A New Lens on Sustainability

It is commonly thought that environmental and sustainability initiatives are the focus of non-profit organizations. However, when we take a closer look at the impact that some of these environmental issues can have on the business world, the picture becomes much different. There are currently 1.1 billion people who lack access to clean water. By 2025, two-thirds of the world’s population will live under water scarcity. At first glance, this may appear to be a social problem of the developing world. However, this is a global problem that will have social and economic implications if conscious efforts are not taken against the trend.

The water shortage issue can be divided into two business segments: those who will experience a direct effect from water scarcity; and those who will feel the impact from their suppliers. Distilleries are an example of those who will experience a direct effect of the water scarcity issue. Distillation processes use a significant amount of water in their cooling systems. With time, it is likely that prices per unit of water will increase to encourage businesses to be more conservative in their use. However, for businesses, in which water plays a direct role in their production, this will have significant impact on their costs and decrease their margins.

The second segment affected by the crisis will be businesses, whose suppliers feel the impact. The water crisis will lead to a number of businesses having to make significant investments in technology to recycle the water they are currently using, or to improve water accessibility. Either way, these costs will need to be recovered and will most likely show up in the prices that end users pay. This will weaken the power of smaller companies who lack the large economies of scale necessary to absorb these higher costs.

The important questions for today’s businesses should focus on redesigning the processes and strategies that not only drive profitability, but ensure sustainability. For example, production facilities can investigate innovative mechanisms that recycle water. Specifically, distillers should look into implementing cooling systems that reuse water instead of drawing from a new source each time. There are conscious steps you can take in your own business to minimize the impact of water scarcity on your profits. Here are six from the Beverage Industry Environmental Roundtable (BIER):

Six Principles of World Class Water Stewardship in the Beverage Industry

Leaders Act with the understanding that:

Water is a finite and shared resource
Continuous improvement of water efficiency is fundamental to operational excellence

Leaders Engage and Communicate with the understanding that:

Community engagement is essential for sustained solutions
Partnerships lead to more effective water management
Open and honest communications define transparency

Leaders Work to Influence with the understanding that:

Responsibility for water stewardship extends throughout the value chain

(BIER) is a coalition of beverage industry companies and supporting partners that work together on a variety of environmental and stewardship initiatives in three core areas: Water Stewardship, Energy and Climate Change, and Stakeholder Engagement. For more, visit: http://bieroundtable.com.

It is time to breathe new life into the old and more traditional ways of doing business. As business leaders of the future, it is imperative that we focus on the triple bottom line: people, planet and profit.

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Renee delCastillo

Renee del Castillo is an MBA candidate at the College of William and Mary's Mason School of Business.

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