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Some might say the race is on to measure and declare the first full water footprint comprehensively assessing a company’s water used throughout the supply chain. Others might say it’s a slow race
The below piece originally appeared as subscriber-only content with the September 2015 issue of Ethical Corp magazine. It has now been made free to access for World Water Day.
When Coca-Cola recently announced that it would be “water neutral” by the end of this year, the creator of that term, Arjen Hoekstra, was bemused.
Hoekstra, professor in water management at the Netherlands’ Twente University, coined the idea of water neutrality as well as the concept of a water footprint (see box on p.x). While Hoekstra was cheered that Coca-Cola is working to offset each gallon of water it uses by recycling or conserving water somewhere else in the world, Hoekstra couldn’t help but also be disappointed.
“Water neutrality clearly entails water footprint reductions in operations and in the supply chain,” he said. “If you apply water neutrality only to operations as Coca-Cola is doing, and not to the supply chain, well that is not hiding anything but it’s a bit misleading.”
Neutrality and footprints
Water neutrality is an idea similar to carbon neutrality. Arjen Hoekstra defined water neutrality in 2008 as: reducing the water footprint of an activity or product as much as reasonably possible, and offsetting the remaining externalities of the water footprint. The water footprint is itself an indicator of water use that looks at both direct and indirect water use, i.e. the volume of fresh water used to produce the product, summed over the various steps of the production chain. (Source: AY Hoekstra, Twente Water Centre, 2008.)
Calculating a company’s water footprint includes setting goals and scope; collecting data and doing a footprint “accounting”; evaluating water use from social, environmental, and economic standpoints; and creating a water footprint response formulation. The ISO 14046 standard, released in 2014, encompasses the factors necessary to assess a product, service, or organisation’s water footprint.
Hoekstra and many others feel that water users must urgently look at their consumption in this holistic “footprint” way, where all of the water that goes into the making of a product or service is accounted for. In the 2015 World Environment Federation (WEF) Global Risk Report, water was ranked as the number one risk to society in terms of impact. Hoekstra and others believe we won’t truly be managing water risk if companies count only the water used in their operations and not the “virtual” water embodied in their products down through the supply chain.
And while a growing number of companies are paying attention to their water risks, not one has yet come out with a firm goal to reduce its water footprint with supply chain water use included. “To me that is the next logical step,” Hoekstra says. “Companies are struggling a bit right now because they are not used to doing something through the supply chain. They are being cautionary. If there is enough public attention, though, companies will move, because they will have to.”
Green, blue, and grey
A water footprint can comprise blue water, green water and grey water components. Blue water refers to surface or groundwater used in production of a good or service. The green water footprint is the volume of rainwater consumed during a production process. The grey water footprint indicates freshwater pollution associated with the production of a product over its full supply chain. Source: Water Footprint Network
From here to there
WWF and others maintain that three types of water risks are common to all companies regardless of industry: physical risks, regulatory risks, and reputational risks.
Ruth Matthews, executive director of the Water Footprint Network, says it is still a limited group of companies globally that are ready to envision their complete water footprint. “Mostly the leaders – in terms of companies engaging in water stewardship – are those with the most financial or reputational risk,” Matthews says. “Though it is still a small proportion, there are many more than there were five years ago, and I think there will soon be exponential growth.”
That growth Matthews predicts is in part due to worsening water woes, like the extreme drought in California that has highlighted those physical and reputational risks water shortages impose.
Companies large and small operating in California have experienced sudden media scrutiny, with water bottlers such as Nestlé getting the most coverage (though its total usage is less than 1% of the state’s water) and other users such as almond growers, beef and dairy farmers and power producers facing criticism. The drought has caused California consumers to become suddenly aware of the water footprint concept, especially as it relates to food production (see box). But as with climate crises, water calamities hit the world unevenly.
Sugar to soda, barley to beer, cotton to clothes
If it were simply a case of figuring out how much water a company uses internally to produce a product or service, water footprints would be easy. But then there’s “virtual” water, which isn’t obvious when looking at a half-litre bottle of Coca-Cola. In a landmark 2010 study by Coca-Cola and the Nature Conservancy, that half-litre bottle of Coke produced in the Netherlands was found to have a green water footprint of 15 litres, a blue water footprint of 8 litres and a grey water footprint of 12 litres.
Most of the green and blue water footprints are associated with the growing of the sugar beet used to sweeten the Dutch version of the drink. In fact the Water Footprint Network has estimated that it can take 442 litres of water to make a litre of Coke that uses cane sugar, and 618 litres of water for a litre of Coke that uses high fructose corn syrup. Meanwhile, the operational water footprint of a half-litre of the soda is calculated at just 0.4 litres.
Looking at beer, growing hops and barley takes far more water than SABMiller users to turn the grains into a heady brew. A 2010 study of water footprints of barley and hops production in four countries showed variations in the footprint but in all cases at least 89% of the total footprint of the beer was in the cultivations of ingredients.
In clothing, water footprints can be gargantuan because cotton growing is so thirsty: nearly 2,500 litres for a T-shirt, 7,500 litres for a pair of jeans, and 8,000 litres for a pair of leather shoes. Finally, hamburgers must be humanity’s Achilles heel in terms of water footprints: just one kilogram of beef needs 15,000 litres of water to produce it.
When it comes to a water footprint, the best reduction plan for individuals is simple but not very palatable: don’t wash your jeans, skip the cream and the coffee, or don’t put a burger on your bun. For companies, the road is just as hard, for once internal operational usage is minimised it’s time to look through the supply chain for ways to shrink the water footprint.
Transparency about water use, both internally and in the supply chain, is the first step in acknowledging our shared and problematic water footprint. In a study released this year, Hoekstra and colleagues at Twente University ranked the 75 largest Dutch companies on water reporting transparency. Brewing company Heineken ranked as the most transparent on water use reporting with a score of 43% out of a possible 100% transparency. Surprisingly, Unilever scored only 16%, while almost half (34 of the 75) companies scored zero.
Know your footprint
The tools for water use transparency are now many. For example, the American industrial products company 3M identified water as a “critical global challenge” long ago in its internal materiality studies. 3M started using the World Business Council for Sustainable Development’s Global Water Tool and the World Resources Institute’s Aqueduct Water Risk Framework to guide its water stewardship. By 2014, 3M achieved a 42% reduction in water use (indexed to sales) with 2005 as the baseline, and now will attempt to cut that figure 10% further by 2025.
All 3M sites in water scarce or water stressed areas are developing water conservation plans, says vice-president for sustainability Gayle Schueller, and 3M will begin to engage with communities on water conservation. While 3M says in its latest sustainability report that understanding its full supply chain footprint is important, thus far it is measuring and reducing only its operational water footprint.
Clothing company Levi Strauss views its water footprints through product lifecycle analysis. According to senior director of corporate affairs Amber McCasland, in 2015 the company completed an updated product lifecycle assessment (LCA) for multiple core products. The updated LCA, for example, pinpointed that cotton cultivation consumes 68% of the water in a pair of blue jeans’ lifecycle, while manufacturing uses 9% and consumer care, i.e. washing, uses 23%.
Levi Strauss is working on reducing water use on all three fronts. By developing WaterLess techniques – removing water from stone washing, combining different wet manufacturing processes – the company reduced its internal use by one billion litres of water since 2011. Levi Strauss has set a goal of producing 80% of its products using WaterLess techniques by 2020, compared with just 25% of its products that are made today using WaterLess.
On the agricultural front, Levi Strauss is a pioneer in the Better Cotton Initiative (BCI), which aims to help cotton growers use up to 23% less water (and 55% less pesticides). Levi Strauss says it plans to source 75% BCI cotton by 2020, up from just 6% today. Finally, the company hasn’t been timid about trying to get consumers involved in lowering jeans’ water footprint: CEO Chip Bergh declared over a year ago that jeans don’t need regular washings, and now Levi’s advises US consumers to reduce the footprint of their jeans by washing them only once every 10 wearings (the current average is after two wearings).
Levi Strauss is keeping track of the water footprint of its core products and, as McCasland says, is “focused on understanding where we can make the greatest positive impact”. The company claims to be the first in the clothing industry to adopt a water recycle/reuse standard. Companies such as Levi Strauss have realized that partnerships, especially within an industry, can be key to getting water reductions in the supply chain.
Global clothing retailer C&A has worked in a three-year process with Matthews’ Water Footprint Network to create a supply chain water footprint. Stephanie Klotz, communications manager for C&A’s Foundation, says the company learned a lot during the assessment, including absorbing the data that cotton sourced to produce all C&A’s textile products has a water footprint of 3.6bn cubic metres per year – and C&A’s total water footprint is between 5.7 and 9.7bn cubic metres. That transparency of its water footprint drove C&A to increase its goals around organic cotton use, as well as identifying hotspots for water scarcity. C&A is focusing efforts on improving cotton farmers’ water efficiency and expanding the organic cotton supply – it overtook Swedish rival H&M to become the top buyer of organic cotton in the world. Yet C&A hasn’t committed to an overall water footprint reduction goal.
“Conventional cotton can generate as much as five times more pollution than organic,” Klotz says, “mainly because of the use of agro-chemicals.” She says once there is an understanding of the footprint, the next step is quantifiable targets. “Lack of insight on the water footprint across the supply chain makes it hard for anyone – factory, retailers, even customer – to act on it.”
Generally, companies that want to reduce their water footprint need to avoid water use where possible, reduce water use as much as possible, and compensate or replenish the water used. It also makes sense for companies to take action first in their own water scarce “hotspots”. C&A gets that, but acknowledges the kind of uncertainty and hesitancy Hoekstra mentioned with hard goals – C&A says in its final water footprint report that, “Achieving improvements in the water footprint of C&A’s supply chain may be difficult since they are not under C&A’s direct control.”
No thirst to be first
Hoekstra says he believes a handful of companies are now working silently, behind the scenes, to get ready to formulate goals around reducing their total water footprints, though they hesitate to be the first out with commitments due to the media spotlight and scrutiny that that would entail.
David Grant, manager for water risk and partnerships at the UK drinks giant SABMiller, says his company has done a lot of work with WWF to look at the water use in the supply chain. Forty-six of SABMiller’s breweries (representing about 65% of the beer the company makes) have done “intensive” water risk assessments. Since 2010, the company has cut operational use from 4.3 litres of water to produce a litre of beer to 3.3 litres. The 2020 goal is 3.0 litres of water per litre of beer, and 1.8 litres of water per litre of soft drink.
SABMiller has made the business case for slimming its internal water footprint by developing a “user pays” principle at breweries, putting what it calls a true dollar value on water used in different parts of a brewery. Savings in 2014 was a total of 23bn litres of water and $117m (for water plus energy saving measures). As far as water use in the supply chain, SABMiller defines this as shared water risk and takes as a soft goal “mitigating shared risk for key crop origins”.
Grant says that working with the UN’s Water Action Hub has been an excellent way to find partners to collaborate on the best water efficiency projects. Grant acknowledges that goals in supply chain water footprint reduction are “a lot more difficult” than operations goals. “It’s easy if you control it internally, but looking at the supply chain means you are moving three to four levels down,” he says. “We are doing a lot of good work, but that also takes a lot more time.”
Hoekstra says it is hard to tell whether it will be a big global brand or a small, innovative social enterprise that might finally step into the limelight with a total water footprint reduction goal.
“But I do know that I am so much looking forward to that,” he says. He adds that Coca-Cola is in some ways well positioned to be the first. Coca-Cola has done its water footprint work. It has also received both praise and flak for announcing water neutrality, precisely because it does not include external supply chain water. Yet is so obviously proactive with its water footprint.
“On the one hand, Coca-Cola can be blamed a bit for a misleading message with the water neutrality,” Hoekstra said. “On the other hand, they really have undertaken crisper, more well-defined targets than any other company.”water natural resources resource scarcity water conservation water briefing Levis beer SABMiller