Sustainable Agriculture Initiative Platform
The global food value chain initiative for sustainable agriculture

Quenching the thirst of business - Sustainability innovations to preserve water supplies

World Water Day, this March 22, reminds us that water is essential for life. It is also an opportunity for business leaders to reflect on how the world's most precious natural resource impacts corporate operations across the planet.

With freely running faucets everywhere, many of us are so familiar with the seeming abundance of water that we take its availability for granted. In the developed world, we regard access to water as a human right, but those in more water stressed contexts do not have this luxury. Where water has always been scarce, it is now getting scarcer. Discomfort has recently come closer to home, with areas in Spain and Southern France experiencing serious water shortages.

Today’s global water situation is worrying for several reasons:

  1. With population growth and higher living standards, fresh water supplies are decreasing. Water-intensive agriculture (“thirsty” crops such as cotton, sugar, and rice), pesticide use, climate change, loss of habitats and water born diseases are degrading water supplies.
  2. Bio fuels are increasingly competing with food and other non-food (fibers, feed) productions on water usage.
  3. There is a lack of water protection resulting in leaking underground sewage pipes and incessant use, abuse and overuse of aquifers.

Is it possible that a “fight for water” will become as economically important as the current “fight for oil?” In some parts of the world, concerns about local water control and its management are already arising because of increasing agricultural and industrial consumption. Since water does not respect national borders, good governance is needed to mitigate conflicts. As companies need both a robust license to operate and an enabling environment, assuring adequate access to clean and plentiful supplies of water is a long-term business challenge that goes beyond the responsibility and scope of any single company. Because tackling such issues is often perceived as likely to increase complexity and costs, the issue must be addressed through partnerships between companies, governments, NGOs, local opinion leaders and the entire value chain.

The Sustainable Agriculture Initiative Platform: in partnership with IMD

Recently planning a partnership with IMD’s Center for Corporate Sustainability Management (CSM), theSustainable Agriculture Initiative Platform (SAI) is building momentum to tackle issues facing water supplies and other natural resources. Set up some ten years ago by Nestlé, Danone and Unilever, SAI is a consortium of more than 30 major food and beverage companies that have developed voluntary guidelines for sustainable agriculture. These companies are increasingly finding business opportunities in dealing with water strategically and there is major potential to increase water use efficiency. Interestingly, with rising economic development, industrial water use increases while water-intensive agriculture decreases. Water, as a key resource in agriculture (representing 70% of freshwater withdrawals worldwide), can often be seriously misused at the farm level.

IMD is tracking and documenting system innovations that transform markets, such as the recent conversion of Unilever’s entire tea supply chain for its prominent Lipton brand to 100% sustainable tea[1]. Indeed, Unilever serves as an example of best practice in corporate action. The company runs various water-related projects (in Ghana, Brazil, India) and has significantly increased yields while reducing water and pesticide use. Unilever adopted an integrated approach by taking account of other issues (Malaria, river flows, fishing) and reducing water use in manufacturing by 30% in 5 years. It is also concerned about consumer behaviour; for example, it improves the “rinse-ability” and biodegradability of its products.

Nestlé is another company advocating change. The food giant provides manuals to farmers to help protect on-farm springs and tackle manure problems. The company also introduced a manure management system (a joint project with the Chinese government) and improved water use efficiency in the coffee chain through better irrigation and de-pulping. Nestlé has built a clear business case for water use reduction in its factories.

As an agribusiness company, Syngenta also partners with farmers and focuses on the prevention of habitat changes, soil-moisture balance and the portfolio of plants (depending on their individual “thirst”). Their development of draught-resistant crops holds significant potential for water use efficiency, however, social acceptance is currently lacking.

For these companies, the business case is clear. The companies are linked to agricultural commodity value chains and rely on the long-term supply of raw materials for their business. The depletion of natural resources such as water affects agricultural productivity and presents a risk of disruption in supply. In agriculture, water use efficiency and water protection can go hand in hand with major yield increases.

Looking forward, challenges remain ahead to ensure the positive use and protection of water in agriculture. SAI Platform's Working Group on Water & Agriculture (WGWA), whose main members include Heineken, Kellogg's, McCain, Nestlé, Pepsi Co, The Coca-Cola Company and Unilever, is addressing several issues including: maintaining the food safety and quality of agricultural products; improving farms' economic viability and social progress through water savings; and increasing environmental ecosystem protections through polluted runoff collection.

As for projects, in early 2010, the WGWA launched a pilot project in North-West India together with ICRISAT, which aims at developing a simple Water Impact Calculator (WIC) for farmers to estimate the impact of their current practices on water conservation, and ways to minimize these. And, this coming May at Rollins College in Florida, and in June at IMD, SAI and IMD will run a Master Class Workshop for mainstream managers that will explore ways companies can embed sustainable agriculture strategies into business models.

Cooperation is essential

When dealing with water-related issues businesses should focus on site awareness and integrated management, while maintaining a clear view of other players. The World Business Council for Sustainable Development (WBCSD) has built several water scenarios to improve understanding by businesses and stakeholders, to support effective business solutions, and to ensure more efficient and fair use. Since most governmental programs have had a limited impact, businesses face a challenge to mitigate existing and emerging problems.

Given the complexity of the underlying problems, cooperation is essential; thus addressing water issues will be the “litmus test” for multilateral agreements. While World Water Day brings more awareness to the issues, we look to business leaders to shape and preserve the planet’s water reserves for tomorrow’s generation.

An article sritten by Dr Aileen Ionescu-Somers, Director, IMD’s Center for Corporate Sustainability Management
With input from Peter-Erik Ywema and Emeline Fellus of the Sustainable Agriculture Initiative (SAI) Platform