Modern business responsibility has transcended itself from the borders of material benefits to the horizons of protecting nature and natural resources. A recent report in media, caution companies by reminding them that “water security is not just a CSR activity, but a critical business function”. (TOI,20/06/19)
The ‘Blue Gold’
Water, which is also called ‘The Blue Gold’, is really scarce in supply. Seventy five percent of the Earth’s surface is covered by water. 94 percent of this is in oceans and only 6 percent is fresh water. Out of this 6 percent, 27 percent is in glaciers, 72 percent in underground and only 1 percent is available from wells, canals, ponds, rivers and lakes. The problem is that this available one percent of water is being depleted and polluted by human activities at a dangerous level. Hence scientists suggest that there should be a rethinking regarding the exploitation of water resources on this planet.
The Water Balance
The existence of nature depends on the equilibrium or balance of the fundamental five elements – space, air, temperature, water and soil. Torrential rains bring flood and shortage of rainfall brings drought; both are extreme conditions of excess and scarcity of water supply, which results in an unbalance or disequilibrium. There is a proportional equilibrium range of water in outer nature that is required for the healthy survival of living beings.
In the human body also 68 -70 percent is water. Excess of water in the human body is over hydration and shortage of water is dehydration. Hence as in the case of outer nature, the human body also demands the right proportional quantity of water content, to maintain the body balance / equilibrium. This concept of balance /equilibrium brings the similar feature of the human body and planet earth.
No species on this planet other than human beings disturb the supply and quality of water. Through agriculture and industries the ‘Blue Gold ‘ has been turned into a black waste.
- Indigenous people have always spoken about the power of water and now the world is listening ‘water is life; water is sacred’.
- The CSIR estimates on pollution of ground water in India found that in 2014 7 crore lives in 6 states are adversely affected by arsenic pollution. (TOI, 13/12/2014)
- While on the one hand when the underground water level is depleting due to overexploitation, the global warming causes the sea level rising, which is a contradiction.
- South African city of Cape Town’s severe water shortage made it the first city globally to face ‘Day Zero’ when government shuts down water connections for homes and business, in 2018. (TOI, 15/02/2018)
- Water pollution caused 1.8 million deaths in 2015. Every year unsafe water sickens 1 billion people around the world.
Water and the Business World
Providing pure water, preventing water pollution and provision for rain water harvesting etc. are CSR events which are totally different from the major business function. “But a 2019 study by WWF India has recorded how water related risks can limit production, disrupt supply chains and result in asset write downs, create conflict with other water users and harm Corporate reputations” (TOI, 20/06/2019).
The above WWF study found that 39 percent of Indian Banking sector is exposed to “ high levels of operational risk – scarcity and pollution in the main. The extension of loans to reckless business practices ranging from dams to factories resulted in the piling up of liabilities”. There are ‘water risk business ventures’ according to World Resources Institute study. It found that “water scarcity caused 14 out of India’s 20 largest Thermal utilities to shut down at least once between 2013 and 2016, costing those companies $ 1.4 billion”.
“Water problems could push the non-performing assets of banks higher as many lenders have loan exposure in sectors where there are risks to water resources”, says the report. The water risks could pose further ‘liquidity constraints, on the strained balance sheet of banks. The non-profit Customer Data Platform in 2014 found that 53 percent of companies reported ‘significant financial impacts from water – an increase of 40 percent over 2011’.
India is a highly water sensitive country where 600 million people are facing acute water stress. They have no access to pure water and what is supplied is polluted also. 70 percent households receive contaminated water. Water stress is marked not only by verbal altercations but also even armed conflicts. Discharging untreated effluents to the actual water sources have resulted in the closure of many industries.
The report has cited 21 examples in India where “companies are facing consequences of not adapting water –positive measures in their business operations”. Either popular protests or NGO activism plus Public Interest Litigation along with court rulings have resulted in the abandon of assets by the force of water scarcity and pollution.
Water is not the only natural resource that is putting pressure on companies. Air pollution, soil degradation, deforestation, acid rains and toxic wastes also put pressure on companies to become more careful in protecting environment while promoting business.
All these trends indicate one important aspect of practical solution. This is to increase the mandatory 2 percent of Profit Before Tax (PBT) to at least 5 percent of PBT. Then only the environmental and social responsibility of modern companies could be tied tightly to the stone pillars of profit.