Water must be treated as a strategic asset, and companies should plan carefully to ensure that critical operations can continue if their water supply dries up or becomes too polluted, or even too expensive, for use in the future.
This is the upshot from Bertus following the release of research by the National Business Initiative (NBI) outlining the high water risks that South African companies face but which, apparently, very few address. Dolphin Bay recently joined the NBI, an umbrella body working to ensure the financial, social and environmental sustainability of businesses in South Africa.
In the water research project, the responses to water-related risks of 59 of the 100 largest companies on the Johannesburg Stock Exchange were assessed. The chosen companies were all operating in sectors likely to be affected by water resources. A staggering 83% of the respondents reported that their direct operations face water-related risks. This is the highest of any country in the world.
More than half these risks are expected to manifest within the next three years, and two-thirds of those risks have a medium-to-high financial impact.
Furthermore, 70% of the respondents experienced problems with water supply or quality in 2015, the year of reporting. The second-most affected country was Switzerland, at 50%.
The research was conducted on behalf of the CDP, formerly the Carbon Disclosure Project, an international organisation motivating companies and cities to disclose all their environmental impacts, as the first step in measures to ensure their long-term sustainability.
Some of these respondents in the study were exemplary, with water-management strategies that were among the best in the world. However, only about half the companies responded in South Africa. The implication was that many companies do not realise their need to assess their water risk, which is “of serious concern”, the researchers said.
In an interview with the Dolphin Bay Brief, the NBI’s Programme Manager for Climate and Water, Alex McNamara, said that all companies in South Africa face water risks to varying extent, depending on their location. “There is a rising discrepancy between supply and demand for water, so the risk is not going to go away,” said Alex.
The risk could be due to water shortages, diminishing quality of water and / or rising prices. The causes included the current drought, long-term climate warming, rising demand and inadequate infrastructure, especially in poorly functioning municipalities.
Companies in the three largest metropolises, Gauteng, Cape Town and Durban, would probably be the least affected as these cities have the best infrastructure. Even in these areas, however, prices were expected to escalate because water prices have not been cost reflective for many years, and water remains undervalued, Alex says. The investment backlog is resulting in institutional pressure to raise the cost of water.
Bertus concludes that complacency was the enemy, regarding water security. “We need to make decisions now, to be well-placed to weather the inevitable water constraints in future,” he says.
“The first step is to measure the total volume of water your business uses, and its flow through your business - how much is used by the various divisions,” he advises. “This entails setting up water meters in key locations.
“Which of these areas is most critical? When you know this, you can plan accordingly, to determine where you could cut your water usage in an emergency, and the real risks your business faces.”
After measurement, water harvesting and re-use from activities such as drying wood in the kilns at your treatment plants, should be investigated.
Dolphin Bay measures the water that goes into our reactors, and will start investigating the volumes used in various aspects of our own factories, assessing which operations are critical to the functioning of our operations.
“The thrust of all this is that we should not take water for granted. We need to prepare for shortages, as water is not something we can put a cost to,” concludes Bertus.