I was recently speaking with a friend and entrepreneur who lives in Dubai about the world economy, the state of the environment, and what to do next with my life.
"You have to get into water," he said with complete certainty. "Water will be the overarching challenge of the future," he assured me, "it doesn't matter how you approach it: resource management, public health, corporate strategy- water is where the money will be, and water is where the jobs will be."
Corporate water usage is only one part of the issue, but hopefully one which can make a large difference if properly addressed. This message was echoed this month in State of Green Business Forum, and the accompanying State of Green Business 2009 Report. The report, which covers ten trends in green business, using twenty indicators, gives positive indication that water usage is coming to the forefront of the discussion. In the report, 'Water Intensity', as measured by Gallons consumed per dollar of GDP shows an encouraging reduction in water use in the United States, but of course this is only part of the picture.
At the forum, a panel discussion entitled "Is Water the New Carbon?" was one of the most exciting sessions of the day. Companies are now starting to take a critical look at the "embedded water" that goes into creating their products, (for instance the 634 gallons of water required to produce one hamburger), as part of an effort to become more efficient and save costs, with the added benefit of reducing their impact on the environment.
In their own factories, corporations can make changes to reduce water and energy consumption in their every day operations. Al Halvorsen, the Director of Environmental Sustainability at Frito-Lay discussed his companies efforts to take Casa Grande, an existing plant as far off the grid as possible: "The first goal is to try to minimize the impact on our own operations- trying to get as far off the water grid as possible- in one of our operations. This product alone is us asking how might we operate our business in the next ten, twenty and thirty years when water becomes a scarce economy. "
However, reducing internal operations is only one step of the process. Michael Kobori, Levi's VP of Supply Chain Social and Environmental Responsibility, discussed his companies efforts to reduce water:
After completing a life cycle analysis for their best selling product, they found out that a pair of Levi's 501 jeans uses 3,480 liters of water in it's whole life cycle. That's a lot of water! As they started to break it down, they determined that 49% of all water is used in growing the cotton. 45% is used in home laundering, so there is really only about 6% accounted for in other part, and their piece, the milling, manufacturing, and washing the product at their factories is about 5%.
While Levi's set out to increase the efficiency at their own factories, they also paid attention to their indirect water usage, by looking further up the supply chain, and determining how they can influence water reduction strategies beyond their factories, for both their suppliers and their consumers. Reducing the embedded water in a product requires collective action, with the entire product chain, cooperation from peers across sectors, and the consumer. Among their initiatives, Levi's partnered with Walmart and Tide, to encourage consumers to wash their Levi's in cold water, to reduce both energy usage and money spent.
Jason Morrison, the Director of the Pacific Institute's Economic Globalization and the Environment Program, commended Levi's, noted that: "Levi's is pretty far ahead, as very few companies have given thought to indirect water use, especially through their supply chain." He went on to elaborate his own organizations work to create frameworks to help companies address these issues, which go beyond their own "water footprint".
Addressing indirect issues may be difficult for companies, as these issues may be outside their perceived "sphere of influence", but with large companies like Walmart and Levi's requiring suppliers to adhere to stricter environmental standards, hopefully this will become common practice.