Understanding Collective Action



Drivers and motivations

Companies that make the strategic decision to manage water-related risks or seek stewardship opportunities often do so to:

  • Ensure business viability by preventing or reacting to operational crises resulting from the inadequate availability, supply, or quality of water or water-dependent inputs in a specific location;
  • Retain their local legal or social license to operate, or gain competitive advantage, by demonstrating to interested parties and customers that they use and share a precious natural resource responsibly, with minimal impacts on communities or ecosystems;
  • Assure investors, financiers, and other stakeholders that water risks, particularly those occurring beyond the factory fence line, are adequately addressed; or
  • Uphold corporate values and commitments related to sustainable development by contributing to the well-being of communities and the health of ecosystems and catchments in which they operate.

Collective action is desirable (and likely necessary) when the ability to produce these outcomes is not possible through internal or unilateral action. A company’s capacity to engage externally will often be linked to its state of water stewardship practice. The CEO Water Mandate’s Corporate Water Disclosure Guidelines puts forth a framework for how corporate water management efforts typically evolve and mature over time. It suggests that company water stewardship efforts commonly begin with a focus on internal operations, seeking to optimize water use and reduce direct operational impacts (e.g., pollution) on water resources. Such efforts to improve operational performance often fall solely or substantially under direct company control and depend minimally, if at all, on external parties. If these efforts effectively manage operational water-related risks or meet company stewardship objectives, the resultant need for collective action will typically be quite low. However, over time, companies begin to explore further activities, such as assessing the basin context in which they operate and developing comprehensive, company-wide water policies and strategies. As water management practices mature, companies often look to promote water stewardship throughout the value chain and to pursue collective action with external parties in regions of strategic interest.

From the starting point of focusing on direct operations, and depending on the nature of the water risks and opportunities, a company may branch out along a number of pathways. It may choose to focus on its supply chain (where many companies find significant water-related risks or opportunities) or target efforts in the catchments in which key facilities or suppliers are situated. In these contexts, a company typically has less control over water management risks and opportunities and must depend on the support of other parties to achieve water-related objectives. Figure 2 depicts the degree of company control within the three domains of water stewardship practice: direct operations; supplier operations; and water resource management in catchments.

Company Water Management Domains and Degree of Direct Control

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