From Risk to Strategic Asset: Why Companies Must Transform Their Approach to Water

By Amie Hedblom Sr. Director of Corporate Sustainability Marketing at Ecolab and Klaudia Schachtschneider, Programme Manager at the Pacific Institute and Interim Technical Lead at the CEO Water Mandate 

As climate volatility increases and stakeholder expectations grow, water is becoming a critical factor for business resilience and long-term growth.  

Yet within this challenge lies an opportunity. Companies that treat water not just as a risk but as a strategic asset can unlock efficiencies, strengthen supply chains, and build a competitive advantage. 

A Growing Business Risk 

Water underpins much of the global economy. An estimated 60% of global GDP depends on reliable access to freshwater, making water security increasingly important for industries ranging from agriculture and manufacturing to technology and energy. 

At the same time, the gap between global freshwater supply and demand is widening. Climate change, population growth, and economic expansion are intensifying pressure on water systems worldwide. Businesses are already experiencing the consequences through supply disruptions, rising costs, and increasing regulatory scrutiny. 

Digital transformation is adding further complexity. Data centers supporting artificial intelligence and cloud computing require large amounts of both energy and water, placing additional stress on local water basins. Yet the same technologies driving demand also hold promise. AI-enabled water management can help companies improve efficiency, anticipate risks, and better manage water resources over time. 

Rising Expectations from Stakeholders 

Investors, regulators, and consumers are paying closer attention to how companies manage water.  

In 2024, more than 1,000 companies were requested by financial institutions to disclose water-related risks through CDP, reflecting growing investor concern about water security. But disclosure alone is not enough. According to Ceres, many companies still fall short when it comes to implementing meaningful water strategies. 

Consumers are also raising expectations. Research from the latest Ecolab Watermark™ Study shows strong support for businesses investing in water-efficient technologies and water reuse practices, yet many consumers believe companies are not moving fast enough. Companies perceived as lagging on water stewardship risk damaging both their reputation and their social license to operate. 

Water as a Driver of Resilience 

Water-related events, including droughts and floods, are becoming more frequent and severe. These disruptions pose real risks to operations, supply chains, and community well-being.  

Forward-looking companies are beginning to rethink their approach. Rather than treating water solely as a compliance issue, they are embedding water stewardship into core business strategy.  

Smart water strategies can reduce operational costs, lower energy use, and strengthen supply resilience. Circular water approaches (reducing, reusing, and reclaiming water) can improve efficiency while helping companies adapt to increasing water scarcity. 

Turning Insight into Action 

Transforming water management requires practical tools and collaboration. 

Tools such as the Aqueduct Water Risk Atlas from the World Resources Institute and the Water Risk Filter from World Wide Fund for Nature help companies understand basin-level water risks and identify priority locations for action. 

Collaboration through the Water Resilience Coalition and platforms like the Water Action Hub connect companies with collective action initiatives and partners working to strengthen water resilience at the basin level. 

Digital tools like Ecolab’s Water Navigator IQ can help companies turn data into decisions, enabling better planning, investment, and performance tracking across operations. 

A Strategic Imperative 

Companies are approaching a pivotal moment. Water scarcity is intensifying, resource demand is growing, and stakeholder expectations are rising. Businesses that continue to treat water as a peripheral issue risk falling behind. 

By recognizing water as a strategic asset—and investing in smarter management, collaboration, and innovation—companies can build resilience while contributing to healthier ecosystems and communities. 

The message is clear: water is no longer just a risk to mitigate. It is a foundation for sustainable business success in the decades ahead. 

NOTE: This blog post is based on an article originally posted here. 

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CEO Water Mandate
The Mandate is a commitment platform for business leaders and learners to advance water stewardship. Endorsing companies commit to action across six key elements and report annually on progress. The Mandate Secretariat - a partnership between the UN Global Compact and Pacific Institute - supports the initiative’s mission and endorsing companies in many ways, including: (1) developing research, guidance, and tools that advance corporate water stewardship, (2) convening multi-stakeholder events to identify, explore, and solve key water challenges, and (3) facilitating meaningful collective action to improve conditions in at-risk river basins around the world.