Sink or Swim

If the noughties were all about carbon, the environmental issue that will define the current decade is almost certain to be water. But there’s more to tackling your water use than turning the taps off, says Nick Hughes.


When the chief executive of Nestle claims that “water will run out before oil” and the head of PepsiCo states that the world water crisis is “one of the most pressing issues of our time” it shines a light on just how high up the corporate agenda the issue of water scarcity has risen.


Water is now a boardroom issue for food businesses; and for good reason. Agriculture is responsible for 70 per cent of global water use; a surprising statistic perhaps, but less so when you consider that just 1kg of beef requires up to 20,000 litres of water to produce.


“As an industry we use a lot of water,” says Joanne Denney-Finch, chief executive of food experts IGD. “As the triple challenge of climate change, global development and a rising world population really start to impact the supply of water, it could become a bigger challenge for food and grocery companies than anything we have seen for decades.”


There are signs over recent years that the food industry is starting to take the issue of water scarcity seriously. Forty food manufacturers are signatories of the Federation House Commitment, a joint initiative between the Food and Drink Federation and Envirowise, the goal of which is to reduce industry-wide water use by 20 per cent by 2020 against a 2007 baseline. The IGD, meanwhile, has formed a water working group within its industry sustainability group with the aim of understanding the impact of water on the grocery supply chain.


Such initiatives, and others like them, have produced plenty of examples of good practice in food sector water management. However, there remains a lingering suspicion that the industry, and the foodservice sector in particular, has yet to fully understand where it stands in the water equation. “Water is certainly moving up the agenda as a sustainability issue generally, however, in reality the majority of players in the food sector are struggling to work out how to get to the meat of the problem,” says Mark Line, executive chairman of sustainability consultants Two Tomorrows.


A trawl through foodservice companies’ sustainability reports shows a broad willingness to commit to evaluations and improvement actions which relate to companies’ own operations. In its 2009 sustainability report, Compass Group set itself the target to track and measure annual office water consumption and to identify opportunities for improvement; Lamb Weston has committed to reducing water usage by 15 per cent by 2015; Sodexo has promised to develop common resources to assess the water footprint of selected offices and shape water conservation and management programmes at its sites; while Starbucks – hammered by the press in 2008 for its policy of leaving taps permanently running in a “dipper well” to clean coffee making utensils – now uses a blast of higher-pressure water to clean equipment and has committed to reducing its water usage by 15 per cent in company-owned stores by 2012.


Such pledges and actions are all worthwhile and will form part of the solution but they only look at one aspect of the problem, namely the water usage under direct control of the business. The issue with water is that the vast majority of the impact lies in the supply chain – in crop irrigation, harvesting and transportation, which often take place on the other side of the world beyond the influence of foodservice operators.


Stuart Orr, freshwater manager at WWF International, believes there remains a detachment from foodservice operators when it comes to issues at the production end of the food chain. “With foodservice you’ve got the issue of what’s in their direct control, what’s in their supply chain, how much they can have leverage on improvement, to what extent they think there’s a business case for this, to what extent they actually face the risk themselves or their suppliers face the risk. All these things are really up for grabs right now.”


Part of the challenge that foodservice operators face is in understanding the complexities of their indirect water usage. The further away from the core business that companies travel, the more difficult it is to understand what’s going on, says Two Tomorrows’ Line. That’s why some have started using new tools to assess their water risks, impacts and opportunities outside the four walls of their operations.


The concept of measuring a business’s water footprint, for instance, is a relatively new one but progress is being made on the methodologies. The Water Footprint Network, a collaboration of businesses and scientists, recently published its ‘state of the art’ manual to help standardise the measurement of water. Executive Director Ruth Mathews says the 139-page document will help more companies understand in more detail what their water use is, and guide them to take the most significant steps toward good water stewardship.


Indeed, there is much more to a water footprint, than a carbon footprint. A kilogram of carbon-dioxide emitted in Israel or Spain has exactly the same impact on the atmosphere and climate change as a kilogram of carbon-dioxide emitted in New Zealand or Scotland. However, with water, the impact will depend on the degree of water scarcity in the area it’s taken from, or released in – as well as the time it is taken and the type of water.


Companies are beginning to make stabs at calculating their own water footprint to better understand where their water consumption has the greatest impact. SAB Miller, a pioneer in this field, worked with WWF on calculating the footprint of beer; they discovered that it takes 155 litres for one litre of beer in such as Castle lager and Carling Black Label. The vast majority of this (98.3 per cent) comes from the cultivation of crops, both local and imported. However, for Plzensky Prazdroj, SABMiller’s Czech operation and home of Pilsner Urquell, the overall water footprint is significantly smaller at 45 litres of water to every 1 litre of beer. This difference is due to a number of factors including weather, the reliance on irrigation in South Africa and the proportion and origin of imported crops.


SAB Miller global head of sustainable development, Andy Wales, says the numbers can raise awareness, but it is more about the insight that calculating it gives into SAB’s business risks in the future. “Water footprinting enables us to understand which parts of our supply chain might face water scarcity, or poor water quality, in the future, and means that we can plan now to deal with these future challenges.”


Nestlé, meanwhile, has carried out a water footprint study on Shredded Wheat working in partnership with WWF. The project quantified the water usage over the lifecycle of the product and found that the total water footprint of a 750g carton of Bitesize Shredded Wheat equates to 274 litres of water per packet when served with semi-skimmed milk. Nestlé’s ultimate aim is to achieve a reduction of total water consumption of 30 per cent against a baseline of 2006 by 2020. “We take access to fresh water for granted in countries like the UK and Ireland but we all need to value water more and, for Nestle, this means sharing good water management techniques throughout our supply chain,” says Inder Poonaji, head of health and environmental sustainability at Nestlé UK and Ireland.


It’s noticeable that the leaders in the field of water footprinting are suppliers, particularly of commodity-based products, who are most exposed to disruptions in the supply of water. But for the majority, water footprinting remains a concept of the future, albeit one that companies are becoming increasingly aware of. Sodexo, for example, is currently working on a methodology to define its water footprint and developing a strategy to reduce the impact of production on water stressed areas, according to environmental manager Paul Bracegirdle.


Two Tomorrows’ Line believes that to achieve widespread industry buy-in, a common standard for water footprinting is required from which best practice will emerge from those companies, such as soft drinks manufacturers, most at risk from water scarcity. WWF’s Orr, however, believes holding out for a common standard is a convenient excuse for companies to sit on the sidelines and wait for others to lead. “I think we all know how to calculate how much water is in the crop, that’s been understood for a very long time. I think it’s a weak excuse to say I’m going to wait for the standard to come out.”


Currently, consumer understanding of water is nowhere near what it is for carbon but Orr believes as more sophisticated tools for measuring water are developed, the investor community will begin to ask a lot more searching questions around companies’ water usage. “My message to businesses is if you’re not going to figure out your supply chains within a couple of years your public is going to do it for you,” he says.


If the environmental and financial arguments aren’t sufficiently persuasive for foodservice operators to look more closely at their water efficiency, perhaps it’s the reputational argument that will finally open the floodgates.