In early 2018, four million residents of Cape Town, South Africa, faced an impossible situation: The city’s reservoirs fell to dangerously low levels. The metropolis was officially running out of water — the first major urban area projected to do so — and was projected to reach so-called Day Zero by April. The city acted fast, limiting water use to 50 liters per person per day in February 2018, and made plans to shut off municipal water supplies, instead asking citizens to pick up water rations at collection points. However, the moves weren’t quick enough for some: According to a McKinsey report, businesses lost up to $400 million in sales and exports that quarter as farms suffered; for at least one business, losses accounted for 25% of revenue.
Day Zero was ultimately avoided in Cape Town as summer rains fell and refilled the city’s reservoirs, but the impact to business remains a potent reminder for companies around the globe who will need to seek solutions to a parched future, especially in arid urban areas like Los Angeles, New York, Istanbul, London and others. “Any company, really no matter what sector, needs a clean and abundant supply of water to survive,” says Kirsten James, director of the water program at Ceres, a nonprofit focused on climate change solutions.
To be sure, businesses rely on water for their products — from dishwashing detergents to coffee — and in their supply chain; water scarcity could easily upend companies. But unlike other issues of climate change, such as carbon dioxide release, water is location-specific, making it a more complicated issue: There isn’t always a single, global solution, especially as it can impact businesses in different ways. “When you don’t have enough water for local population basic needs and agriculture, it can create a lot of tension between stakeholders,” says McKinsey partner Kun Lueck. Such tension can manifest in more than one way: A backlash against workers by local residents for contributing to the community’s water woes; or regulatory pressure and even license revocation.
Water also feeds into climate change: homes overall likely produce more greenhouse gas emissions than the entire airline industry because of the energy consumption involved in heating water for showering, hand-washing or laundering, says Frantz Beznik, head of sustainable innovation at Procter & Gamble. Businesses use double the amount of water as homes, while agriculture — which may play into businesses’ supply chains or even produce their products — accounts for 70% of use. And a global climate with more mood swings — heavy rains followed by long periods of minimal precipitation and higher temperatures — leaves less water for use by people, especially in cities. Water is also an old-energy problem, too, as it’s used in the extraction and processing of fossil fuels. Says Lueck, “If we don’t change our energy mix, we won’t be able to sustain the amount of water that’s needed.”
While businesses are increasingly focused on cutting their carbon usage to move to a greener future, they haven’t always viewed water through the same lens, says Lueck. The mindset of water based on a couple centuries ago, on a more outdated way of thinking, she says: “Water was considered a free resource.”
But for companies and people alike, the risk is real: In its 2020 Global Risk Report, the World Economic Forum ranks water crises higher than terrorism, financial crises, and energy price shocks.
By 2025, as many as 3.5 billion people could experience water scarcity, according to the World Resources Institute. Water demand is projected to rise 50% by 2030, but water supplies physically cannot grow in parallel. And cities are the first places the impact will be felt: 14 of the world’s 20 largest cities are already experiencing water scarcity. Solving the issue of water scarcity isn’t straightforward. In some areas, water may be plentiful, but companies may have approvals to discharge toxins into the water supply. And who within the company is supposed to make a difference? “For a plant manager in a water-stressed area, they need to balance the immediate need of ‘I have to keep the plant running’ with questions of what to do when they recognize a problem,” notes Lueck. “Who does the manager talk to? Farmers? The municipality? It’s hard to find a solution when it’s not clear what the channel is.”
Lueck and James agree that the solutions are complicated yet possible, mostly through partnerships with other businesses as well as entities like the World Health Organization. Change the Course is a group launched by the World Health Organization that focuses on public awareness around water usage and which brings together corporations, conservation organizations and the public to raise awareness about freshwater scarcity. The organization is working with Cascade and others to ask people to skip pre-rinsing dishes before loading them in the dishwasher, and generally to use the dishwasher more than hand-washing.
Another effort is the 50L Home coalition, spearheaded by P&G, which seeks to improve water and energy efficiency as well as awareness around water scarcity. 50L stands for 50 liters — an aspired amount of water use per day, per person. (It’s also the amount allotted during the Day Zero run-up in Cape Town.) A 10-minute shower with a regular shower head can use up to 100 liters of water, so the reduction to a sustainable level may feel steep. Working together with multiple companies and organizations can help improve efficiencies across peoples’ homes — as well as educate a public to be more mindful about water use — such that 50L of daily water living per person per day can ultimately feel like 500L.
Some potential areas of innovation, says Beznik, are reducing hot water through better efficiency in washing detergents, removing water from products like waterless shampoos, and reusing water from showers or laundry multiple times within homes. “P&G is a water cleaning company too,” says Beznik, “the last step between consumer and sewages — so we want to rethink how we best use and reuse water in the home.”
The efforts to drive down water use may eventually prevent more Day Zeroes from popping up around the globe — and they can also contribute to a more sustainable future overall.
Businesses have a chance to help lead the charge both for their own interests and the broader world, says James. “We really need companies to help us be part of the solution,” she says, “because not only are they looking at their own risks around water that’s clean and secure, but also thinking of the communities that they serve.”
