Water Resilience Is the Next Competitive Advantage for Business
At the end of last year, I had the pleasure of working on a policy brief for the Water Resilience Tracker programme entitled “Scaling Water and Climate Resilience: Tools to Link National Strategies to Local Realities.” It provided important recommendations for strengthening collaboration between national and sub-national entities, addressing most specifically the policy environment in the public sphere. It identified important enablers like clear communication around shared knowledge, learning and access to information to build transparency and trust for informed decision-making.
Fast Forward to this year, where I have been spending several months scoping climate risk and resilience opportunities on four specific subnational sites for a major multinational consumer goods company. Through this work, it has become evident that the private sector has a more important role to play in strengthening water and climate resilience than we often acknowledge or give space to. But, it is also evident that companies often need guidance in navigating the complexities of engagement in policy spaces.
So what can companies do to contribute to strengthening resilience?
Most companies still think about water as an operational issue, one that seeks to maintain the status quo under expected conditions. Can we reduce consumption? Improve efficiency? Replenish what we use? These kinds of goals are quickly outdated as we prepare for a world where the past is no longer a good frame of reference for the future.
Resilience, as opposed to sustainability or adaptation, asks how society, and the businesses operating within it, can continue to thrive when today’s assumptions no longer hold. What happens if groundwater abstraction is restricted for industrial use? How resilient are supply chains during several consecutive years of drought? How would operations respond if energy shortages, water shortages and regulatory changes occurred simultaneously? These are not engineering questions alone. The ability to anticipate, absorb, adapt and transform in response to these interconnected shocks requires flexibility and learning, not simply optimization.
Water challenges rarely begin—or end—inside company boundaries. To be effective, the formulation of a company’s water footprint or corporate water stewardship strategy needs to take into account a broader set of externalities, acknowledging and integrating policy and political environments and locally lived experiences. The question is no longer whether companies should manage water better. The question is whether they are prepared for a future in which water itself has become increasingly unpredictable and if they are equipped to contribute to their knowledge and expertise to the discussion.
Water problems are governance problems
One of the strongest messages emerging from both research and practice is that water crises are rarely caused by hydrology alone. Climate change certainly alters rainfall patterns and river flows, but whether those changes become economic crises depends largely on governance. Forward-looking companies increasingly recognize that long-term business resilience depends on the resilience of the wider watershed and policy environment.
Across very different regions, businesses are encountering remarkably similar challenges: fragmented institutions, overlapping mandates, ageing infrastructure, evolving abstraction rules and limited coordination between water, agriculture, energy and climate policy. In many cases, uncertainty about future regulation or its enforcement presents as much risk as uncertainty about future rainfall.
Doesn’t it logically follow, then, that businesses, as stakeholders whose activities depend on the stability of the institutions in the places they are implanted, should be able to participate more actively in policy formulation? Forward-looking companies are beginning to do just that, not to lobby for exceptions, but to contribute operational knowledge, often providing information not even available to public entities, which helps to shape practical, implementable policy. Companies can also seek to reinforce resilience by supporting institutions to learn, coordinate and adapt. The most resilient organizations will not simply comply with future governance systems. They will help build them, and build them in a way that prevents abuse and protects from corruption, while maintaining progress on existing climate commitments.
Business can also create important linkages across governance levels. Where national, river basin, city and community institutions are siloed, business can provide important bridges across all these levels to improve communication and knowledge sharing and strengthen resilience. Businesses possess great operational expertise, technical knowledge and long investment horizons that governments increasingly need as they develop climate adaptation strategies. Water resilience is ultimately a shared outcome.
Resilience is, however, not an endpoint, but rather a continuous learning process. Climate uncertainty means that no organization can predict exactly what lies ahead. The competitive advantage of the future, therefore, lies not in having the most efficient operation, but rather having the strategic capabilities to adapt. Resilience comes from building the capacity to respond to unexpected conditions through, for example, scenario planning, stress testing, collaborative governance and adaptive management.
It is helping build governance systems that remain effective under increasing climatic uncertainty. That is the real message emerging from both Water Resilience from National to Local and practical experience across multiple regions: resilience is no longer simply about surviving shocks. It is about creating institutions, partnerships and decision-making systems capable of navigating and thriving within continual change. We all have a role to play in that.