Morgan Gillespy is an experienced environmental and business professional, focusing on improving water security globally. Having joined CDP in 2013, she has been instrumental to the development and implementation of products and services relating to water as well as the analysis of CDP’s water data. In 2016 she was named Head of Water, leading the program to ensure it remains the gold standard for disclosure of corporate water related information globally. She holds an MSc in Environmental Technology from Imperial College London, specializing in Environmental Assessment and Analysis.
Christopher P. Skroupa: We are hearing a lot about “collective action”, what is it and why is it important to companies?
Morgan Gillespy: Increasing population, economic activity and consumption, coupled with declining water availability and quality, and weak water governance in many geographic regions are all leading to increased competition for water–a critical resource for both economic and human health and development. Since these drivers of water challenges lie outside of any one company’s sphere of control, finding sustainable solutions is not straightforward. Individual business action will always have limited impact and most water risks can only be mitigated by the effective and concerted action of a collection of relevant stakeholders. Importantly, the underlying health and water security of the catchment in which a business is situated is increasingly being recognized as synonymous with business health and security. Likewise, the water security of a country usually plays a critical role in its economic health. Despite this growing risk and awareness, corporate engagement in meaningful collective action remains confined to islands of excellence, rather than a mainstream activity. Many of the water-related challenges reported by companies in the catchments they operate in, source from or sell their products to are also shared by others in the same catchments. The case for responsible engagement is built on the premise that water-related risks are shared among all the stakeholders in the river basin. Collective action is based on the premise that facilitating an equitable process through which all affected parties can come together to mitigate these shared risks or pursue improvement opportunities is a powerful tool when faced with water challenges. Essentially, even if you’re a clean fish, if you’re operating in a dirty pond and it doesn’t do you much good.
Skroupa: This sounds great, why isn’t this widespread practice?
Gillespy: We found a few common themes when we hosted workshops to talk to companies about collective action. Firstly, commitment from company leadership is a critical factor for effective engagement in collective action. For many companies, water is a long term emerging risk and therefore needs to be prioritized at the strategic level, so as not to be forgotten in the urgency of day-to-day operations. Leaders with foresight are prioritizing water risk reduction as a core business issue, and are creating the right incentives and internal enabling environment for local operational managers, and in some cases suppliers, to engage in meaningful, collective water management. Secondly, integrating water risk management and stewardship into internal governance practices helps you act in a more holistic, collective manner. Aligning internal governance practices with water stewardship expectations by, for example, publishing a clear, comprehensive water stewardship strategy and setting mandates and KPIs for water risk reduction are the best places to manage their water risks.
Acknowledging and communicating that the only way to address water security risks is to mobilize and support others in the catchment enables those with responsibility for water management to act in a more holistic, collective manner. Thirdly, chances of success in collective action were greatly increased with the involvement of a trusted advisor. For example, an advisor with local knowledge of the political economy governing the water sector to help guide them, and an honest broker to help convene and mobilize other actors to jointly develop impactful solutions at scale. Examples include water utility companies, river basin management authorities, development agencies, and local and international NGO’s.
Skroupa: That is a fairly lengthy list of actions, are companies able to do this? What are the barriers facing business to effective manage corporate water risk?
Gillespy: For many companies, the first step in managing corporate water risk is to understand how that risk might impact their business. This means that companies need to undertake a risk assessment that focuses on water. This is challenging for businesses, as there is currently no international standard for how to undertake a risk assessment. CDP has worked hard to outline several considerations, however our data shows reason for concern. For example, in 2016 only 34% of companies that responded to CDP undertook an assessment that included both direct operations and supply chain; this means an enormous number of companies might not be aware of the risks that face their business. This is just a basic first step–CDP data also shows that when comparing average companies to leading companies, leading companies are more likely to incorporate a range of water issues (such as ecosystem and habitat health, stakeholder conflicts and supply chains) into their risk assessments. They’re also much more likely to include a wide range of stakeholders when conducting their water risk assessment. This means that leading companies are more aware of risk and better prepared to respond to these risks in the face of increasing climatic uncertainty.
Skroupa: So there are clear actions that companies should be taking, what are some of the barriers preventing business from progressing?
Gillespy: Our report, Overcoming barriers to effective corporate water risk management, commissioned by and developed in conjunction with the International Water Stewardship Programme (IWaSP), a German-UK funded program implemented by GIZ, helps to establish why corporate engagement in collective action remains low and identifies opportunities to address this. We found six key barriers and also identified key actions to help companies overcome these. I would suggest reading the full report for more details, but a few examples include how a large number of participants acknowledged difficulty in making the business case for catchment-based collective action to both senior management and plant-based staff due to a lack of guidance tools and internal education. Companies were unaware of the simple “no-brainer” actions available to them to get started. One suggestion in the report to counter this is quite simple: the creation of internal water expertise and “councils” comprised of different internal stakeholders such as facility engineers, procurement people, sustainability team and senior management to help bridge the lack of internal education and create shared understanding of corporate risk and reward for action on water security.
From a data perspective there is also a real or perceived lack of reliable, independent and verifiable data to support decision making–and this is causing paralysis amongst research participants. A lack of standardization is limiting the application of existing water risk tools and frameworks. In response, the report suggests simple actions such as improved education for companies on available datasets or a centralized platform to signpost verified data sources and also more complex undertakings such as taking a participatory approach to catchment based data collection. By doing so, participants are much more likely to identify data they have which is not always publicly available.