Responsible engagement begins with developing internal understanding, focus, and buy-in to support meaningful and credible engagement outside the company fence line. The company will need to discern the relationship between water risks and opportunities (from the group or corporate level to individual operating units), based on an understanding of the needs of its stakeholders and the public policy contexts within which it operates. Assessing the context for water policy engagement includes the following key elements, which are interrelated and often implemented simultaneously.
Understand the water resource and policy contexts
The company needs to understand the water resource and the complex interactions among the water users that rely on it. This understanding will help mitigate the negative impacts of company water use and the risks imposed on the business by local water conditions.
Companies can answer the following types of questions to diagnose which aspects of the current water policy framework lead to or exacerbate water-related business risks and which of them present opportunities, and to also reveal the interdependence of key stakeholders.
- What is the formal (legal and regulatory) water management framework and decision-making and implementation process, and where do statutory duties and powers lie?
- Is this framework adequate (e.g., includes appropriate standards, allocation mechanisms, and public participation elements) and functional (sufficient resources, legitimacy and license to enforce rules, process permits and licenses, etc.)?
- What are the key determinants of water policy performance? Is poor performance linked to a lack of resources, funding, or technical capacity? Is there a lack of political support or evidence of negligence or corruption? Are lines of responsibility and accountability clear, or do overlapping mandates restrict action?
- Who has what type of leverage in the water management decision framework? Are there underrepresented or poorly represented interests?
- Who has what type of water access and use needs and to what extent are these met? What is the outlook for these needs being met in the future?
- What major reform initiatives or investment programs are in the pipeline?
- Is water supply and treatment infrastructure sufficient and adequately maintained to meet current and projected needs?
A company should consider exactly how weak links in the policy framework relate to its own operational water-related risks and impacts to help clarify the type of mitigation action and potential engagement that might be required.
Understand the political economy and risks of engagement
Effective engagement must also be grounded in a nuanced understanding of the political economy within which a company operates. A contextual understanding of why policy and legislation is or is not implemented, political priorities and imperatives, modes of decision-making, drivers of change, and who holds genuine power, authority, and influence will shape appropriate engagement.
Key characteristics of a location’s political economy that may influence decisions about the nature of engagement (or non- engagement) include:
- The complexity of the water issue at hand and the viability of a clearly defined, finite, and targeted intervention.
- The coherence, stability, and maturity of the policy and legal framework within which an intervention will take place.
- The political will of counterparts to proactively engage in good faith, particularly before a situation has developed into a crisis.
- The capacity and interest of water managers to cooperate and collaborate and to engage in an effective and sustained manner.
The nature of water management inherently predisposes the sector to corruption and other types of manipulation. Many commentators, including the Global Corruption Report 2008, allege that corruption lies at the heart of the global water crisis. This Guide suggests that companies planning to engage comprehensively in water policy issues consider joining the Water Integrity Network (WIN),4 not only to benefit from the WIN’s expertise, but to send a very clear signal that they uphold and plan to maintain the highest ethical and probity standards while engaging on water issues.
Where political will around water policy is weak, the company’s intervention may be exposed to greater risk, with potentially little benefit. Where this situation exists, the company might want to realign its engagement strategy to one of advocacy and support with governments or direct intervention with communities, as opposed to higher risk interventions.
While an assessment of political economy is the most important component of any assessment of the risks associated with engagement, numerous other factors might also inform engagement decisions, including:
- The company’s ability to initiate a process or intervention, including the involvement of potential allies and specialists.
- Tolerance by corporate shareholders of long-term initiatives that may not yield short-term profits or immediate benefit.
- An ability to communicate the intentions of engagement clearly and maintain transparency.
Assess stakeholders to understand their concerns
Though the “shared risk” concept emphasizes that governments, companies, and communities share the risks of dysfunctional water policy, it cannot be assumed that corporate and public opinion and interests will always align. Communities, policy makers, NGOs, and companies tend to focus on specific elements of water policy debates and operate in differing contexts with differing priorities. Further, while all stakeholders may agree on water resource challenges, their preferred methods for addressing these issues may be fundamentally different. Shared learning and experience across this broad spectrum may generate innovative, consensus-based solutions or processes for change. Engagement is likely to be most effective when affected parties share a respectful understanding of a wide range of other viewpoints.