Water Footprint: A Sustainable Competitive Advantage for Businesses

The concept of carbon neutrality is becoming increasingly popular-it consists of achieving a balance between emissions generated and emissions offset, through absorption methodologies-and so is the issue of companies’ impacts on the environment, which are not only limited to greenhouse gas (GHG) emissions, but involve numerous other aspects, such as water availability and quality.

In practice, the lack of water in the coming decades will be one of the central problems related to the climate crisis. Water resources will not be evenly distributed geographically and will pose social justice issues; therefore, there will be a need to optimize its consumption.

Businesses can help save the planet by limiting water consumption by calculating their water footprint or water footprint (WF), the environmental sustainability tool that is part of the ESG process of improving business competitiveness.

What is water footprinting and why it supports environmental sustainability

Water ^footprint1 is defined as the amount of fresh water used to produce goods or services. It is an indicator that evolved from the concept of “virtual water “² and the geopolitical clashes that occurred in Israel in the 1990s due to the production of citrus fruits, aimed at their export.

Numerous studies have been conducted to show that the export of very water-intensive products, in a country with high water scarcity, is a serious management and resource depletion problem.

Instead, on the contrary, importing such products would mean avoiding the consumption of that amount of water resources within the country itself, and thus provide for a real import of water.

From Virtual Water to Water Footprint

In the early 2000s, Virtual Water evolved into the Water Footprint, a process that, using the same logic as the Carbon Footprint, allows for the measurement of the amount of freshwater used throughout the life cycle of a product or process, while also taking into account where the water is taken from.

The object of the Water Footprint can be a specific city, a particular basin, an entire company, a single product or process. Every individual and every company has its own Water Footprint, because everything we consume, produce, use, buy or sell uses water in its process. It follows, then, that understanding one’s Water Footprint is not limited to activities (direct use), but extends to the entire supply chain (indirect use).

Depending on the process or product to which it refers, the water footprint is generally expressed in liters or cubic meters, and in addition to helping us understand for what purposes freshwater resources are consumed, it is a valuable tool for assessing the environmental impacts caused by these activities.

Calculation of water footprint: the models

In parallel with the development of the definition, calculation models have also evolved, moving from the comprehensive and generalist Life Cycle Analysis methodology, which considers the resources (in this case water) used in the entire life cycle of a product/service (from the raw material extraction stages to disposal), to the specialized approach introduced by ISO 14046:²⁰¹⁴³³.

The value of WF is the result of the sum of three components:

• blue water: volume of fresh water withdrawn from the surface and groundwater, intended for agricultural, domestic and industrial purposes. This water does not return downstream from the production process, so it may evaporate, be incorporated into a product, or simply end up in a reservoir other than where it was withdrawn;
• Green water: volume of rainwater that does not runoff into groundwater, thus does not get to become “blue water,” but remains stored in the soil or on the surface. This is water that enters the evapotranspiration cycle, that is, partly absorbed by plants and partly dispersed into the atmosphere through evaporation. It is important to account for it because it goes to reduce the irrigation needed for crops;
• gray water: volume of water that would be needed to dilute a certain pollutant to such a low concentration that it would not be harmful. So, it is the volume of polluted water.

The UNI EN ISO 14046:2014 standard: principles, requirements and guidelines for conducting and reporting on water footprinting

As anticipated, the Water Footprint can refer to a product, a process or an organization as a whole. The ISO standard requires four main steps to be followed for its accounting:

1. definition of the purpose and scope
2. inventory analysis
3. assessment of impacts
4. Interpretation of results.

The UNI EN ISO 14046:2014 standard deals only with the quantification of the water footprint, while aspects of communicating WF results and actions taken to improve it must be included within the company’s sustainability strategy.

Why the WF tool is strategic for companies

It is now clear that organizations around the world must take responsibility for their sustainability and environmental impact. Therefore, mechanisms are expected to be put in place and steps taken in all production processes to minimize their footprint on the planet, be it water, carbon, etc.

Introducing the WF determination process in the company, at the micro level, allows for greater availability of information to be able to:

• To make processes efficient by identifying critical water consumption points, inefficiencies and opportunities for improvement in resource management, thereby also reducing consumption-related costs;
• Identify risks from its supply chain by defining the geographic locations from which water needed for its processes is extracted and assessing its long-term safety based on future water availability;
• improve reporting: the water footprint is a useful tool for compiling non-financial reports;
• anticipate market demands and policies for transparency on the impacts of its production processes;
• increase transparency to stakeholders and shareholders, gaining a competitive differentiating advantage;
• Adapt to the demands of the Sustainable Development Go als (Goal 6 – Ensure the availability and sustainable management of water resources and sanitation services for all);
• improve its supply chain by relying on resource-conscious organizations generated.
  It should be kept in mind that all lifecycle-based analyses require a certain commitment of resources and time, which are necessary to analyze all steps of the production process “from cradle to grave. “⁴ If every organization along the production chain made an effort to calculate its water footprint, it would be enough to add up all the individual pieces to get an overall view, thus moving to a “gate to gate“^perspective5.

Water neutrality and competitive advantages

One of the elements that can generate a competitive advantage, speaking of water resource management, is the achievement of so-called Water Neutrality.

Water neutrality consists ofzeroing the net balance of one’s water footprint by offsetting water consumption and deterioration through actions that help restore or conserve water resources.

In practical terms, Water Neutrality involves measures to reduce water use and increase water efficiency, along with the adoption of sustainable water management strategies, such as:

• water-efficient technologies
• recycling and reuse of wastewater
• rainwater harvesting and storage
• Restoration of aquatic ecosystems
• protection of water supplies or support for communities without access to clean water.

The Limits of Water Neutrality

One of the major limitations of Water Neutrality concerns precisely how it is offset. While greenhouse gases generate climate impacts at a global scale, water use is concentrated at a local level. Hence, offsetting actions should preferably be carried out in the same watershed from which the water was withdrawn.

Currently there are still no internationally recognized standards available that define ways or directions to achieve Water Neutrality. Again, ISO standards come to our rescue with the standard on Water Footprint assessment (ISO 14046), but this is only a good starting point to which two additional steps must be added:

• The definition of actions necessary to reduce and compensate for water impacts, with a schedule of improvements to be carried out by certain deadlines;
• Monitoring of actions, measurement of improvements and achievement of goals.

When will Water Footprint be an opportunity to improve corporate sustainability?

Although the water resource is currently not yet in the spotlight, with the intensification of extreme weather events, tightening disclosure constraints and community expectations, we expect that on par with the Carbon Footprint it will soon become a topic of debate and an opportunity for improvement.

Understanding one’s operating environment in all respects and for all possible impacts, even before there is a regulatory requirement to do so, represents a major commitment in terms of time and resources, but certainly also a great opportunity for advantage, both over one’s competitors and as a tool for anticipating market demands.