Good morning all,
We are excited to launch this first newsletter of the Strategic Management course of 2021. As we all come from diversified backgrounds yet meet in the same space, Universidad Carlos III de Madrid (UC3M), we will do our best to make this newsletter diverse, creative and knowledgeable as possible!
As a start to our sustainability focused newsletter, we decided to expose some news that is strictly related to one of the most important sources that we use frequently on daily basis! WATER! This topic specifically captures an important issue of lack of sustainability within different business sectors that affect different stakeholders at global level, therefore, we will expose the following points:
Concerns of major companies
Examples
Solutions and inventions
We will also talk about how several companies and international organizations are facing this problem.
Andrea Marsili, Sarra Elbenghazi, Hayal Guloglu and Davide Luigi Matrullo
Students at University of Carlos III de Madrid
Today's newsletter is 1717 words, a 12-minute read.
❝ Water scarcity is really important because when it runs out you have really serious problems, and because of its low price it is one of those classic externality risks❞ - Beth Burks, Director of Sustainable Finance at S&P GLOBAL RATINGS
The quote above says it all! However, allow us to explain further.
Recently, big companies have been concerned about the misuse of water. An analyst at the multinational Bryclets bank stated that water scarcity is the ¨most important environmental concern¨ in which we are facing this problem for obvious reasons. The first reason for the scarcity of water is due both natural and human use which is increasing day by day. Secondly, due to the low cost of water, it is certainly not capturing the true value of this scarce source which makes many individuals not willing to integrate sustainable responsibilities into their daily practices, whether it's an individual, company or some organization.
WHAT MAKES COMPANIES SO AFRAID? Many reasons such as shortage of water, threats to different sectors such as food, beverages, agriculture, tobacco and more!
Big Companies Contribute to Shortage…
One of the typical water sustainability problems big companies face is FACING WATER SHORTAGE, HOW?
CocaCola Company is a clear example, as many multinational companies have manufactures in different countries, specifically in the rural countries that require less costs. Coca-Cola in 2014 was accused and being held against many legal actions in India due to the shortage in water supply. Many locals were pointing fingers at Coca Cola, which created a huge black lash. Again such accusations push companies to take action and to serve Sustainability solutions.
Solutions like what?
The company started an innovation by replacing the plastic bottles it used with PlantBottle. In this way, 37% of the bottles are currently recyclable. However, this was not the only step. One of Coca-Cola's goals in 2030 is to create a green supply chain. Considering the inclusiveness of Coca-Cola's supply chain, suppliers have to say yes to sustainable technologies in order not to lose their big customers.
https://digital.hbs.edu/platform-rctom/submission/coca-cola-goes-green/
Source: https://www.coca-colacompany.com/sustainable-business/water-stewardship
Nestle is in trouble with the government for using more water than it deserves. The state of California claimed that Nestle used illegal amounts of water, over 80,000 tons. Julé Rizzardo, the assistant deputy director of the Division of Water Rights emphasized that “We have a limited amount of water, and as we face our second dry year in a row, it’s important that we use our authority to protect the municipal water supply and the environment.”
Destroying natural resources in the state, such as the Santa Ana River, could lead to the death of many lives. In addition, selling natural spring waters for money still causes controversy. The attempt to profit from natural resources and the use of plastic are the main reasons for the discussions.
Let's take a closer look
When we do a SWOT analysis of Nestle, we can clearly see that the strongest point is its R&D capability. The firm invests approximately two percent of its revenue in the R&D department. If Nestle uses this strong point for its sustainability efforts, it can achieve competitive advantage. Beverages, the product line that sells the most (more than twenty-five percent), may become a threat due to climate change.
Source: https://strategicmanagementinsight.com/swot-analyses/nestle-swot-analysis.html
Why is water sustainability important to companies?
It is a well-known fact that water is a basic need and a limited resource. But why is it so important for companies to use water efficiently?
Conscious consumers, conscious choices
Thanks to the development of technology and social media, the only goal of consumers is not to find a cheap or quality product anymore. The demand for environmentally friendly companies is increasing day by day.
A growing market
The market for green solutions and sustainable products is estimated to reach $48.36 billion by 2027. It is very important for companies to take part in this market, without strong competitors entering.
We're all in the same boat
Depletion of water resources causes a disaster for the world. Increasing diseases, wars, and deaths. We should care about sustainability for a livable world.
Solutions and Inventions
Although we consider it an endless good, water is a limited resource, and worrying data shows it. Looking at this Water Scarcity Clock, we can see that there are currently over 2.3 billion people living in water-scarce places, and that by 2025, half of the world's population might be living in water-scarce areas.
Moreover, scientists predict that by 2030, global water demand will double the supply. A recent report of the WMO alerts about the looming water crisis and calls for improving water management. Moreover, the report says that by 2050 over 5 billion people won’t have adequate access to water for one month a year.
As a result, countries, regions, and international organizations must address the severe issues posed by water stress as soon as possible. Water must be urgently addressed as a scarce resource.
Fortunately, there are several organizations that are trying to face this challenge:
Pacific Institute: The leader in producing water conservation research papers and materials. Every two years they publish The World's Water, a “series that “provides both detailed analysis of the most significant trends and events and up-to-date data on water resources and their use”
Source: https://www.worldwater.org/book-details/
United Nations UN-Water: An entity that coordinates more than 30 UN organizations to support Member States to manage water more sustainably, they do that in three way:
Inform Policies
Monitor and Report
Inspire Action
This organization was successful in including water in recent agreements such as the 2030 Agenda for Sustainable Development.. UN Water helped shape SDG 6 to "Ensure availability and sustainable management of water and sanitation for all”
Unicef: The organization works at several levels to implement specific technologies focused on:
Identifying new water resources and improving their efficiency
Planning for future urban water needs
Technology advancements to ensure climate resilience
European Commission: with the Water Framework Directive (WFD) aims to establish a framework for Community Action in the field of water policy. The WFD works by asking the Member States to prepare and revise every 6 years the River Basin Management Plans
Also companies are asked to implement concrete sustainable practices in their processes, and this involves a more aware approach to this important resource: the “blue gold”, the fundamental resource for our lives.
Companies are increasingly aware of the importance of having a sustainable approach to the use of water, and some of them are implementing concrete responsible actions, also to give their contribution to achieve the 6th goal of the 2030 SDGs.
Microsoft, for example, in 2020 announced a commitment to reduce its water use intensity and to become “water positive” by replenishing more water than it uses. Also in the food industry, which for its nature consumes a lot of water, some big companies have announced their commitment.
McDonald’s is improving its water stewardship by managing resources throughout its supply chain and reducing water waste in its restaurants.
Starbucks, in one of its preliminary targets for 2030, sets the following goal: “50% of our water withdrawal for direct operations and coffee production will be conserved or replenished with a focus on communities and basins with high water risk”.
Other great examples can be found in various sectors:
Ford Motor Co. has been the first automaker to commit to the CEO Water Mandate, the hospitality company Marriott International has announced its goal to cut water intensity by 15% by 2025 and P&G, through its non profit “Children’s Safe Drinking Water”, is planning to deliver 25 billion liters of clean drinking water worldwide by 2025.
Sustainability Startups?
It's only fair to finish this newsletter by speaking about some startups companies that have done tremendously great work focusing on sustainability. According to a study done by ESEI business school of Barcelona, there are startups that are established in Spain who are fighting for environmental sustainability for a better future. Here are some examples:
Eixverd company as a first example, they are implementing their Idea to help the urbanic areas by implementing sustainable solutions to rooftops! This brilliant idea brings usage of rooftops as a source of power houses of fresh air and energy.
HOLALUZ company is considered as one of the most known startups in Barcelona for being efficient by offering 100% green energy solutions at a low price which makes it very attractive and helpful in the consumer's point of view, therefore, it is gaining popularity and competitive advantage with their sustainability offers.
Ethical Time, an online fashion company that breaks the rules of having clothes that are made with respect! Ethical time is a platform that makes it possible for every individual to shop online at any time and contribute in being sustainable in this sector.
The idea of this is to show that in terms of sustainability, startups are the ones to stand out and ask for change. If you wish to see more about this article click (here).
We recommend …
📹A video: Michael Pritchard: How to make filthy water drinkable | TED Talk
https://www.ted.com/talks/michael_pritchard_how_to_make_filthy_water_drinkable?language=en
📱 An Instagram account: Water
https://www.instagram.com/water/?hl=es
🎧 A podcast: Water Infrastructure
🎤 An Event: CleanTech Forum Europe (Edinburgh & Online)
https://www.cleantech.com/event/cleantech-forum-europe-21/
⁉️ A Quiz: Water Footprint Calculator
https://www.watercalculator.org/
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Very inspiring!!