Water Security, Water Funds and the Corporate Sector — an Inside Guide

The relevance of water security to the business sector

Inter-connectedness of certain key risks in 2019. Source: World Economic Forum
Infographic showing Water Risks to Business. Source: CEO Water Mandate
Water Risks to Business. Source: CEO Water Mandate

What is water security and where is the challenge?

Already, the World Business Council for Sustainable Development estimates that water shortages cost the global economy over US$323 billion annually. To put this into perspective, this is roughly double the value of the entire global wheat harvest (FAO, 2018).

Graphic showing the world and expected changes, per region, in GDP due to impending water scarcity
Estimated change in GDP due to water scarcity — business as usual vs. efficient water polices. Source: World Resources Institute.

By improving water security, businesses can help address some of these key risks.

Chart showing how water security can reduce global risks (as determined by the World Economic Forum)
The extent to which improved water security can address some of the top 10 risks in The World Economic Forum’s The Global Risk Report 2019 (scale = 1–3). Source: TNC

Water governance — a long-term challenge for business

“More than just a key resource for our business, water is a critical resource for the economic, social and environmental well-being of every community around the world. As the world’s leading brewer, we are committed to being a part of the solution to some of the growing water challenges in areas where we operate — but we know the scale of the global water challenge is bigger than any individual organization or sector, so engaging in collective action is a cornerstone of our approach.”

– Samantha Fahrbach, Global Director, Water & Sustainability Operations AB InBev

Unfortunately, strong water governance is often lacking.

The largest water users are agriculture and industry, where the private sector dominates. Clearly then, any efforts to address water security issues on a global scale will have to be multi-sector collaborations —and the private sector will need to be a key partner.

The existing poor state of water governance in many countries is a reflection of the complexity in addressing the problem.

Water funds — one mechanism via which businesses can engage

Water Funds unite the public and private sectors and civil society around the common goal of securing water for communities by protecting natural water systems in a way that promotes sustainable economic development.

How water funds channel finance from downstream beneficiaries to upstream communities that provide ecosystem services. Source: TNC.

Which for business means that, over time, the burden of investing in water security is shared with others.

[3 min video] Securing water and protecting watersheds in Arizona is a long-term commitment. With support from PepsiCo, The Nature Conservancy is working to find solutions that work for the environment and for farmers and communities. Click play to hear more about why this is important to the company and how they see this as a model for work globally.

How can Water Funds help business address water security and other issues?

Collective action is often required based on water challenges and degree of direct control. Source: TNC

Through participation in a Water Fund, companies can thus break down barriers to collective action and attain greater gains in water security than they can achieve by working on their own.

Organized on this scale, Water Fund activities ‘pay for themselves.’ For instance, 1 out of every 6 cities can pay for natural solutions through savings in water treatment costs alone.

Water Funds also improve the credibility and legitimacy of any actions to address water security, providing corporate partners with an improved legal and social license to operate.

How can a company contribute to a Water Fund?

Six ways that corporates can engage to support water funds and collective action. Source: TNC

Challenges in engaging via a Water Fund approach

Firstly, while Water Funds provide a strong base for stakeholders to improve their water security, they are not a one-size-fits-all tool.

Companies engaging via Water Funds must prepare for an ongoing campaign to educate decision-makers — both externally and internally — as to what Nature-based Solutions are and how they work.

It can be hard to reach consensus among stakeholders, especially in the early days of a Water Fund when partners are unfamiliar with working together.

It is crucial to effectively communicate throughout the company that collective action and systems-thinking approaches do take time, that behavior change can be slow and to set realistic expectations from the onset.

Finding out more, joining a community

Impact at this scale would equate to 70 million people with better water security, 150,000 people having improved livelihoods, 2 million hectares of watersheds protected across Africa, Asia and Latin America.

Together, we can amplify corporate action to address water security.

Map of TNC Water Funds, as of March 2020. Source: TNC















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