When COP21 concluded in Paris, I was particularly struck by the lack of any mention of water in the agreement. Here we had the leaders of the world meeting to solve one of the greatest problems facing mankind and there was no evident acknowledgement of the impact that climate change is having on water.
This, to me, is a classic illustration of one of the main problems we face when trying to tackle water scarcity and quality issues. Too often both companies and governments have a narrow perception of water. It is viewed as a standalone issue, and frequently the greatest focus is on water efficiency and reducing water use. Water use is important of course, but the issue is so much bigger than that. Human life and economic growth are entirely dependent on the availability of sufficient water of the right quality, in the right places, at the right time – and that is currently changing dramatically as a result of climate change.
Our water strategy is all about understanding the operational and financial impacts that water scarcity is going to have on our business and supply chains, if risks go unmitigated. And where those impacts are potentially severe, we aim to work out who is facing the same risks as us, then either join, or help create, coalitions to develop practical, programmatic and policy solutions.
Companies will only invest their time and money where in places that are operationally significant, and where the risks are clear. For SABMiller, South Africa is a great example of one of those places; it is our heartland, and a highly water-stressed country, as the current drought is showing. We’ve done a lot of work to understand the real extent of water risks there and the potential financial cost so we can create a business case to take action.
At a policy level, a number of companies, including Coca Cola, Nestlé, Sasol, Anglo American, SAB and BHPBilliton have joined forces with NGOs and the South African government to create the Strategic Water Partners Network .This model, which tries to shape solutions to avert a water crisis, has been more recently replicated in Tanzania, India and Peru. But we also work directly with farmers in our key supply chains to tackle the root causes of water stress. One example of this is our work with WWF on alien tree clearing programmes.
In India, we are working in multiple watersheds close to our breweries, with NGOs, research organisations and government, to improve water management, in particular by farmers. I was in Telangana near Hyderabad last year visiting our brewery and the local water programme that SABMiller India has established with ICRISAT, an agricultural research institute. India is home to 17% of the world’s population, but only 4% of its freshwater reserves, so many of our breweries in India face acute water risk. However, 90% of freshwater consumption in India is for agriculture, compared to around 70% worldwide. There is tremendous scope for reducing agricultural inefficiencies and improving the way water is used and managed by farmers – as well as other users.
A major challenge being scale, we believe we can have a real impact on securing shared water resources if we work with partners to develop models that drive real improvement, scale them far enough to prove replicability, and engage with government and other stakeholders to pave the way for replication at scale.
But very often, the biggest issue is not about the underlying availability of water, it is about the infrastructure to provide it. This is the case in Nejapa, in El Salvador, where we have a soft drinks bottling operation. Many thousands of local people have no access to water because the municipal infrastructure is simply inadequate. We are now taking steps to change this, working with local communities and water authorities to ensure everyone in Nejapa has access to water and sanitation in their houses.
It is enormously time-consuming and complicated to bring together coalitions of companies, governments, organisations and civil society to do anything meaningful. This isn’t a quick solution, but in many cases it is the only sustainable one, because ultimately we will not be able to sustain an operation dependent on water in a watershed where the local community doesn’t have any access to water.
This sort of work is a business imperative and a moral imperative. We want to be seen as the go-to partner on water issues. We want to be sitting round the table trying to solve water problems, rather than creating them.
Our sustainable development ambition, Prosper, sets out five shared imperatives – the five areas of greatest risk or opportunity for our business that are also huge challenges for society:
- Accelerate growth and social development through our value chains.
- Endeavour to make beer the natural choice for the moderate and responsible drinker.
- Secure shared water resources for our business and local communities.
- Create value from reducing waste and carbon emissions.
- Support responsible, sustainable use of land for brewing crops.
Each of these five imperatives has a number of 2020 targets that call for us to take action both directly in our direct operations, and in coalitions with others. Of course, in order to be credible as a partner in this sort of coalition, we have to make sure we have our own house in order. The big transition we have made is away from sustainability programmes that sometimes stand alone to sustainability that is integrated into our commercial approach. That’s not always easy. Like every other company, we face the challenge of a trade-off between short-term delivery of financial goals and long-term investment into sustainability. We’re a plc, and while investors are slowly becoming more demanding in terms of sustainability performance, they are still primarily looking for short-term financial results. But we must find ways to not only meet these financial expectations, but also invest in the things that will sustain those results for the long term, by ensuring that communities and landscapes around us are resilient and prosperous.