Unlocking The Potential Of Corporate Funding To Address Water Challenges — Part 1: Understanding Corporate Water Stewardship
By Patricia Whitby, PhD and Carla De Las Casas, PhD
This three-part series explores how corporations are voluntarily investing in projects that address water risk while demonstrating responsible leadership. Funding from corporate water stewardship (CWS) programs earmarked to address local water challenges has the potential to catalyze innovation in water management. Hence, CWS has important implications for non-governmental organizations (NGOs), utilities, and municipalities who can leverage these funds to drive meaningful positive impacts for the benefit of communities and our environment.
Corporate water stewardship (CWS) is the practice of responsible and sustainable management of water resources by businesses. CWS aims to protect the availability and quality of water for the well-being of people and the environment. As climate change increases the complexity of water supply management and drives watershed stakeholders to explore new and innovative collaborations, CWS presents itself as a new driver for collective action.
According to the United Nations, global demand for freshwater in 2030 is projected to exceed available supplies by 40%, with more than 2 billion people worldwide already living in water-scarce areas. Worsening conditions impact everyone, from communities and the public utilities that serve them, to private corporations facing operational and financial risk related to water availability, quality, management, and access concerns.
Historically, local governments and water utilities have been responsible for establishing sustainable practices and building resilient communities and ecosystems. But with climate change impacts accelerating, CWS programs have emerged as vehicles for businesses to manage risk and demonstrate responsible leadership. Through CWS programs, companies are not only implementing water efficiency measures to reduce operational footprints but also investing in local community projects to broaden their impact. An influx of funds from private CWS programs offers utilities the opportunity to prioritize innovation and demonstration-scale projects that are difficult to implement as part of capital improvement plans, and complements recent billion-dollar investments from the federal government. In other words, CWS has the potential to trigger a transformation in the way utilities manage our water systems.
Drivers For Corporate Water Stewardship
Over the last two decades, corporate interest in CWS programs has grown. Its benefits are two-pronged: It helps companies to address water-related risks to operations, and to mitigate adverse impacts that business operations may have on the watersheds where they operate.
CWS programs typically involve engaging with watershed stakeholders such as utilities, municipalities, and non-governmental organizations (NGOs), often with a dedicated budget to support water management activities. This type of engagement supports environmental, social, and governance (ESG) initiatives for building resilience, demonstrates commitment to water sustainability, and actively contributes to solving our shared water challenges.
Even though CWS programs are currently voluntary initiatives, additional drivers include evolving regulations and shareholder expectations. New mandates such as the recent Securities and Exchange Commission Climate-Related Disclosure Rule aim to standardize the disclosure of the climate-related risks of company operations and how the company is managing those risks. Beyond regulatory drivers, companies have long been subject to public scrutiny and pressure from socially responsible investors. There is an increased call for transparency and accountability to ensure corporate sustainability claims are accurate and that corporations are not adversely impacting neighboring communities and society at large.
Facing both external scrutiny, as well as water-related risks to operations, corporations are pledging to become “Water Positive” and increasing CWS budgets to meet those commitments. Although each company defines its own goals, Water Positive pledges typically entail going beyond simply conserving water in their operations to actively restoring water resources within the watershed — this requires investing in water projects to effectively return more water than is consumed back to the same watershed. Because effective CWS interventions require an understanding of local context and shared water challenges, companies partner with community stakeholders to implement projects that address local needs. The end goal of becoming Water Positive is to leave communities and nature in a better state than they would be if the company were not there.
Identifying And Funding Water Stewardship Projects
For decades, NGOs have led the creation of a robust market for water stewardship projects, primarily nature-based solutions (NBS) aimed at addressing water challenges. NGOs’ local awareness, connections, and (sometimes global) influence make these organizations easy partners for CWS funding programs. Investments in NBS from reputable NGO partners like The Nature Conservancy, Ducks Unlimited, Trout Unlimited, Arbor Day Foundation and Bonneville Environmental Foundation have evolved to meet the changing requirements of CWS programs, but there is room for diversification of project types and partners to balance risk to the corporation’s investment portfolio.
CWS commitments and industry best practices have evolved over time. Three key aspects have changed in recent years: 1) Funding has evolved from donations to investments with an expected return (i.e., a realized water benefit within a target date); 2) the magnitude of the investment has increased and with it the need for robust programs that are defensible against claims of greenwashing; and 3) CWS programs have become more diverse with portfolios of investment that include NBS as well as utility projects.
The evolution of CWS programs reflects an imperative to align more closely with the corporation’s commitments. As CWS journeys progress, they typically call for more direct community engagement and investment in projects with more direct impact to local water resources. Today, water stewardship projects tend to focus on more quantitative positive impacts to local watersheds and communities — typically referred to as “replenishment” projects — because the goal is to recharge, return, or make water available for use within the watershed to address water quantity, quality, or access challenges. Because of this added scrutiny, CWS funds are now typically issued as grants seeking specific outcomes.
Partnerships with the public sector, including water and wastewater utilities, and local and regional government agencies, can offer complementary benefits to the traditional focus on NGO NBS. Utility-type projects offer solutions with direct and quantifiable community benefits but are not as readily available or primed for private funding as NGO projects because they typically are not defined in a way that addresses CWS metrics.
Regardless, these public sector partnerships often represent untapped avenues for CWS programs to diversify investments in locally impactful projects; it also allows public entities to leverage investments in shaping more climate-resilient communities. Unlike traditional state or federal grants, CWS funds tend to be more discretionary and have fewer requirements. As such, they can be leveraged to finance projects that, although important, may not be a top priority in the utility’s capital improvement plan. Access to CWS funds requires public sector projects to be defined using CWS program metrics, at a minimum cost per volume replenished.
Part 2 will provide additional insights into CWS metrics and program funding eligibility.
About The Authors
Dr. Patricia Whitby is Brown and Caldwell’s Water Stewardship Program Implementation Lead based in Colorado. In this role she supports clients in developing the framework to deliver on water commitments. This includes resources and processes designed to capture and report the right metrics for each client's program.
Dr. Carla De Las Casas leads Brown and Caldwell’s Water Stewardship team. She is passionate about supporting clients in developing and executing their water stewardship strategies to positively impact our watersheds and create thriving communities. Identifying opportunities for win-win collaboration between public and private sectors to address our shared water challenges and manage risks is a major area of focus of Brown and Caldwell’s Water Stewardship team.
Headquartered in Walnut Creek, California, Brown and Caldwell is a full-service environmental engineering and construction services firm with 52 offices and over 1,900 professionals across North America and the Pacific. For more than 75 years, our creative solutions have helped municipalities, private industry, and government agencies successfully overcome their most challenging water and environmental obstacles. As an employee-owned company, Brown and Caldwell is passionate about exceeding our clients’ expectations and making a difference for our employees, our communities, and our environment. For more information, visit https://brownandcaldwell.com
Acknowledgements
We would like to thank Ted Douglass (Impact Sustainability, LLC) for his valuable contributions to this article.