Fueling Water and Business Growth

How do companies with ambitious global growth strategies secure the water they need to fuel business growth in a world where simply paying more for water will not work?

The answer resides in why and how companies align their water stewardship strategies to support their business growth strategies. This alignment is built upon two key actions. First, companies that synchronize water stewardship strategy with growth strategy can benefit from considering and quantifying water’s full business value, moving beyond the price of water to take into account water’s various impacts on operations, value chain, brand, and growth prospects. Second, companies that depend on water would also benefit from proactively leadingcollective action initiatives with stakeholders across their value chain within the watersheds in which they operate. Actions in these two areas go well beyond most companies’ current thinking on water management, which focuses primarily on water efficiency and reuse and recycling within their operations.

A “license-to-grow” model

Considering water as a scarce resource necessary for growth brings into sharp focus the particular issues organizations must face when operational or economic logic is insufficient to support business growth. Where water scarcity is concerned, we have observed that firms generally follow the trajectory described by the maturity model.

Managing water scarcity and driving growth: What are the critical business decisions?

Companies whose operations and growth depend on water should also be aware of where they fall along the stages of maturity outlined above. Understanding where a company sits on the maturity model can help frame the steps needed to address water risk and to align its water strategy with its business growth strategy.

For companies looking to leverage their water strategy to drive business growth, I recommend asking the following questions as they relate to the value chain:

• What or who do water prices depend upon?
• How likely are prices to fluctuate and why?
• What are the water scarcity risks common to all users?
• What water scarcity-related risks are particular to one’s own company?
• How severe are these risks to the way the company does business today?
• How severe are these risks to prospects for future growth?
• What is the value of water to the company’s business and growth strategy?
• Where will engagement with stakeholders increase the overall value of this resource to the firm (including increases in value driven by risk and cost reductions)?

You can’t always buy what you need, but with an understanding of the business value of water and an enterprise-wide strategy to engage with stakeholders, you may be able to secure a long-term supply of the water you need to support business growth.

William Sarni is director and practice leader of enterprise water strategy at Deloitte Consulting LLP. He focuses on water stewardship strategies as a driver for economic and business growth and in addressing access to safe water, sanitation and hygiene. A version of this post originally appeared in the July 2014 issue of Deloitte Review.