Both businesses and suppliers need a better understanding of water-related supply chain risk, according to research.
A brief by Sedex Global and the World Wildlife Fund concluded although positive efforts are being made to manage and set targets around water risks such as scarcity, drought, flooding and infrastructure decay, more collaborative systems are needed to help suppliers ensure environmental legal requirements are met.
The briefing analysed data from over 20,000 audits on supply chains looking at how water is managed.
The report said understanding water risk and how it relates to business operations was important for all companies, especially as global water demand is predicted to rise 55 per cent between 2000 and 2050. Better understanding of local water issues enables appropriate stewardship strategies, it said.
Most respondents to Sedex’s self-assessment questionnaire said they did not believe themselves to be located in a particularly water stressed area and 97 per cent of respondents said that they meet all relevant requirements.
Despite this, the brief concluded that most non-compliance of environmental regulations was down to lack of supplier understanding of relevant laws.
But Sedex also predicted more robust practices would be put in place as the awareness of water scarcity increased. Some 86 per cent of supplier respondents have a senior manager or board member responsible for water concerns. It found three quarters are looking at water related risks and 73 per cent are setting targets in relation to their findings.
The briefing also includes studies of the partnership between Sedex members Marks & Spencer and Woolworths (South Africa) with WWF and the Alliance for Water Stewardship in South Africa’s Western Cape as an example of successful collaboration.
The project worked with nine South African farmers in the stone fruit supply chain to help assess their water usage and identify opportunities for improvements, as well as bringing the farmers together with other catchment stakeholders to assess the wider catchment risks.
“Water-related supply chain risks can have a profound impact on companies by affecting profitability, brand value and even ability to operate ”, said Marianne Voss, report co-author at Sedex. “Good examples from Sedex’s global membership and beyond highlight how capacity building can aid suppliers’ understanding and further collaboration on a local, river basin level as well as on a bigger scale.”