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India Inc underestimating water-related risks, says study

Under the circumstances, have corporate houses in India taken note of the looming problem? Not really, says a report by CDP-a non-profit organisation that works to prevent dangerous climate change and protect natural resources by transforming the way the world does business.

N Madhavan        Last Updated: March 19, 2014  | 15:22 IST

India has just four per cent of world's water but has to cater to 16 per cent of the global population. This has meant a steady decrease in per capita water availability. Today, nearly 50 per cent of villages do not have access to safe drinking water. By the year, 2020 India is expected to become a water scarce nation. Even worse, 2030 Water Resources Group estimates that by 2030, demand for water in India will outstrip supply by as much as 50 per cent.

Under the circumstances, have corporate houses in India taken note of the looming problem? Not really, says a report by CDP-a non-profit organisation that works to prevent dangerous climate change and protect natural resources by transforming the way the world does business. In its report 'Safeguarding India's Water Resources', it says that companies are actually underestimating water related risks.

For instance, companies like Coca Cola and Pepsi have both announced plans to invest $5 billion in India by 2020. However, India's growing water shortage and the highly emotive politics over access to water could pose a problem for these companies' ambitious growth plans, says the report.

"India's economic growth and political stability are at stake in the coming years if it does not change its approach to water management. The water crisis can be alleviated but to do this, a more structured way of thinking with increased momentum is required. The bottom-line is we need to act now," warns the CDP report.

The report says that water has dramatically risen in the political agenda in India with the country's 12th Five Year Plan seeking a paradigm shift in the management of water resources. The government of India has proposed to set up a 'bureau of water use efficiency' to oversee a 20 per cent reduction in water use by industry as an initial target. Industry, the report says, has a significant role to play in reducing water consumption and initiating greater recourse to water recycling and re-use.

This, the report says, will not be possible unless Indian companies improve their measurement of water use. "Currently, the lack of a robust, standardised and centralised system  for corporate water disclosure  in India, has created serious gaps and inadequacies in the availability, scope, coverage and quality of water data collected," says Raajeev Batra, Partner and Head, Governance Risk and Compliance Services, Climate Change and Sustainability, KPMG which has partnered with CDP to produce this report.

The report also says that pressure is growing on companies to build long-term resilience to water challenges into their business. "Companies with robust water stewardship strategies are characterised by having comprehensive knowledge of water use across their value chain and the impact (current and projected) that water related issues have on their business and vice versa" it says. The need of the hour is better understanding of water measurement techniques, risk identification and greater transparency in reporting by companies.

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