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Thank you for joining us
Thank you for logging into ERM’s webinar on Tackling Water Risks - the importance of looking beyond water use efficiency. We will begin the webinar at 1pm EDT. All lines have been muted but the chat feature will be active during the call. The call will be recorded and sent out to all registrants. We look forward to our discussion today!
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The business of sustainability
© Copyright 2019 by ERM Worldwide Group Limited and/or its affiliates (‘ERM’). All Rights Reserved. No part of this work may be reproduced or transmitted in any form or by any means, without prior written permission of ERM.
ERM Webinar: Tackling Water Risks - the Importance of Looking Beyond Water Use EfficiencyPart of ERM's 2019 Sustainability Means Business Webinar Series
June 20, 2019
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Welcome
ERM Webinar: Tackling Water Risks 3
This presentation will be recorded and all who registered will receive a follow-up email containing a link to the presentation within a week.
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www.erm.com ERM Webinar: Tackling Water Risks 4
Sustainability Performance
To disclose, or not to disclose, that is
the question (November)
Disclosure Trends
A Look at Sustainability
Reporting in 2019 (September)
Tackling Water Risks
The Importance of Looking Beyond
Water Use Efficiency
(June)
CDP Reporting Strategies for
Improving Scores as the Bar is Being Raised
(April)
2019 ERM Webinar Series
SUSTAINABILITY
MEANS BUSINESS
Learn more about the series here
https://www.erm.com/2019-sustainability-means-business-webinar-series/
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Today’s Speakers
ERM Webinar: Tackling Water Risks 5
Kate BrownProcter & GambleGlobal Product Supply Water Sustainability Leader
Sarah WadeAlliance for Water Stewardship (AWS)Outreach and Engagement Coordinator
Greg KochERMTechnical [email protected]+1 (678) 486-2774
Dylan WaldhuetterAlliance for Water Stewardship (AWS)Program Manager, AWS North America
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Maturing your water stewardship strategy
Water stress overview
Presentation Overview
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Mitigating your risks and why efficiency alone is often not enough
Identifying and quantifying business risks
03 Q&A
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01 Procter & Gamble case study
Alliance for Water Stewardship overview
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07
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Water stress overviewPresented by Greg Koch
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Water scarcity
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Source: Center for Environmental Systems Research, University of Kassel, www.usf.uni-kassel.de
3.3billion people, or almost half of the world's population, live in areas of physical scarcity and/or face economic watershortage
$17 trillion22% of Global GDP is currently generated in water-scarce areas. By 2050 it will be 45%
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Not just quantity issue, but also a quality issue
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North America
Caribbean
West and Central Africa
Mediterranean
Western Europe
Baltic Sea
Central and East Europe
Caspian Sea
East Asia
Southern Asia
Untreated
Treated
Ratio of treated to untreated wastewater reaching water bodies for 10 regions
Source: Adapted from a map by Ahlenius, H., http://maps.grida.no/go/graphic/ratio -of-wastewater-treatment Sources: UNEP-GPA, 2004.
Greater than 80% of water is untreated
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Untreated
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Caribbean
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Price ≠ Cost ≠ Value
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Source: Fortune 2014
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Who uses water? Not really industry, right?
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3200
2800
2400
2000
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0
1900 1925 1950 1975 2000 2025 1900 1925 1950 1975 2000 2025 1900 1925 1950 1975 2000 2025
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Identifying and quantifying business risksPresented by Greg Koch
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How to quantify water as a business risk?
Supply Chain Operations Product Use
Physical
Water scarcity drives up input prices (~2%-20%)
Increased capital expenditure on water treatment, extraction or alternative technologies raises costs
Non-availability or scarcity of water required for using product or service limits growth
Regulatory
Suspension or withdrawal of supplier's water license or discharge permits disrupts supply chain
Reallocation to more urgent needs during drought disrupts operations
Restrictions on use of particular products or services due to water intensity raises costs or checks growth
Reputational
Responsibility "by association" for suppliers' water pollution damages brand or reputation, hinders growth
Competition with household demands, or pollution incidents, damages brand or reputation, hinders growth
Public outcry regarding water intensity of product damages brand, reputation, hinders growth
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Financial Impact
• Lost revenue• Higher costs from:‒ Supply chain‒ Changes in production‒ Capital expenditure ‒ Regulatory compliance‒ Increasing price of
consuming or discharging water
• Delayed or suppressed growth
• Potential higher cost of capital
1 – “Watching Water,” JP Morgan Chase Global Equity Research, April 2008.
http://pdf.wri.org/jpmorgan_watching_water.pdf
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Risks
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RISK = Probability x Loss
PROBABILITY = Likelihood x Frequency
LOSS = Consequences + Their Resultant Impact
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Risks to business…an example
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Probability = Likelihood x Frequency = 0.20 x 1 = 0.2 (or 20%)
20%
Water stress research reveals that a plant could have its water supply cut by 20%
The plant thinks this has a 20% chance of occurring and, if it happens, it would happen only once within the next 10 years
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Risks to your business…an example
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Mitigate3Insure against it (if possible)2Live with it1
What can you do with risk?
The plant determines that a 20% reduction in water supply would prevent any future production growth and cut current production by 15% (consequence) costing $980,000 in lost net revenue (impact)
Situation
Results in a risk of $196,000
Result
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Risks to your business…an example
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Water efficiency/reuse measures (with ROI measured against avoided risk and not just cost of water)
Shift production to another plant Build a new plant in a low-stress area
Engage water utility to negotiate water supply increase Partner with peer industry to reduce collective water use, freeing
up water for growth Advocate for policy change/investments in more water storage Work with government on water system leak management Advocate for/join public awareness campaign of water efficiency
Mitigation options:
Typical corporate responses
Comprehensive risk-informed
responses
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Mitigating your risks and why efficiency alone is often not enoughPresented by Greg Koch
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How to mitigate such business risks?
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Incorporate water risk into ‘traditional’ corporate risk management processes
Quantify the “real” value of water to the business
Understand the energy-water nexus and its potential business implications, set targets across the value chain
Increase focus on engagement and innovation
Look for opportunities in the overlaps
Make a public commitment to water stewardship
Practice “radical transparency” about water and seek opportunities to collaborate – or clear the (internal) path for collaboration
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Plant water efficiency measures are not enough
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Local and global communities, sustainability ratings (Oxfam, CDP, FTSE4Good, DJSI), and NGOs
Types of risks to consider:
Due to climate change and lack of infrastructure investment (e.g. flooding)
Limits on water use, more stringent wastewater discharge requirements
Business continuity, extended responsibility for total water footprint
Supply Chain
Municipal infrastructure vulnerabilities, overexploitation, water quality
Water SupplySupply ChainPhysical RegulatoryReputational
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Alliance for Water Stewardship overviewPresented by Sarah Wade & Dylan Waldhuetter, Alliance for Water Stewardship (AWS)
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THE ALLIANCE FOR WATER STEWARDSHIP AND THE AWS STANDARD
Sarah Wade, AWS International [email protected]
Dylan Waldhuetter, AWS North [email protected]
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THE ALLIANCE FOR WATER STEWARDSHIP (AWS)
- AWS is a global membership alliance of business, civil society and public sector
- We unite behind a shared definition and a common approach to robust, independently verifiable water stewardship: the AWS Standard
- The AWS Standard is already being implemented at hundreds of sites around the world
“Water stewardship is the use of water that is socially and culturally equitable, environmentally sustainable and economically beneficial, achieved through a stakeholder inclusive process that involves site
and catchment based actions”AWS definition of Water Stewardship
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AWS: A GLOBAL ORGANISATION
AWS International acts as the Secretariat for the global system, and is the custodian of the AWS Standard and its related processes.
There are AWS Regional Partners and Regional Coordinators in: • Africa: supported by Water Witness International• Asia Pacific: offices in Australia, China and Indonesia• North America: office in Wisconsin, USA• South Asia: offices in India and Pakistan • Coming soon: offices in Europe and Latin America
We also have AWS Service Providers who support AWS implementation globally by providing training, consultancy advice and auditing services.
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AWS: A MULTI-STAKEHOLDER MEMBERSHIP ALLIANCE
- Our membership is made up of business, civil society and the public sector- AWS is governed by our members through:
- Member nomination to and voting on representation on the AWS Board and Technical Committee
- Member input on the future direction of AWS- Opportunity to input on new topics for consideration by AWS and its members
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THE AWS STANDARD
- First launched in 2014 - Is responsive to site and catchment context- Takes users on a journey to understand site and catchment water risks, and then act - Is supported by third party verification to enable certified sites to make credible claims
Since the AWS Standard 1.0 was launched:- Hundreds of sites around the world are implementing the Standard (over 35 certified) - Membership was introduced in 2016, and there are now over 120 members globally- There have been corporate commitments to the AWS Standard from:
Coca-Cola Hellenic, EDEKA, Nestlé Waters and PMI- The Standard is being used by stakeholders from agriculture, food and beverage
production, manufacturing, microelectronics, textiles and many more sectors
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AWS STANDARD V2.0
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IMPLEMENTERS SAY THE BENEFITS OF USING THE AWS STANDARD ARE:
Site:- Increase efficiencies- Enable risk mitigation- Grow staff capacity &
motivation- Strengthen stakeholder
relationships- Build and grow
community trust
Catchment:- Improve local water quality
and availability- Protects socially and
culturally important water-related areas
- Drives local collaboration - Supports knowledge
sharing- Strengthens multi-
stakeholder governance
Corporate: - Understand sites’ risks- Common approach
across whole business- Credible independently
verifiable claims - Contribute to CDP &
other disclosures - Support CSR activities- Reinforces brand
credentials
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KEEN TO FIND OUT MORE?
There are five actions you can take to start your water stewardship journey: 1. Download the AWS Standard at www.a4ws.org2. Ask us a question at the end or get in touch to be connected with your local
team: [email protected] or [email protected]. Join AWS as a Member to be part of the conversation 4. Attend an AWS Training5. Connect with an AWS Service Provider
You can find out more on our website, and make sure you sign up for the AWS newsletter to stay up to date with news and opportunities
http://www.a4ws.org/mailto:[email protected]:[email protected]
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Procter & Gamble case studyPresented by Kate Brown, Procter & Gamble
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We are a global company, with operations in approximately 70 countries and products sold in more than 180 countries and territories around the world.
P&G at a Glance
SOME OF THE WORLD’S MOST TRUSTED BRANDS
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70%of P&G products
require water during their use
100%of P&G and supplier operations require water for making ingredients and
products
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P&G sites will deliver 35% increase in water efficiency vs. 2010.
We will protect water for people and nature in priority basins.
2030 Water Goals
Ambition 2030: Enabling and Inspiring Positive Impact in the World
Use the power of innovation and our brands to delight
consumers and drive positive impact.
BRANDS
Reduce our footprint and strive for circular
solutions.
SUPPLYCHAIN
Create transformative partnerships that
enable people, the planet and our
business to thrive.
SOCIETY
Engage and equip P&G employees to build sustainability
thinking and practices into their work and their communities.
EMPLOYEES
Source at least 5 billion liters from circular sources.
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Facility Water Risk Assessment Process
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• Value of risk assessment process• Importance of cross functional engagement• Ensure site leadership participation from beginning• Communication
Lessons Learned
Tier 3 AWS Standard
Oxnard, California AWS Pilot
• Approved as the first in the world Alliance for Water Stewardship Self-Verified Site
• Completed a water management practices case study with World Wildlife Fund, Limnotech, and a key supplier
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Maturing your water stewardship strategyPresented by Greg Koch, ERM
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Increase your level of maturity based on risk
ERM Webinar: Tackling Water Risks 37
No Strategy
Efficiency Strategy
Risk Strategy
License-to-Grow Strategy
Water scarcity not acknowledged as an issue
All resources treated equally
Cash flows heavily weighted
Market price of water governs decisions
Water scarcity as a driver of cost
Consider cost of acquisition and use of water
Heavily weight profitability risk
Focus on water conservation
Set internal water efficiency goals
Manage water scarcity risk at the facility or business-unit level
Pursue stakeholder engagement to improve water access
May calculate full cost of water
May participate in public policy formulation
Ad hoc investment in technology innovation
“Social license-to-operate” risks heavily weighted
Quantify value of water Proactively drive business
“ecosystems and “aligned action”
Innovation - develop product/service offerings that address water scarcity
Manage water scarcity as a platform for growth
Participate in water-related policy development
Fueling Growth: You Can’t Always Buy What You Need. W. Sarni. Deloitte University Press. 2014
Increasing Value & Collective Action
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Questions
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ERM Sustainability Report 2019: from the WHAT to the HOW: operationalizing sustainability
There is a growing sense of urgency about the sustainability challenges facing the world - and a recognition that while many of the solutions are within reach, there is a need to increase the pace and scale of change. This has led to a shift in the conversation from “what” needs to be done to “how” we can deliver the change that is required.
ERM’s 2019 Sustainability Report sets out clear examples of how we are helping clients respond to these challenges, in ways that create business value.
ERM Sustainability Report 2019 39
Climate change and energy transition Tech-enabled innovation Circular economy https://www.erm.com/en/sustainability-report-2019/
https://www.erm.com/en/sustainability-report-2019/
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The business of sustainability
Thank you Kate BrownProcter & GambleGlobal Product Supply Water Sustainability Leader
Sarah WadeAlliance for Water Stewardship (AWS)Outreach and Engagement Coordinator
Greg KochERMTechnical [email protected]+1 (678) 486-2774
Dylan WaldhuetterAlliance for Water Stewardship (AWS)Program Manager, AWS North America
Thank you for joining usERM Webinar: Tackling Water Risks - the Importance of Looking Beyond Water Use EfficiencyWelcomeSlide Number 4Today’s SpeakersPresentation OverviewWater stress overviewWater scarcityNot just quantity issue, but also a quality issuePrice ≠ Cost ≠ Value �Who uses water? Not really industry, right?�Identifying and quantifying business risksHow to quantify water as a business risk?RisksRisks to business…an exampleRisks to your business…an exampleRisks to your business…an exampleMitigating your risks and why efficiency alone is often not enoughHow to mitigate such business risks?�Plant water efficiency measures are not enough�Alliance for Water Stewardship overviewTHE ALLIANCE FOR WATER STEWARDSHIP AND �THE AWS STANDARDTHE ALLIANCE FOR WATER STEWARDSHIP (AWS)AWS: A GLOBAL ORGANISATIONAWS: A MULTI-STAKEHOLDER MEMBERSHIP ALLIANCETHE AWS STANDARDSlide Number 27IMPLEMENTERS SAY THE BENEFITS OF USING THE AWS STANDARD ARE:KEEN TO FIND OUT MORE?Procter & Gamble case studySlide Number 31Slide Number 32Slide Number 33Facility Water Risk Assessment ProcessSlide Number 35Maturing your water stewardship strategyIncrease your level of maturity based on risk�QuestionsERM Sustainability Report 2019: from the WHAT to the HOW: operationalizing sustainabilityThank you