ESG and Climate Risk Science and Technology

Drowning, Drowning and Drowning in Water Crisis!

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  • India is facing an acute water crisis with 70% households receiving contaminated water
  • 600 crore faces extreme water stress meaning- 2,00,000 people die every year due to inadequate access to safe water.
  • As per CDP’s analysis, growing water insecurity may put a “substantive corporate value” at risk.
  • There has been a boom in sustainable investment and the ESG term has gained ground to mitigate impact of human activities
  • UDA’s science and technology arm will assist specific industries to devise new sensors and tools to track and improve their water risks accounting.

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Our Blue Planet with 71% of Earth’s surface covered with water is a necessity for all living creatures. Water is for everyone but will we have enough to use it? Are we taking enough steps to conserve water?  Are we ready to face the consequences of our own activities? These questions loom in my mind. The constant tug of war between water supply and ever- increasing demand is attributed to a confluence of factors such as climatic changes, industrialization, inefficient water usage and urbanization. Consequently, water scarcity, its quality issues and poor water governance are sure to wreck the economy, environment, and people’s lives.

It is petrifying to hear that our country is smoldering as per recent surveys suggesting

“India is facing an acute water crisis with 70% households receiving contaminated water.” 

Further as per the 2018 NITI Aayog report, “600 crore faces extreme water stress meaning- 2,00,000 people die every year due to inadequate access to safe water.” If timely intervention does not happen, an acute water shortage is projected to result in a 6% loss in the country’s gross domestic product.”

Horrifying tunnel: Utilities to Risk Journey

Water, a finite resource, has its utilities in the various agriculture, industrial and environmental sectors. In India, industries utilize just 13% of available freshwater than agriculture while industries groundwater usage is mere 2%. Though water usage is less in the industrial sector than agriculture, it is pertinent that water has several applications in power generation, textiles, oil gas, metal and mining industries. Henceforth, it is imperative to understand that water shortage shall have a cascading effect on supply chains, production cycle, production costing and companies’ performance increasing their overall financial risks.

A dagger that is constantly hanging is that water, an endless resource, is becoming scarce and precious. With rising population and expanding economies, most sectors in the nation will encounter an increase in freshwater demand. The total demand in the country is predicted to double the amount of supply by 2030. This pressure on freshwater demand and availability coupled with habitat degradation, erratic weather cycles are sure to restrain India’s economic growth.

"As per CDP’s analysis, growing water insecurity may put a “substantive corporate value” at risk."

To understand this, let us delve into water risks spanning across industries starting with Physical risks stemming from quantity (floods, droughts) and quality (pollution) of water at river basin can substantially impact the environment and company’s performance. Regulatory Risks due to stringent governmental policies and regulations on water withdrawal and discharge, mandatory water recycling and high-water prices. Reputational Risks would emanate from external perceptions about the company’s water use such as negative stakeholder feedback, opposition of projects by the community people, a change in consumer’s behavior, negatively impacting the company’s brand value. Technological Risks: low water intensity inefficient technologies.

Recent evidence proposes how water risks have throttled business leading to shut down of 14 of India’s total 20 thermal utilities to shut down at least between 2013 and 2016, costing USD 1.4 billion. Another example of how these risks have started impacting corporations leading to stranded assets across coal, mining and power: The Oyster Nuclear Power plant in the USA has retired after eleven years of working. It can be attributed to a couple of factors: tight effluent discharge regulations (reactor coolants discharged elevated water temperatures and affected aquatic lives), tight water regulation to build cooling towers projected to increase their capital costing. Hence, shutting down of the plant has yielded substantial financial losses.

Lately, there has been a boom in sustainable investment and the ESG term has gained ground to mitigate impact of human activities. But what is ESG and why do we care so much about it? ESG (environment, social and governance) are non-financial factors used by investors to assess a company’s business sustainability.

With ESG in action, companies minimize footprint and show greater governance. Climate and water risks are amongst several parameters to measure ESG performance of companies. Companies have started disclosing their water risks through ESG (environment, social and governance) reporting but still there is a vacuum in risk disclosure across their core businesses and the impacted interdependent sectors. Current reporting frameworks adopted by companies such as: CDP (Carbon disclosure project), WRI (World Resources Institute) understate the fundamental importance of water. These frameworks focus on quantitative water, energy, carbon indicators with more focus on carbon emissions across the business operations chain without capturing the true sense of water’s footprint across the core business system (example: Information system).

Undoubtedly, freshwater is the next frontier of national security and economy. The corporate world should monitor the complete value chain of their operations, services along with sustainably managing water resources to ensure financial, social, and environmental growth.

Navigating Water Crisis

Oceans and the freshwater ecosystems are a storehouse of services such as climate regulation, groundwater recharge, nursery of species, pool of renewable and non-renewable resources, power as well as economic beneficiaries. It is indispensable to understand that if usual unsustainable approaches to water management and planning are continued without proper mitigation plans, the nation is not far from becoming a hornet’s nest of extreme water crisis.

To understand the nuances of water scarcity, it is imperative to understand the maritime domain by not limiting only to the surface but diving deep into underwater, a rich reservoir of resources and biodiversity. In order to ensure high quality of stable water supply, sustainable management of water is a must. This would require both the private and public sector to synergize cohesively towards constraining the detrimental impact of the water crisis.

Water Resource and Water quality management are two distinct branches of water sciences when it comes to governance and policy making. Although they both need interlinking, they are also governed by different authorities. This creates a lot of discrepancies as the Ministry of Water Resource and Ministry of Environment, Forest, and Climate Change deal with the same issues of River management separately.

The impact of anthropogenic activities on the quality and quantity of fresh water have been a critical concern for our society. Water being the most basic requirement for all our needs has faced the maximum deterioration. Water pollution is a subject of concern as it has a varied list of effects on the ecosystem as well as livelihood.

Road Ahead: Relevance of UDA (Underwater Domain Awareness) framework:

The UDA framework proposed by Maritime Research Centre, Pune has been consolidated into horizontal and vertical constructs with four stakeholders: blue economy, maritime security, environment regulators and science and technology. Horizontal construct delineates assets to stakeholders in terms of technology and capacity building. Vertical level represents the hierarchy starting from identifying water risks, extracting data to propose sustainable strategies to be incorporated by policy makers in regulatory frameworks. With its nuanced approach, user interactive nature, it can address and help companies overcome a set of water challenges.

To gain an understanding of freshwater (both surface and underwater), its threats, resources and potential, acoustic survey is pivotal. Further, the framework with its four-stakeholder approach would assist socially responsible corporations to proactively understand their business models, identify, track and report their water usage (its withdrawal and discharge) and associated water (and underwater) risks that could otherwise lead to stranded assets for themselves, community and planet benefits.

For sustainable management of water along with increased transparency for an array of investors like governmental organizations, NGOs and CSR, UDA framework’s policy intervention and capacity building shall aid. Moreover, with this, corporates would invest in environmental programs to put more water back into the ecosystems. UDA’s science and technology arm will assist specific industries to devise new sensors and tools to track and improve their water risks accounting.

Water is a resource shared by multiple end users and so will its risks be affecting multiple users. To stay afloat with progressive growth and avoid unforeseen cataclysm, proposed UDA framework shall navigate a synergy among corporates, political governance, regulatory frameworks, and academia to overcome anthropogenic challenges of habitat destruction, pollution, and climatic change.

Adoption and implementation of UDA framework as per industry requirements would help the nation to overcome Development vs Sustainability challenges and reach larger goals in accordance with the UN’s declaration of 2021-2030 as a decade of sustainable ocean.

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Aradhya Kapoor

About Author

Aradhya Kapoor works in the Communications and Advocacy team of the Maritime Research Centre (MRC), Pune. She has completed her undergrads in Microbiology and Biochemistry from St. Xavier’s College, Mumbai. She further completed her Masters in Life Science with core modules in Biochemistry and Immunology from St. Xavier’s College, Mumbai.

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