Vestergaard Frandsen (VF) is a game-changer in the field of aid. The company worked hand-in-hand with Gold Standard Foundation, a Geneva-based voluntary registry of voluntary carbon credits, to create the “Carbon for Water” program. This program allows VF to earn carbon offset credits by reducing the amount of wood used in this region to boil water and by donating approximately 900,000 LifeStraw Family units to roughly 90 percent of the population in western Kenya. This program was implemented in April 2011, and was considered a highly unique way to do business.
Two filmmakers followed the distribution of LifeStraw in one particularly vulnerable town in western Kenya and explained how the carbon offset program works and how VF only gets paid when they can prove their impact. They called the program “smart business.”
The former Nestlé CEO and current chairman, Peter Brabeck-Letmathe, is notorious for saying, “I am convinced we will run out of water long before we run out of fuel.” In fact, according to UN Water: “Water is the primary medium in which climate change influences the earth’s ecosystems and therefore people’s livelihoods and well-being.” In a report published by the Intergovernmental Panel on Climate Change (IPCC), they found that climate change is altering the earth’s hydrologic cycle, thereby changing freshwater systems in ways that affect both the long-term availability of freshwater as well as its quality. UN Water goes on to claim that water-related climate change has already impacted many around the world, mainly by more frequent droughts and floods. They anticipate that as the world temperature continues to rise and the availability of fresh water continues to decline, the poor will be the most affected. It is easy to see why programs like VF’s Carbon for Water are needed. Although the program does not help with long-term solutions to the problem, LifeStraw helps to relieve needs in the short term.
Water and business
World Water Week in August 2012 saw a large increase in corporate interest in water conservation. This is not because of a rise in interest in environmental issues, but rather companies’ recognizing that water shortages will severely impact their profit. This perceived risk has encouraged companies to collaborate with water organizations to develop tools and methodologies to help all become better water stewards.
One such tool is an online platform developed by Water Footprint that allows companies, NGOs, governments, or anyone see their water footprint and access information on the scarcity or availability of water, as well as creating targets to reduce their footprint. The Pacific Institute released a report titled “Water Scarcity & Climate Change: Growing Risks for Businesses & Investors,” in which they detail the critical aspect of water to virtually all industries: agriculture, high tech, beverage, apparel and tourism, to name a few. The report concludes that water availability is often not seen as an imminent threat and is therefore not assessable by investors.
To evaluate and effectively address water risks, the report recommends that companies take the following actions:
- Measure the company’s water footprint (i.e., water use and wastewater discharge) throughout its entire value chain, including suppliers and product use.
- Assess physical, regulatory and reputational risks associated with its water footprint, and seek to align the evaluation with the company’s energy and climate risk assessments.
- Integrate water issues into strategic business planning and governance structures.
- Engage key stakeholders (e.g., local communities, non-governmental organizations, government bodies, suppliers, and employees) as a part of water risk assessment, long-term planning and implementation activities.
- Disclose and communicate water performance and associated risks.
Putting water on the forefront of future development is crucial as the world population continues to grow and capitalist practices continue to dominate economies worldwide. The value of water and its scarcity needs to be understood.
No one entity can create the change needed with respect to water. Partnerships and collaborations amongst private businesses, governments, local communities and NGOs are necessary to pool resources and bring together the knowledge and expertise of water-related concerns. This approach will allow companies to respond to water issues efficiently and effectively. According to the Pacific Institute:
“Collaborative actions are particularly crucial in assessing and addressing climate change impacts, since there are large gaps in knowledge and information related to climate change and water, especially data and prediction modeling at the watershed level.”
One such collaboration is the CEO Water Mandate, the most visible cross-sector, public-private partnership on water. It is a call to action and a strategic framework to bring on responsible water management by businesses. Dr. Marjin E. Dekkers, CEO of Bayer, who is an active partner in the mandate, stated that it is “bringing together business leaders from around the world who can generate a positive impact on water management by driving the needed innovation and change.” Other companies involved include, H&M, Nike, Nestle, Levi Strauss and Coors. These partnerships are essential in moving forward in the rapidly changing world.
VF and the future
With the success of LifeStraw and the Carbon for Water initiative, Vestergaard Frandsen (VF) is in a great position to champion this movement and become partners with other companies, organizations and governments working to ensure water accessibility. As a point-of-use system, LifeStraw converts contaminated water into clean water at its source. As a result, it does not help to reduce the time needed to fetch water, which is a burden that falls on women and girls, and is a source of criticism of LifeStraw. Paul Hetherington, a spokesperson for WaterAid, believes that the establishment of a reliable source of clean water (point-of-source solution) and education on the importance of good hygiene is a viable solution to provide a long-term solution to water supply and significantly reducing the risk of disease.
When researching this problem and the variety of solutions being attempted, it is logical to think that VF could team up with point-of-source organizations to create new systems that not only provide water close to a village, but provide clean water to these villages. There are numerous organizations providing point-of-source solutions including WaterAid, Charity Water and Engineer Without Borders.
The value of water, and its state as a finite resource, should be incorporated into government policies worldwide. Developing countries should guarantee access to clean water for all their citizens by investing in adequate infrastructure. One successful example is South Africa, who despite having less water availability than Ethiopia, has provided access to fresh water to 88 percent of its constituents since the end of the Apartheid Regime in 1994. Governments should also implement policies to ensure that all private companies within their borders are working towards sustainable use of water and engage in private-public partnerships, such as the CEO Water Mandate to continue to innovate and share best practices in water usage, water recycling and water conservation.
By Jiuyi Zhou, Lina Shalabi, Andrea Filgueiras, Maria Spiridonova, Xuan Zhang, Ruben Piza. The authors are Master of Social Entrepreneurship candidates at Hult International Business School.