Corporate social responsibility: sustainable water use

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Abstract

Freshwater scarcity is no longer limited to sub-Saharan developing countries; also in Western society, access to unlimited amounts of freshwater is not assured at all times. It has been argued – and laid down in many national legal systems – that access to freshwater is a basic human right. What if corporate freshwater use threatens to interfere with this human right? The main focus of the article is to explore the role of today’s companies in relation to freshwater. A number of tools have been developed to attend to the necessity to reduce corporate use of freshwater. The article discusses specialised water reporting instruments such as the 2007 Global Water Tool and the ‘water footprint’ calculation method. In addition, attention is paid to a CERES report (2010) revealing that the majority of the 100 world’s leading companies in water-intensive industries still has weak management and disclosures of water-related risks and opportunities. To obtain concrete information about corporate water strategies and practices, an explorative analysis was conducted on 20 Dutch multinational companies. The article highlights various innovative practices. In sum, it is demonstrated that companies are expected to bear responsibility for their impact on water resources, in particular when it influences public access to water in areas with freshwater scarcity and/or weak government. Notwithstanding the critical conclusions of the CERES report, it is interesting to see an evolution in corporate research concerning sustainable water use and the development of greener products and greener ways of production.

Introduction

Less than 3 per cent of the world’s water is fresh – the rest is seawater and undrinkable. The largest part of this freshwater (83 per cent) is, however, frozen, locked up in Antarctica, the Arctic and glaciers, and is not available to man. Thus, humanity must rely on 0.5 per cent of world’s water for all of men’s and ecosystems' freshwater needs. Although the world is not ‘running out of water’, water is not always available when and where people need it. Climate, normal seasonal variations, droughts and floods can all contribute to local extreme conditions (WBCSD, 2005, p. 1). As a matter of fact, water scarcity affects one in three people on every continent (WHO, 2010). Freshwater scarcity is not limited to – stereotypical as this may seem – sub-Saharan developing countries; also in Western society, where potable water seems to come out of the tap endlessly, access to unlimited amounts of freshwater is not assured at all times (EEA, 2009). Water overuse by farmers, governments and industries is damaging the environment in many major basins and, ultimately, threatening a reliable water supply. The situation is getting worse as needs for water rise along with population growth, urbanisation and increases in household and industrial uses (UNEP, 2006, UNEP, 2008, UNDP, 2006).

One quarter of the global population lives in developing countries that lack an adequate infrastructure to provide water from rivers and aquifers (WHO, 2010). Millennium Development Goal (MDG) number 7, target 10 aims to halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation. Water scarcity could threaten progress towards this target (Camdessus, 2009). It has also been argued, and in fact laid down in many national legal systems, that access to freshwater is a basic human right.1

Traditionally, regional water management and the access to and the use of water by individuals and companies are considered public issues, and hence usually administered by local authorities. People and business are competing users of water. Industrial use of water as part of a country’s total water use increases with country income (from 10 per cent use by the industry in low-income and middle-income countries to 59 per cent industrial use in high-income countries)(UNESCO, 2003, p. 19). Industry is thus a substantial user of water, and is also regarded as an important contributor of water pollution (Hildering, 2004). The question emerged: What if companies use so much freshwater in a certain area that their consumption threatens to interfere with the access to water by individuals (MDG 7)? As part of the answer, it has been argued that water management calls for a combined approach by governments and business (WHO, 2010).

The main objective of this article is to explore the role of today’s companies in relation to freshwater. Because business leaders make decisions every day that can affect water, it is important to identify where such decisions can also lead to improvements in the water sector (UN WWDR-3, 2009). Companies themselves have started recognising that they can have a positive impact on preserving water resources and in granting people access to water (WBCSD, 2005). The research addresses the question to which extent and how companies can bear responsibility for their impact on water resources as part of corporate social responsibility (CSR). This question is particularly relevant when their impact influences public access to water in areas. Subquestions explored in this article are: What are companies’ main drivers to lower their water use and to offer local people access to water? Which are the best tools to address this issue? And what are best practices in this field?

Section 2 of this article provides a general background on public and private responsibilities in regard to water on the basis of literature research. It addresses whether a link can be made between corporate water use and environmental changes such as water scarcity or surplus. Links to European and Dutch law have here and there been included as example in order to make theoretical concepts more concrete. A few cases concerning corporate mismanagement of water resources are recorded to draw the attention to the current discussion concerning corporate use of water.

Section 3 elaborates on water as a CSR-theme. On the basis of desk research study, it explores what companies’ main drivers are to lower their water use. It also focuses on tools developed by the international community aimed at the reduction of corporate freshwater use, including CSR policy guidelines, water use calculation methods and annual reporting tools. This section will also reflect on a recent study on corporate reporting by 100 of the world’s largest companies concerning their water use and dependence.

In Section 4, the discussion part, the results of an explorative study searching for best practices and the extent to which companies indicate that they bear responsibility for their impact on water resources are evaluated. The purpose of the study was to gain tangible information on the subject of sustainable water use. As a Dutch researcher, the author has elected a group of multinational companies with global operations, the parent company of which is registered in the Netherlands.2 Firstly, their activities were analysed in regard to water use and pollution in order to understand the relationship between each of these companies and water. Subsequently, it was examined in which way these companies are addressing the sustainability issue of water. The research made use of publicly available information, including press releases, annual reports and sustainability reports, corporate codes of conduct, and other information. As the purpose of the explorative research was to provide concrete information on corporate water policies and examples of best practices to illustrate the theoretical part of the study, the research did not comprise testing any corporate disclosures against possible other information available from (NGO) sources. An overview of the results is included in Appendix 1. This article ends with a conclusion in Section 5.

Section snippets

Waste water management

Virtually all developed countries, but also emerging economies, have regulations that seek to manage hazardous waste, including waste water. Although not all waste water constitutes hazardous waste, in the Netherlands, strict environmental regulations have been implemented in the Wet Milieubeheer (Environmental Management Act), partly derived from European Directives. Companies are required to obtain a licence for their operations, which licence generally addresses all issues related to water,

CSR

Section 2 has demonstrated that it is quite difficult to determine fixed boundaries as to where public responsibilities end and corporate responsibilities commence in regard of corporate water use because: (i) legislation and policies on how water is managed vary from country to country; (ii) different types of industries have different impacts on water; (iii) it is difficult to link changes in the environment in a direct way to the water consumption of one enterprise; (iv) complications arise

Background information on the research project

To obtain tangible information on the water use and best practices by 20 listed Dutch companies, their public disclosures were analysed in the course of an explorative research project. The results are summarised in this section and an overview is included in Appendix 1 in fine.

The selected companies operate in various business sectors, ranging from oil and gas industry suppliers and producers (e.g. Shell), supermarkets (Ahold), breweries (Heineken) to human resources services (Randstad). Most

Conclusion

This article has addressed the role of today’s companies in relation to freshwater. The research on responsibilities demonstrated that it is quite difficult to determine fixed boundaries as to where public responsibilities end and corporate responsibilities commence in respect of corporate impacts on water. Firstly, legislation and policies on how water is managed vary from country to country, thereby distinguishing between the management of waste water, freshwater consumption and ground water

Acknowledgements

This article elaborates on a paper presented by the author at the Global Challenge Conference, which was held in July 2009 in Utrecht, the Netherlands. The paper was titled ‘The Companies’ Role: Water as Theme of Corporate Social Responsibility’. It was included in the Conference Proceedings. The author would like to thank Marie-Eve Rancourt, LLM (commercial lawyer with the energy company Statkraft Markets, The Netherlands; previously: Utrecht University and Nyenrode Business University), Tabe

Lambooy is a researcher in the field of corporate social responsibility (CSR) since 2003. Subjects of specialisation include the role of companies in regard to water, biodiversity and human rights. In cooperation with NGOs and some major pension funds, she conducted research on ‘capital markets and biodiversity’ (Nyenrode). At Utrecht University, she lectures on legal aspects of globalisation, in particular on CSR and international mergers and acquisitions. Until 2007, she practiced corporate

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    Lambooy is a researcher in the field of corporate social responsibility (CSR) since 2003. Subjects of specialisation include the role of companies in regard to water, biodiversity and human rights. In cooperation with NGOs and some major pension funds, she conducted research on ‘capital markets and biodiversity’ (Nyenrode). At Utrecht University, she lectures on legal aspects of globalisation, in particular on CSR and international mergers and acquisitions. Until 2007, she practiced corporate law, specialising in international transactions and due diligence research, with an international law firm in The Netherlands. She has published books and papers on CSR and corporate law themes. She obtained a PhD for her study 'Corporate Social Responsibility Legal and semi-legal frame works supporting CSR' in 2010.

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