McKinsey Quarterly Explores “The Water Imperative”
by Beth Gray
In the most recent issue of McKinsey & Company’s publication, McKinsey Quarterly, the editors explore the looming issue of water scarcity through a special report and two interviews with leaders of two companies, Nestle and Rio Tinto, who are taking the problem very seriously as they formulate their business plans for the coming years.
In “The Business Opportunity in Water Conservation,” Giulio Boccaletti, Merle Grobbel, and Martin R. Stuchtey explore methods for turning water scarcity into business opportunity. The authors point out that the issue of water scarcity has come to such a crisis level that in 2004, for example, Pepsi Bottling and Coca-Cola “closed down plants in India that local farmers and urban interests believed were competing with them for water.” Global companies are finding that they are increasingly unable to operate in areas where water is particularly scarce – as is seen in the example above. When such companies are able to continue operations in areas of the world in which water is scarce, they must often take significant (and often expensive) measures to ensure that any waste water runoff will not contaminate scarce drinking supplies for local communities.
The current water scarcity situation is predicted to grow even worse in coming decades. The authors note that “assuming continued economic and population growth, by 2030 water supplies will satisfy only 60 percent of global demand and less than 50 percent in many developing regions where water supply is already under stress…” As many companies strive to find ways of reducing their water consumption in an attempt to be respectful of the already scarce water resources, other companies are devising innovative technologies to help them with the process. The authors point out that “the broadest range of opportunities for new products and services [to help reduce water consumption] falls into three areas: improving the productivity of water treatment and distribution, of water-intensive industrial and power processes, or of water usage in agriculture.”
The authors reference several countries that have developed innovative means of conserving water. In Singapore, for example, wastewater, runoff rainwater, and melted snow are collected separately and purified to various standards depending on the purpose for which the collected water is to be used. In a planned community in Abu Dhabi, urban designers have designed collection systems that will allow the community to recycle up to 80 percent of the water needed. Another example of innovative water usage can be found in Hong Kong’s usage of seawater in toilets and proposed use of seawater to cool commercial buildings.
Also in the McKinsey issue are two interviews by business leaders Peter Brabeck-Letmathe, Chairman of Nestle, and Tom Albanese, CEO of Rio Tinto. Each have recognized the importance of managing their consumption of water and have incorporated sustainable water usage into their respective business plans.
Scarcity of water is one of the most pressing concerns of our time. As businesses face growing concern from consumers and stakeholders to green their operations and product lines, water conservation is becoming increasingly important. I recommend this particular issue of McKinsey Quarterly to anyone interested in issues related to sustainability, water specifically, and business.
Tags: Coca-Cola, McKinsey & Company, McKinsey Quarterly, Nestle, Pepsi Bottling, Peter Brabeck-Letmathe, Rio Tinto, Tom Albanese
