Director, Ceres Water Program
“Ford has an opportunity to demonstrate leadership around water because, quite frankly, the auto industry has been a bit slow in making the shift to the 21st century water mindset. It’s true that auto companies are not big direct users of water. But up and down its value chain, you see a far bigger footprint, from raw materials such as aluminum, which requires vast amounts of water to produce, to upstream water impacts of the fuels drivers use.”
The Ceres Water Program was launched in response to a recognition that global water trends – availability challenges, quality threats and climate change, to name a few – required a bold rethinking of future water use. Ceres felt that companies needed to look at these issues from a broader risk and opportunity lens and do far more to plan for a water-scarce future.
The Water Program began analyzing how global water trends and drivers intersect with businesses, supply chains and product development. And we examined ways in which companies were reporting and disclosing their water strategies. Was the disclosure comprehensive? What data were they using? How is the company managing these risks? Ultimately, we wanted to set a higher bar for best practice in water risk management.
In the five years since we began the Water Program, we’ve seen a dramatic shift in corporate understanding around water and its implications for business. I call this the 21st century water stewardship mindset versus a 20th century one. With a 20th century mindset, if I asked a facility manager where the water came from, she might point to the pipe in the back of a factory. Her knowledge about the source of the water – Does it come from an aquifer? Does it come from a river? Who are the other major users of that water? – might not go any deeper. For much of the 20th century, many companies had the luxury of ample and inexpensive water supplies, so they didn’t really have to think beyond the immediate source.
A business with a 21st century mindset views water as part of an interconnected ecosystem that is impacted by a host of variables, including changes in our climate. Water is understood to be a shared good that doesn’t just magically flow out of a pipe; it has a whole natural and engineered infrastructure supporting it – and in many places, a very fragile one at that. Ford Motor Company is among a growing number of companies undergoing this shift in mindset. It realizes that it not only needs to be more efficient in using water, but also needs to consider what it can do beyond its factory walls to protect fresh water for the future.
Ceres has had a relationship with Ford for more than a decade. Our independently convened Ceres Stakeholder Committee, which advises Ford on its sustainability reporting and strategy, has identified global water issues, including access to water in the developing world and overall stability of water supplies, as increasingly important to Ford’s business, especially as the company continues to expand into emerging markets.
The Stakeholder Committee has been active in bringing water concerns forward for Ford – even though it might not seem at first blush that water is a highly material issue for the auto industry. Recently, as Ford worked to expand its global water strategy, Ceres used our Aqua Gauge tool to assess Ford’s water stewardship approach, including the company’s water efficiency goals, and looked to see where there might be opportunities to strengthen and improve.
One of the key areas where we are pushing Ford is around supplier engagement and helping Ford’s strategic suppliers to understand their own water risks. Another key priority is encouraging Ford to look beyond the fence-line to improve stewardship of rivers and watersheds, especially in emerging market countries. We also wanted to see how Ford would implement its commitment to respecting the human right to water. In other words, how is Ford operationalizing that commitment by minimizing its own impacts on water while investing in projects that can make a real difference?
Ford has an opportunity to demonstrate leadership around water because, quite frankly, the auto industry has been a bit slow in making the shift to the 21st century water mindset. It’s true that auto companies are not big direct users of water. But up and down its value chain, you see a far bigger footprint, from raw materials such as aluminum, which requires vast amounts of water to produce, to upstream water impacts of the fuels drivers use.
Companies like Ford should set water efficiency goals that prioritize water savings where water challenges are the biggest. A gallon saved in Michigan does not have the same environmental or social impact as a gallon saved in Mumbai. It’s where a company is saving water that is the critical question.
One of the myopic ironies about water is that it tends to be cheapest in places where supply is most constrained. This perverse equation makes it difficult for companies to think of water as anything more than a monthly operating cost – and a cost that is minimal compared to energy use. But if companies only think of water in relation to price, then they’re missing the full range of business interruption, supply chain and reputational risks. The value of water lies in assessing its opportunity cost – what would you do if it weren’t available?
© 2014 Ford Motor Company