Tapping into Water, Tools to Manage Climate Change and Other Risks

When Anheuser-Busch InBev (NYSE:BUD) was looking recently to assess the risk to vital supplies of barley, a key ingredient in Budweiser beer, the company needed a swift, easy way to calculate current and future supplies of water to barley-growing regions across the world.

They turned to a recently developed web site called Aqueduct, produced by a Washington-based non-profit called the World Resources Institute, and funded largely by corporations including Goldman Sachs (NYSE:GS).

A mapping tool that helps identify global water risk for companies, investors and government agencies, Aqueduct is constantly updated with peer-reviewed academic data, and information from the U.S. space agency NASA, United Nations agencies and scientific centers around the globe, helping companies and communities plan their growth around the expected development of water resources.

"With beverage companies, 90 percent or more of their raw materials is water," says Nick Martin, the head of the sustainability practice at Antea Group, an international engineering consulting firm. For one multinational consumer products client, Martin said he used Aqueduct to help review over 4,000 facilities that belonged to the company or its suppliers to assess the risk of climate change and water supplies to the client's business.

A user can screen the globe for everything from the physical risk that water resources may dry up over a given time frame, to the risk that governments may interfere with a company's water use. Dozens of maps and data points can be assembled to give a picture of water risk for nearly any industrial project.

Special pages on the site show water risk for everything from shale gas extraction to flooding and rising seas.

A lot of the stress comes from areas where a casual observer might least expect it - the Boston to Washington corridor and the Great Lakes area are both at high risk of pollution damaging their water supplies.

The need for data to figure this one out is clear. Last week, Secretary of State John Kerry warned at a conference on food security that "the horrific refugee situation we're facing today will pale in comparison to the mass migrations that intense droughts, sea-level rise and other impacts of climate change are likely to bring about.''

The biggest users of the tool are two to three dozen multinational companies that depend on vast quantities of water in their day-to-day operations, and get "bottom-line value" from knowing what will happen to their water supply, says Maddocks.

Proctor & Gamble (NYSE:PG) used the Aqueduct tool to gauge how much water its factories were using for production, cooling and cleaning and figured out where they needed to reduce water usage and help educate other companies in the area - as well as consumers - on how to do more with less water, said Maddocks.

With Anheuser-Busch's barley survey, once the results came in, Maddocks said, the company was able to determine how much to spend  and when to reach out to other farmers in the areas to see how they could all use water more efficiently.  "It can very quickly and scientifically identify where you can focus your time and money to reduce water risk," he said. That's increasingly important as resources become scarcer and more companies pay attention to the green column of their ledger - the environmental, social and governance aspects.

"It's just good business," says Martin of the Antea Group. "Resiliency is what it's all about - you can have the perfect facility, but you need to have the watershed conditions where your suppliers are, because your suppliers and your facility can be at risk."