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Water Scarcity Leads to Business Risk – PepsiCo Partnership Addresses the Challenge

From a global perspective, the water future should be of concern to all of us. Virtually all reports suggest that the water crisis will only get worse. Ten years ago there were gloomy reports that this century’s wars would be fought over water, but we have recently seen a shift towards discourse on the economic consequences of water scarcity – and how it leads to business risk.

In contrast to global environmental issues like climate change, availability of water is an inherently local phenomenon, defined by the supply, demand and quality of water within a watershed. Ecological and social impacts associated with unsustainable water use are similarly local by nature.

The local issue of water stress depends not only on water availability but also on economic, political and community context. We define achieving positive water impact as making more and better water available to the environment and the communities where we operate.

PepsiCo and The Nature Conservancy (TNC) are working together on these water issues and in late August during the Stockholm International Water Institute’s World Water Week, we announced the initial results of a pilot focused on understanding the watershed conditions and identifying restoration opportunities for a group of diverse manufacturing plants. The findings are summarized in a joint white paper entitled “Striving for Positive Water Impact.”

We believe that by working together to protect the watersheds in which PepsiCo operates, we help ensure that the company will continue to have the water it needs to support its operations and supply chain and that the ecological and social impacts of those operations are addressed. The pilot with TNC, which began in 2010, assesses the sustainability of water use in five areas: Phoenix, Ariz.; Boxford, Suffolk, United Kingdom; Zhanjiang, Guangdong Province, China; Sangareddy, Andhra Pradesh, India; and Mexico City, Federal District, Mexico.

Each area revealed unique watershed challenges and offered the opportunity to find targeted solutions. For instance, the U.S. pilot in Arizona was challenging because PepsiCo facilities there rely on different kinds of water. The Casa Grande facility uses groundwater to operate while the bottling plants in neighboring Phoenix and Tolleson rely on surface water. The pilot study focused on the bottling plants, which use water obtained from the same water source as much of greater Phoenix. Based on our initial assessment, we have found three potential solutions that show promise for protecting that source including purchasing water rights for conservation purposes, municipal groundwater mitigation and irrigation system improvements. In the future, these steps may be applicable in other locations where PepsiCo operations and other facilities rely on a single water source.

What we discovered in Phoenix was vastly different from what we found in Zhanjiang, China. In that case, wastewater from PepsiCo and other facilities is discharged into the South China Sea via a municipal wastewater network. Proposed solutions already being considered include water re-use, rainwater harvesting and improved irrigation practices.

The ultimate value of our pilot work is twofold. For each individual site, the assessment of the sustainability of water use identified a suite of water-saving actions that PepsiCo and others in the watershed can apply to achieve a Positive Water Impact. Those solutions have been informed by TNC’s deep experience in freshwater conservation. At the same time, this work provides lessons that can be integrated into future applications of this methodology, both within the PepsiCo system and in other watersheds where large water users operate.

As concern about water-related risk continues to grow for corporations around the world, the need for approaches that assess and address this risk becomes more critical. Our early progress in this partnership suggests that our framework for watershed protection could be useful to other companies pursuing sustainable water use. We have found that in contrast to the appearance of the global water crisis, when we look at the situation locally – with respect to both watersheds and communities – many opportunities for better water management arise.

Liese Dallbauman is Director of Water Stewardship for PepsiCo. Brian Richter is Global Freshwater Program Director for The Nature Conservancy.

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One thought on “Water Scarcity Leads to Business Risk – PepsiCo Partnership Addresses the Challenge

  1. Most companies in Asia are not yet strategically managing water resources and have only undertaken temporary initiatives related to water use. Apparently they have limited understanding of water’s materiality to their business models. Specifically in India businesses take water as a granted issue and don’t consider it as a threat to their business. Some companies like Nestle incorporated water management initiative in their businesses..also carried out water footprint studies. It shows positive attitude of the organization. But it need growing concern about water and related issues.

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