By Rich Bowden:

A new report issued by specialist insurance group Lloyds, along with environmental organisation WWF, has warned global businesses of the consequences of corporate inaction in fighting the growing global water scarcity crisis.

Noting that only 0ne percent of the world’s water is readily accessible to humans, the study describes water shortages as already being a reality for many businesses with global water supplies such as aquifers and rivers drying up at an alarming rate.

WWF’s head of freshwater programmes, Dr David Tickner, described correct water management as one of the century’s “great challenges”.

“Getting water management right underpins our ability to tackle many of the great challenges of the 21st century: economic growth, food security, energy security, reducing poverty and adapting to a changing climate. We believe businesses should be as much a part of the solution as governments and NGOs,” he said.

The new Lloyd’s 360 Risk Insight briefing titled “Global Water Scarcity: Risks and Challenges for Businesses” warns the consequences for businesses are severe with increasing water scarcity being passed through the production cycle. It calls on companies to account for the uncertainty surrounding water shortages in raw materials and instigate immediate and appropriate action.

Dr Richard Ward, Chief Executive Officer at Lloyds, said that business must be at the forefront of such a water management strategy and outlined the critical need for correct management partnership of the water scarcity crisis with the global community and world governments.

“Water scarcity is already a reality for some businesses, and as this trend increases all risk managers will need to consider their organisation’s exposure,” he said.

“The simplest risk management response is to reduce your own water use, or that of your suppliers. But businesses cannot manage this risk alone, and will need to work with the wider community to improve water management and protect this critical resource.”

He added the risk assessment study recommends business managers take urgent action to resolve water scarcity issues.

“…this report on water scarcity forces businesses and risk managers to take a long-term viewpoint, while recommending that they start to take actions now,” he said.

Dr Ward said the business world needed to introduce measures to improve the sustainability of the precious resource, already under pressure from climate change and a burgeoning world population.

“Over the next few decades, the world will have to make some hard decisions about water,” said Dr Ward.

“The global population may grow by 3 billion people up to 2050, all of which will need water, and rising prosperity in Asia will further heighten demand. Set against more extreme and unpredictable climate conditions, we in the corporate world will need to find a way to ensure the sustainability, and appreciate the value, of the world’s water resources,” he added.

The study predicts that untrammelled economic growth, population shifts and climate change will contribute to an increased water crisis over the next thirty years and warns businesses that it is critical they consider the way in which world governments manage increasing water scarcity.

With many internationally-based companies already under pressure from communities for alleged excessive water usage, the Lloyds risk assessment study said cooperation with water basin managers was necessary and suggests looking to recent debate over carbon emissions as a guide to how international communities will react to what it describes as the “ultimate shared resource.”

“Business also needs to consider how governments and the international community will manage water scarcity over the medium to long term,” it says. “Does the carbon debate offer any useful precedents? What will new regulations look like? And, critically, how can they work with the public and non-governmental sector, not simply to influence the debate, but also to broker solutions?

The report recommends that companies look to devise methods to address water shortages which would include a broader type of water strategy which in effect would include “…some degree of cooperation with stakeholders or government to improve water management, possibly facilitated by an independent third party.”

The study suggests producers follow a “3Ms” strategy:

* measure their water risk

* mitigate it

* market themselves as leaders in water management.

It adds that tertiary service sector businesses should use “3Is”:

* consider water risks when identifying suppliers

* influence suppliers to mitigate water use or meet set standards

* consider water risks when making investment decisions.

Tags: Global Water Scarcity: Risks and Challenges for Businesses, lloyds, Water, water business, water scarcity, WWF