The world’s leading sustainability consultancy Water and Automotive Excellence 2013 AIAG Corporate Sustainability Summit The world’s leading sustainability consultancy
The world’s leading sustainability consultancy
Water and Automotive Excellence 2013 AIAG Corporate Sustainability Summit
The world’s leading sustainability consultancy
The world’s leading sustainability consultancy
Why does water matter?
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A recent review of global
business water risk found:
63% identify water as a
substantial business risk to
direct operations or supply
chain
45% have experienced water-
related detrimental impacts in
the past five years
68% materials and mining
sector reported exposure
71% energy sector reported
exposure to water risk
Carbon Disclosure Project
Global Water Report 2012,
www.cdproject.net
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Business risk Example
Water scarcity • Anglo American Platinum 90% of operations in water stressed region • BHPBilliton’s Escondida costs for desalinated water • Water shortages in Brazil and India resulted in huge increases in world sugar
prices in 2009
Water surplus • NSW and Qld coal mines $2b lost production from 2009 flooding • Alcoa US business interruption from flooding cost US$130m • Anglo American and Gold Fields lost production from flooding
Water quality • SABMiller has faced threats from saltwater intrusion into its 20 strong borehole supply network in Tanzania risking major interruptions to business
Reputation • Perrier suffered a major and irreversible decline in its global reputation as a result of trace concentrations of benzene being detected in its bottled water which prompted a US-wide product recall (February 1990)
Regulation • Lenders imposed stringent commitments for Rio Tinto’s Oyu Tolgoi mine in water scarce region in Mongolia
Business case: financial risk related to water
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Expected state water shortages over the next decade under average water conditions
Water risk varies with geography
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Water scarcity: sites, supply chain, current issues
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Practical approaches to managing water risk
The solution for managing water
risk is to link the technical and
operational aspects of water
management - with the longer
term strategic and social license
aspects
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Strategy for managing business
critical water risk
Strategic Water Risk
Technical Water Risk
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Increasing complexity of water risk
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Site Water Plan - Local Risk - Technical focus - Short term - Internal focus
Business Water Strategy - Business unit/
Regional risk - Technical, social &
economic - Longer term - Cross functional - External
stakeholders
Collaborative Water Solutions - External
collaboration - Regional
development - National/
international - Human rights - Water/ energy/ food
links
Integrating Water Management with Corporate Responsibility
Risk to Opportunity
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Strengths, weaknesses, threats & opportunities
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1. Land Allocation Core Strategy, Flood Risk, Water Accessibility and
Quality Assessment
4. Operation Business / Process Risk
Assessment, Operational Asset Protection & Business Continuity
Support
3. Detailed Design & Construction
Engineering / Construction Flood Risk and Water
Support
2. Planning Planning Advice, Strategic
Environmental Assessments, Flood Risk and
Consequences Assessments
7. Due Diligence
Transactions Support
8. Climate Change Risk
Assessment & Adaptation
Support
6. Expansion / Decommissioning
Re-Working / Creating Assets, Planning Advice, Vulnerability /
Suitability Assessment, Mitigation
5. Existing / Future Asset Assessment
Global Asset / Industry / Business Portfolio
Assessment, Hydrology, Hydrogeology, Flood Risk,
Water Availability
The Project Life Cycle: Water Strategy and Tactics
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Develop strategy
Stag
e Implement strategy
Sustain Strategy
Pro
cess
O
utp
uts
• Diagnosis water risk Stakeholder interviews Benchmarking Water risk assessment Focus workshops
• Develop water goal • Identify key programs and
actions via workshops
• Establish water governance • Accountabilities and
resources • Communication and
change planning • Prioritize programs and
actions
• Review progress of implementation of water strategy to mitigate water risk
• Identify barriers • Provide assurance
• Evaluation of water risk and exposure
• Defined strategic objective • High level plan as a
roadmap for implementation
• Water governance structure
• Implementation plan including communication and change plans
• Detailed scope for key programs
• Report on progress with implementation of water strategy
• Senior management assurance report
ERM’s role
Facilitate development of water strategy
Coach, guide and support implementation
Monitor and review progress and provide assurance
Water Management Strategy
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• Increased Financial Value
• Improved Market Access and Growth
• Improved Risk Management
• Improved Organizational Capabilities
This integrated product sustainability services framework results in:
Product sustainability framework
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Corporate
Product
A single product across its unique life cycle
Partial or entire value
chain across all
product
categories/company
activities
Primarily for investors, stakeholders,
NGOs and media
Primarily for customers and consumers
Used at corporate
level to identify
hotspots
Used for R&D, marketing and
customer footprinting programmes Used to manage
performance
across company,
engage partners
and publically
report
Used to differentiate/ label the product, manage
performance, & assist supply chain engagement
Supply Chain
Secure raw
materials supply
Risk
management
Emerging best
practice
Overlap with
other footprints
Footprints: supply chain – corporate - product
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• The first steps to reducing the negative impacts of climate change are measuring your footprint and identifying where you can make changes
Mitigate climate change (eg floods,
scarcity)
• Having systems in place ahead of emerging legislation allows time to prepare and realize any potential financial implications
Prepare for impending legislation
• Water reductions are often linked to energy efficiency too, which can save resources and money
Reduce costs and resource use
• Understanding what parts of the business may be exposed to water risks and where it can be reduced
Manage risks
• Awareness and involvement of staff in the development of ideas and the implementation of reduction initiatives benefits them and the business
Improve staff motivation and
retention
Advantages to knowing your water footprint
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■ Client wants to double growth in India in next five years
■ Either need to increase water supply or improve efficiency
■ High level footprint used to identify improvement hotspots
■ Detailed footprinting being used to assess sustainability of improvement options for more wide scale implementation
Case Study
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Contents
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■ Assessed current and future water resource risks across the portfolio using the WBCSD Global Water Tool
■ Generated a baseline understanding of water consumption across the business
■ Identified potential risks with respect to future development of production capacity
■ Produced a prioritized list of sites for future action on water efficiency and optimization
Water sustainability assessment
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■ Strategic Water Principles:
• Principle 1: Manage water impacts of operations based on a robust understanding
of key water risks and emerging trends
• Principle 2: Identify innovative tools and technologies to address water risks
• Principle 3: Optimize water use at each site to minimize the impact on local
catchment water resources
• Principle 4: Engage openly with stakeholders to address local water issues,
contribute to regional water policy and international approaches to sustaining global
water resources
• Principle 5: Manage the impacts of operations at a catchment level; be a steward of
these water resources
• Principle 6: Plan for changing climate and the additional water risks that may result
Integrating Strategies: Example
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State the case: communication opportunities
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Environmentally preferred supplier to customers with ‘green’ needs or criteria
Transparently respond to customer, NGO & industry queries & reporting initiatives
Enable proactive engagement with customers
B2B Enhance brand image
Respond to customer queries and competitors’ initiatives quickly and easily
B2C Identify water impacts; promote efficiency and drive sustainable behaviour
Benchmarking for internal and external; potential resource and/or cost savings
Attract and retain top talent/staff
Internal
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Discussion & Questions
Skelly Holmbeck
610.524.3578 [o]
561.707.3186 [c]
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Source: World Economic Forum, Global Risks 2011
Global risk overview