The W ater Margin奥尔良鸡翅怎么做
How Strategic Management of W ater can Grow Business Value
Contents
Executive Summary (1)
供水管网
Forces for Change (3)
Preparing to Respond (4)
Strategic Options, New Concepts
and Smart Choices (6)爬山作文
Proven Opportunities for
Value Creation and Innovation (8)
Perhaps Not Now – But When? (8)
Contacts (9)
Authors:
Richard Skidmore, Melissa Barrett, Pancho Ndebele and David Lyon
The Water Margin
2
Behind the increasing number of news stories devoted to storms, hurricanes, droughts and floods lies a sobering fact for business. Water is a vital input for nearly every industry in the 21st century and incread variability in the quantity and quality of water available is making day-to-day operations more challenging. As we look to the future, the situation is t to become even more demanding.
In a report of the 2008 “T op Risks” investment conference organized by Goldman Sachs, resource scarcity – including water – came first. According to the UN Environment Programme (UNEP)1, a combination of economic and demographic trends is pushing global water consumption upward at twice the speed of population growth. Further pressure on water resources comes from pollution and changing climate patterns. It is estimated that, by 2025 up to two-thirds of the world’s population could be facing rious water shortages, with one-third of tho in situations of absolute water scarcity. Meanwhile, and within the same timeframe, volumes of waste water generated by industry are likely to be around double tho recorded today. The conquences of this crisis are already being realized. Many regions globally are already facing water scarcity (e Figure 1 below).
More and more companies are finding that water is an immediate issue of concern. At Arthur D. Little, we believe that water management should receive priority status; failing to do so could leave a company expod to rious challenges over water curity, regulation, supply chain risks, expectations and local vulnerabilities.
n
W
ater Security – Water curity is necessarily one of the biggest forces driving management decisions in many industries. Strategies and plans need to be able to accommodate the possibility of there being too much, too little or of poor quality. Given current climatic events, in some regions it is necessary to be able to respond to all scenarios. Some companies have already borne the brunt of such water related risks. Electricité de France suffered loss in the region of €300 million when it had to shut down a quarter of its 58 nuclear plants due to water shortages 2.
A s water demand and scarcity increas, water price will ri and companies will be expod to incread operating costs, varying across regions. Companies that do not anticipate the changes are expod to higher costs
and suppresd growth. The economics of certain industries are already being noticeably distorted by the link between water curity and the price of core products.
Forces for Change
1 Half Full or Half Empty? UNEP Finance Initiative, October 2007
2
Watching Water – A Guide to Evaluating Corporate Risks in a Thirsty World , JP Morgan, March 2008
The Water Margin
n R egulation – Regulation on water u and disposal – especially in regions with vere drought – is becoming
more stringent as expectations continue to ri in society
and among politicians that business need to play their
part to prerve and care for the environment. Regulatory
respons include permits, prices, ur fees, penalties,
expansion restrictions and higher transaction costs.
As water scarcity increas, companies need to
understand how the will affect their value chain
to avoid costly pitfalls.
n S upply Chain – In our experience companies often overlook the supply chain3. We believe, however, that
focus on suppliers is esntial as water u is often
highest upstream of a company’s own process.
A recent drought in the Pacific Northwest of the USA
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negatively affected Anheur-Busch’s brewing operations
and incread production costs, mainly by affecting the
supply chain. Supplies of barley decread owing to
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– a highly energy-intensive process supported by
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resulting in higher costs of packaging4.
n A wareness and Expectations – Awareness and expectations of both consumers and investors continues
to grow. How business are dealing with water is achieving global attention and shareholders are becoming increasingly demanding. A group of PepsiCo shareowners recently filed
a resolution asking the company to report on the business
risk of water u throughout its supply chain. The resolution also asks the company to disclo its “current policies and procedures for mitigating the impact of operations on local communities in areas of water scarcity”4.
A dditionally, awareness amongst consumers is rising and
debates about product air miles will soon start to include
the virtual water embedded in imported products.
C ompanies like Starbucks – pilloried in the UK media in 2008
for its global policy of washing utensils in a dipper well with continuous running water – are realizing that recognized
good practice (in this ca, meeting health standards) is
not enough: consumers need to feel comfortable with the means ud to achieve it as well. Disclosure of water related activities is therefore likely to come under increasing scrutiny over the next 3 years.
n L ocal Vulnerabilities – Water is a local issue. The direct regional socio-economic impacts of a company’s business
therefore need to riously consider local vulnerabilities
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with respect to water. In areas where water curity is low, competition for water will be high. Perrier Group (a subsidiary of Nestlé) were challenged by local communities regarding their water consumption. Fears that local wells, wetland
and streams will dry out ignited action against the company with lawsuits raid regarding their pumping and bottling
operations for bottled water. A Mecosta County Court
ruled against Nestlé Waters North America resulting in four springwater wells shutting down. Companies that apply
a global “one size fits all” policy across all operations
in all regions are expod to significant risk.
As ever, change on such a scale prents business with opportunities as well as challenges. In our view, dealing with the challenges and harnessing the opportunities in any company is only made possible by taking a whole-business, strategic approach that starts at Board level. Prefaced by a thorough investigation of relevant internal and external realities, such an approach will incorporate the best available options to balance investment costs against business benefits in smart decision-making for short, medium and long term gain.
One thing is certain: water – as both a constraint and a stimulus for business, social and political activity – is not going to go away.
3 Green Purchasing Power, Arthur D. Little 2008
4 Social Funds (SRI World Group)
3
