Sustainable Business Strategies: Food and Water

Food and water, along with energy, comprise a resource nexus that will impact sustainable business strategies for all firms, given their central role in the economy.

Feeding the future world when water is constrained will be a daunting challenge . Food production will need to increase by 70% by 2050 in order to feed the projected global population of 9 billion.  Extreme weather will exacerbate the production of food and increase food prices disproportionately affecting developing countries where 70% of the household budget goes to food (the US figure is 13%).  Rising food prices have pushed 44 million people into poverty globally just in the past two years.  One tragedy is that smallholder farmers comprise 50% of the undernourished, even as they grow food themselves. Unfortunately, the prices of staple foods could double by 2030.

The food value chain is highly wasteful: 30%-50%, or 1.3 billion tonnes, is wasted from reaping to consumption worldwide.  While 1 billion are malnourished, 2 billion overeat worldwide (the US alone spends $150 billion each year on obesity-related medical costs).  In the US alone, $165 billion, roughly 40% of the food currently gets wasted . That’s roughly 20 lbs./person/month.  There is associated waste in water, energy and land, since 80% of freshwater, 10% of energy, and 50% of land goes to food in the US.

By 2030, the worldwide demand for water is expected to exceed supply by 40%.  45% of the expected worldwide GDP  of $63 trillion in 2050 will be at risk because of business-as-usual practices for water management.  Since water impacts are local, sustainable business strategies need to emphasize local solutions and working with stakeholders at the watershed level, even while creating global policies.

Corporate disclosure of water risks are growing rapidly.  For example, 27% of US companies now report exposure to water risks in their supply chains, compared to 10% in 2009.  But, corporate disclosure of water footprint is still relatively rare.  Boardroom attention to water is missing in many cases, even as risks are increasing.

As water becomes more constrained, the value of water to US industries is seeing a major shift.  Industries most dependent on water are oil and gas, chemicals, mining, electric power generation, food and beverages, and semiconductor manufacturing.  Sustainable water strategies are focusing on community partnerships and zero liquid release policies are getting more popular.

The lessons to corporate sustainability champions are clear:

  1. Pay close attention to the escalating worldwide and regional problems with food and water and identify your company’s exposure to them.
  2. Begin to build corporate momentum around a business strategy for dealing with these risks and identifying your corporate footprint.
  3. Food and water are issues every individual can relate to – find ways to build support for dealing with them.