Influencing the governance of water (i.e. the rules and institutions, both formal and informal, which determine how water is managed) is essential in addressing water risks.

Shared water sources need to be managed sustainably for all or any water savings or reductions in pollution by one company can be offset by increases from others, resulting in no net change in overall risk for the company that has improved practices. The cumulative use of water in a river basin and the social, political and environmental contexts which surround it contribute to a company’s exposure to water risk. A highly water-efficient company operating in a water-stressed catchment, where others continue to manage water poorly, remains exposed to water risks.

Depending on the context, the governance of water may need to be influenced at various scales from local (e.g. Water User Associations) to basin (e.g. basin management organisations), regional (e.g. state government) or national (e.g. Ministry of Water/Environment). Investors expect companies to:

  • understand the policy landscape; and
  • build coalitions of support with other organisations and develop shared policy advocacy positions in key water risk areas.

Example engagement questions

  • Have you investigated the underlying legislation, policy and institutional water management drivers for the water issues in your high water risk areas?
  • Do you engage in advocacy with water management institutions to improve water management policy and practice?
  • Does your advocacy work adhere to recognised principles for responsible engagement with policy makers (e.g. CEO Water Mandate principles)?

Good practice examples:

Lake Naivasha water allocation regime

Kenya’s Lake Naivasha is significant to the national economy; it supports horticulture and floriculture, energy production, power generation, tourism and livestock production. Abstraction was unlimited and human activities caused the clearing of lakeside vegetation, nutrient loading from the upper catchment and loss of aquatic vegetation. International media drew attention to concerns around the lake’s future and the high water usage of flower production for western consumers. In response, European retailers, WWF and other NGOs brought stakeholders together to develop a plan for the lake. The Lake Naivasha Grower’s Group developed a Water Allocation Plan (WAP), which now guides water use in the basin. Several Water User Associations were established, which work together to implement water conservation measures and sustainable livelihood strategies in their catchments. The WAP was adopted by the Water Resources Management Authority and developed further through stakeholder consultation.

Doñana Strawberry and Sustainable Water Management Group

In March 2016, the Doñana Strawberry and Sustainable Water Management Group supported the Land Use Plan (Plan de Ordenación de la Corona Forestal Doñana) issued by the Government of Andalucía, calling for its urgent implementation. The group was concerned about the continued pressure on the quantity and quality of the water resources in the region. The Land Use Plan offered legal certainty to adopt sustainable and efficient water management practices by businesses in the area.

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    Investor guide on water risks in agricultural supply chains

    March 2018