Global demand for freshwater will exceed supply by 40 percent by 2030, according to the Water Resources Group, with potentially calamitous implications for business, society and the environment. When compared with the more gradual and indirect implications of climate change, water scarcity seems not only a more immediate issue, but also a more manageable one.
Like other sustainability megaforces, water scarcity brings both risks and opportunities for businesses. Diminishing water supplies can disrupt – or even curtail – business operations, power generation capacity and the supply of key business inputs. Simply put: no water, no products, no business.
Water scarcity also brings about a number of indirect impacts. Governments are already introducing regulations to manage supplies more effectively which, in turn, are creating new compliance requirements and cost increases for businesses. For example, in 2008, the Portuguese government introduced a tax on major water users in agriculture and industry. More recently, in June 2012, China announced that it will adopt high water rates for water-intensive industries and will encourage the reuse of recycled water. And Singapore’s regulators have priced water to reflect its scarcity value.
At KPMG, we believe that companies need to demonstrate a robust response to water scarcity through their corporate reporting in order to convince investors of future growth and profitability.