It’s time for business leaders to recognize water as the linchpin of business functionality it is, particularly in supply chains. As water resources come under increasing threat, a network approach to supply chain and water risk management will be essential.
Water is essential to supply chain functionality
Water availability and quality are fundamental to the health of business value chains, particularly global supply chains. Whether for food and beverage production, manufacturing processes, or cooling data centers, every business needs water to build economic value. Supply chains are unique because they depend on water in many ways across different water resource scenarios, making it challenging to understand and manage water resources effectively.
Plentiful clean water is also critical to the health of our workforces, the communities in which we operate, and the environments in which we live. We can no longer underestimate the value of our shared freshwater resources.
Be aware of growing water-related business risks
Water risk is growing in scarcity and quality. Today, 90% of climate impacts are water-related: Floods, droughts, severe weather, and resulting impacts such as freshwater contamination, saltwater intrusion, and aquifer depletion are threatening water resources and supply chain, and economic stability.
As evidenced by the recent United Nations Global Water Conference, leaders from government, business, and finance increasingly recognize the economic and human catastrophe on our doorstep. Water is at the center of future global economic growth and the health of our natural systems and communities.
Water risk includes a variety of risks
Water risk is not just operational or supply chain risk. As regulatory and financial institutions seek a greater understanding of environmental risks and consumers demand that companies act on them, water risk expands to include regulatory, financial, and reputational risks.
Although attention has thus far been paid to environmental impacts related to GHG emissions, as freshwater resources are increasingly threatened by climate change, increasing pollution, and population growth, forces are aligning to shift focus to water.
The World Economic Forum estimates that the cost of water risk to businesses will be five times higher for businesses that do not act now to mitigate those risks than for those that do. Assessing and mitigating business risk for your organization and supply network will be critical as we head into an uncertain water future. If you are a supplier, your corporate partners may soon require you to report your water risk.
Supply chains are network challenges – so is water
Like supply chains, water is a complex network challenge. Every use and user of water in your supply chain is interdependent on every other use and user. This extends to the watersheds and communities in which your assets are located, and in which your company invests.
Your company or supply chain partners may not create a water risk condition caused by industrial, chemical, or agricultural pollutants, but are nonetheless affected through proximity.
The key is to recognize that one cannot solve a water risk challenge affecting your supply chain alone. The whole network must pitch in. A linear solution, often used in the past, will not solve a network problem today or in the future. Effective solutions require participation and commitment from the whole network. For water, this means the whole watershed.
In my experience helping organize prominent business and community networks over the last 20 years, several principles are proven best practices.
Networks thrive through trust, transparency, recognition, and common cause
Trust. Trust will drive the participation of all users affected by watershed health. As respected author Steven Covey shares in the Speed of Trust, trust is not simply soft, feel-good emotions and public relations, but the proven performance of all network members based on known facts.
Authenticity is essential to building trust. Networks that self-organize versus result from programmatic dictates are more effective, and authentic. No one wants to be told what to do.
Transparency. Trust requires honesty based on transparency. We must know how stakeholders are affecting the watershed and how that watershed is affecting them. Building trust requires that we understand this. As water is a shared resource, we must have a foundation of common understanding to move forward in protecting and sharing those resources equitably.
Recognition. I often say that recognition is the most powerful emotion in the world. People love to be heard. It is wired into our DNA. Edward O. Wilson would use the term “eusocial.” Do you listen to the stakeholder networks in which you and your suppliers operate? Do you enable constructive participation?
Participation must be made simple and easy. People tend to embrace solutions in which they contribute to solution design. Low-cost, electronic means of participation – not long, contentious public meetings, go a long way toward driving participation and creating opportunities for recognition.
Common Cause. Common cause attracts organizations to each other. Corporate movement toward partnerships with government, NGOs and community groups enables networks to move faster, more productively, and effectively. As freshwater resources dwindle, these partnerships will be essential in driving action to understand and manage shared water resources within watersheds where suppliers operate.
Water Intelligence facilitates a network approach
The emerging field of water intelligence, the ability to aggregate copious amounts of water data from trusted sources and convert that data into clear, meaningful insights and applications, can facilitate the network approach needed to manage water risk, whether related to a supply chain or an entire value chain.
By bringing water data together and making it easily understandable to a wide audience, water intelligence delivers the information needed to create collective understanding. That collective understanding encourages network participation from stakeholders to grow and partnerships to form.
Decision intelligence based on data integration and AI learning has been common in other industries – Credit, Healthcare, Energy, Retail, and Finance as examples. Now, those advanced methods are coming to water.
As an ever-changing element significantly impacted by climate change and other macro factors, water is uniquely complex. For that reason, reliable water intelligence must be based on a phenomenological understanding of water and its impacts across all Earth system layers, geolocated everywhere in the world, delivered dynamically, in near real-time. As technology journalist Kara Swisher, opines, “Everything that can be digitized will be digitized.” Water is no exception.
Build your water network now to ensure a water-resilient future
Geoffrey Parker, a leader in supply chain innovation, says it well in his pre-eminent work, The Platform Revolution. We must look at supply chains through a new lens where we recognize that value and impacts come from different actors in the network demand-supply equation. Nowhere is that truer than in water.
To achieve tomorrow’s solutions, we must adopt new ways of doing things by enabling a wave of innovation to solve the biggest challenge of our time – the depletion of the freshwater resources on which the world depends.
Water Intelligence is at the core of this enablement. It provides the facts and prognosticates the future. It helps us build the network capital we need to collectively drive economic growth by lowering water risk in supply chains and throughout the value chain. Water intelligence can help us make the best possible decisions as we seek to preserve and leverage our most precious resource – water.
Kim Patrick Kobza is a co-founder and CEO of True Elements.
A technology and social impact entrepreneur, he was co-founder and CEO of Neighborhood America, a SaaS pioneer building public communications systems for major media and commercial applications. Neighborhood America built systems for Imagine New York (World Trade Center), Statute of Liberty and American Express, among others, and received three SIIA awards.
Mr. Kobza then founded Innovation that Matters, a social impact portfolio, and was awarded Florida’s SIIA Entrepreneur of the Year.
He has a B.S. in Economics, Math, and Earth Sciences (Central Michigan University) and a J.D. (Wayne State University).
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