key water risks in automotive...

Key Water Risks in Automotive Business

Maurie Carr

• Established in 1988 as a 501(c) 3 nonprofit

• Promote sustainable development through partnerships and targeted action

• 28 year history of successful sustainability partnerships

GETF History and Background

2

Monitoring, evaluation &

reporting

Program delivery,

management &

coordination

Leverage

Program launch and

external affairs/comms

support

Strategy Development

Offering

G

ET

F S

erv

ice

s

Re

pre

se

nta

tive

Clie

nts

Internal & external

stakeholder mgmt;

risk analysis;

geographic

prioritization;

target setting

Event and partner

coordination;

commitment

framing; partner

identification; and

development of

comms

Co-finance

identification;

collective action;

developing

pathways from pilot

to scale

Turnkey mgmt;

technical support &

oversight; liaison

between global &

local teams;

business unit &

brand engagement

Target

verification;

support for

corporate

reporting;

program

evaluation

GETF Service Offering

3

Why Water?

1 in 10 people

lack access to clean water

35% of the world’s

population lack adequate sanitation

facilities

Universal access to water and sanitation

would yield $220 billion in

economic benefits

healthy children

sanitation women

disease food supply

agriculture multiplier

gender equality

economic growth

hygiene education

Water is a catalyst.

4

Water Scarcity

2025: over 1 billion people will face absolute

water scarcity 5 Source: IWMI

• For every $1 invested in water and sanitation, there is a $4 return

• Improvements in access to clean water can results in an annual increase in GDP

between 2% and 7%

• By year 2050, population in emerging markets will have

doubled; population in the developed world will remain the same

Building the Business Case

6

By the year 2025, consumption in emerging markets will reach $30 trillion per year, representing the BIGGEST GROWTH OPPORTUNITY in the history of

capitalism.

MCKINSEY – WINNING THE $30 TRILLION DECATHALON

The key to bringing people and markets to their POTENTIAL starts with

WATER. Investing in water and sanitation BOOSTS ECONOMIC GROWTH:

From Headlines to Bottom Lines: Water Risk in the News

7

Water Footprint in the Auto Supply Chain

The average U.S. vehicle uses 59,365 liters of water throughout its lifetime (from pre-production to post-production).*

*Source: Quantifying the Life Cycle Water Consumption of a

Passenger Vehicle. Burt Bras, Francisco Tejada, Jeff Yen,

John Zullo and Tina Guldberg. Georgia Institute of

Technology, 2012.

11% 1%

88%

Water Usage in Vehicle Life Cycle

Pre-Production

Production

Post Production

Post-

Production:

• Fuel

Processing

• Post-use

Recycling

Pre-Production:

• Materials

manufacturing

(metals, rubbers

& plastics)

• Parts production

Production:

• Vehicle Assembly

• Facility operations

(e.g. restrooms,

cooling towers)

8

Water Use in Electric Vehicles

Increasing vehicle electric use Increasing water footprint

SOURCE: Noori M, et al., Electric vehicle cost,

emissions, and water footprint in the United States:

Development of a regional optimization model, Energy

(2015), http://dx.doi.org/10.1016/j.energy.2015.05.152 9

Financial Risk

Financial Operational Product Reputation Regulatory/Compliance

Example – Price Hikes

In 2013, water prices rose as

much as 300% in Mexico.

Consequences:

•Increased operating costs

•Affected revenues and

constraints on growth

•Higher costs of goods sold

•Decreased shareholder value

Water is highly undervalued and

prices are increasing.

10

Operational Risk

Consequences of

Interruption:

•Closure of operations

•Delays in permitting

•Property damage

•Supply chain

disruption

•Transport disruption

•Constraints to growth


Poor water quality

Major flooding events

Competition for allocations between agriculture, human consumption and industry

Availability of water resources

Fluctuating water prices due to regulatory or changing resource constraints

Factors affecting business continuity

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Product Risk

Definition: how do products and

services affect communities and

ecosystems?


Considerations:

• Increasing water footprint of electric

vehicles

• Water use of vehicle inputs (synthetic

materials, leather, agricultural

derivatives, etc.)

• Water use for fuel production (biofuels,

gasoline, etc.)

12

Reputational Risk


Example – Loss of Social License

to Operate

In 2015, Coca-Cola decided not to

move forward with the development of

an $81 MM bottling plant in southern

India due to resistance from local

farmers related to strains on ground-

water supplies.

Consequences:

•Disruption to operations and supply

•Affected revenues and constraints on

growth

•Brand damage

•Fines and Penalties

Social unrest can cause interruptions to water

supply. In February 2016, 10 MM people in Delhi

were without water as protesters sabotaged the

supply canals.

13 Kazmin, Amy, “Coca-Cola Forced to Abandon India Bottling Plant

Plans,” The Financial Times, 22 April, 2015,

http://www.ft.com/intl/cms/s/0/9e7d36da-e8e5-11e4-87fe-

00144feab7de.html

https://next.ft.com/content/534f779

4-d940-11e5-9ba8-3abc1e7247e4

Regulatory/Compliance Risk

Poor policy frameworks + Low institutional capacity + Lack of political will

poor management of demand and supply, competing uses, permitting, etc. AND

uncertain regulatory environment


Consequences:

• Disruption to operations and

supply

• Increasing operating costs

• Affected revenues and

constraints on growth

• Fines and penalties

• Increased capital expenditures

14

Understanding internal water management

and use

Identify external water

risks

Evaluate exposure to

and likelihood of risks

Development of strategies - Internal and

external action

Risk Assessment Tools and Methodologies

Assessment Tools:

Building a

baseline

Determining

operating

environment

Prioritizing

relevant and

immediate

risks

Making the

“case” for

water

15

Aqueduct

Example - Tool to Identify Risk

16

Prioritizing Risk

• Validating global

assessments with

local information and

inputs

– Facility surveys

– News reports

• Determining

likelihood, type and

severity of impact

Example Questionnaire: Water Risk Filter

17

Access to Guidance and Tools

Water Stewardship Toolbox Ceres Aqua Gauge

Determining which resources are right for you

18

Building a Water Strategy:

Elements of the CEO Water Mandate

• Managing use efficiently; ensuring all employees have access to WASH in the workplace

Direct Operations

• Engaging with suppliers on water stewardship and stakeholders in shared watersheds

Supply Chain and Watershed Management

• Partnering with key stakeholders on water management

Collective Action

• Engaging in local, regional and national policy discussions to support sound water management

Public Policy

• Ensuring communities and environments beyond factory “fence line” have sustainable access to WASH

Community Engagement

• Reporting, communicating and disclosing important water information

Transparency

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Facilities/

Operations

Risk/

Insurance

Government/Public Affairs

Supply Chain and

Procurement

Marketing

Finance

Integrating Water - Internal Engagement

Making the case for cross-functional collaboration on water risk

Risk Mitigation Strategies

20

Engaging External Partners

Example – Water Action Hub

21

Taking the First Step

22

Build understanding of water footprint

Get “house” in order

Engage operating communities

Join in collective action

Questions?

Maurie Carr

Vice President, Partnerships & Development

Global Environment & Technology

Foundation

[email protected]

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key water risks in automotive...

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