The Case for Private Sector Engagement in Water Policy and Management




In this discussion paper, we make the case for private sector engagement in water policy and management and respond to the question of whether such strategies truly advance the public interest. We posit that discouraging or preventing companies from contributing to sustainable water management in cases where they have a clear and demonstrable interest in doing so, and where they have access to vast resources that would not otherwise be available, is actually a significant detriment and threat to effective water governance, sustainable development, and economic growth.

This discussion was developed in partnership with WWF



Emerging debates on the appropriate role of business in water policy and management
Industry relies on fresh water directly to manufacture goods, and it relies on water indirectly in the production of supplies. Water is used as a solvent and cleaning agent, to cool industrial and energy= generation processes, to dilute contaminants, to irrigate crops, and to extract fossil fuels, and as a key ingredient in many products, among many other uses. In almost all of these examples, water is nonsubstitutable. Because of pronounced water scarcity, pollution, inadequate management systems, and associated challenges in a growing number of regions around the world, many businesses are making the strategic decision to promote and invest in improved water resource management (CDP 2012, Ceres 2009). Their decisions are based on their growing understanding that water risks are caused not only by a company’s own water use and pollution, but also by the watershed context in which a company operates.

The CEO Water Mandate seeks to articulate the business case for sustainable water management, develop good practice guidance, and convene multi-stakeholder working conferences to identify and encourage good policies and practices for corporate water stewardship. The Mandate posits that not only can companies contribute significantly to achieving more sustainable and effective water management, but that in many areas their participation is in fact vital—particularly in emerging markets of the “developing” world or Global South, where government capacity and resources are limited.

Importantly, this new corporate water stewardship agenda is finding growing acceptance by governments and public policy leaders in both developed and developing countries. Increasingly, traditional state actors recognize that water and related challenges (e.g., sanitation) are too complex and daunting for governments to solve alone—collaboration will be required in the quest to achieve water security, on the local and global levels.

Companies will respond to water challenges differently, depending upon the area, sector, resources and levels of risk. While many companies will seek solely to improve their water-use efficiency and ensure adequate wastewater treatment in their operations, others may go beyond their “factory fence-lines” to encourage and facilitate more sustainable water management throughout their supply chain and to engage in the watersheds in which they operate (Pegram et al. 2009, Newborne and Mason 2012, Morrison et al. 2010). The focus of this discussion paper are these companies that engage externally to address water risks through a variety of means (often as a collective action with NGOs, government agencies, other businesses, etc.), including:

  • Facilitating water-use efficiency and pollution reduction measures of others in their watershed.
  • Advocating for efficient, equitable, and ecologically sustainable water policies and practices at
    local, national, and international levels.
  • Sharing data and information to improve public water management.
  • Investing in public water infrastructure expansions or upgrades.
  • Using internal facilities to meet local water supply and treatment needs.
  • Using financial and technical resources to support local water institutions in catchment planning
    and management.
  • Supplementing infrastructure to ensure local supply to communities and industry (Morrison et
    al. 2010).

The stated objective of these “beyond the fence-line” engagement strategies, often collectively referred to as “policy engagement” (Morrison et al. 2010), is to reduce business risk by supporting a stable business environment and ensuring consistent access to water supplies. Ideally this strengthens a company’s license to operate and builds its standing amongst relevant stakeholders. These efforts also seek to identify and reduce the company’s adverse impacts on a region’s water-related challenges. Such strategies are grounded in the premise that they advance the public interest and are mutually beneficial to companies, their stakeholders, and other actors in the watershed. This premise, in turn, stems from the idea that many water-related challenges, such as scarcity, pollution, inadequate infrastructure, insufficient management capacity, and climate change, affect a wide range of actors and are shared among companies, governments, civil society, communities, and others (Pegram et al. 2009).

While many companies are beginning to engage in water policy as a key element of their watermanagement strategies, some NGOs and academics are calling into question whether such strategies truly advance the public interest. Some, such as the Public Services International Research Unit (PSIRU), as detailed in its article “Conflicts, Companies, Human Rights and Water—A Critical Review of LocalCorporate Practices and Global Corporate Initiatives,” argue that these strategies in reality perpetuate a history of undue corporate influence on public policy that subverts the public interest in favor of corporate profit (Hall and Lobina 2012). This argument is based largely on the interrelated notions that:

  • Companies do not have an economic incentive to promote sustainable conditions beyond their
    fence-lines (apart from public relations gains).
  • Companies have an interest in weak water-related governance, which allows them to continue
    socially and environmentally harmful, yet profitable, practices; consequently, companies strive
    to undermine democratic processes.
  • Water challenges are not “shared”; many issues that companies consider risks, namely
    regulation, are actually a boon to communities and ecosystems.

This article sets out to provide nuance to these notions and in some instances outright challenge them.

It acknowledges the real threat of corporate policy capture and “greenwashing,” as well as the inherent asymmetries in conceptions and realities of water risk. However, the paper argues that current conditions actually offer a much greater incentive for companies to align their water-related policies and practices with the public interest than in the past. A great opportunity exists for companies, governments, civil society groups, communities, and others to collaborate to achieve shared water-related objectives. Such collective-action undertakings should be encouraged if they are conducted in a way that advances the public interest and aligns with global sustainable development goals. This potential lies at the heart of what has been referred to as the “shared risk proposition.” It makes feasible the prospect of better aligning water challenges as shared objectives with mutually-beneficial outcomes, as opposed to each stakeholder “fighting its corner” to the detriment of the others.

Further, we posit that discouraging or preventing companies from contributing to sustainable water management in cases where they have a clear and demonstrable interest in doing so, and where they have access to vast resources that would not otherwise be available, is actually a significant detriment and threat to effective water governance, sustainable development, and economic growth. The moral imperative here is not to forcibly remove companies with wasteful water-related practices from waterscarce regions, but to demand that they implement optimal water-related practices and make positive contributions to local water resource management and governance. The moral imperative is not to exclude companies from contributing to water management efforts, but rather (1) to insist that they operate in a manner that is welcomed by local stakeholders and that justifies their presence and (2) to assist them in doing so.