Using Business Resources While Ensuring Public Interest Outcomes and Preventing Policy Capture



Critical to this debate is the question of how to use business resources toward mutually beneficial outcomes while ensuring that companies act in a manner that aligns with the public interest and that avoids undue influence. Though we see emerging incentives for companies to act in a responsible manner, there are also important and powerful conflicting interests and competing incentives that may lead to perverse and unbalanced outcomes (Morrison et al. 2010, Hepworth et al. 2010). However, these concerns should not overshadow the need to solve critical water challenges that affect us all. Rather, looking forward, corporate engagement with water issues should be founded upon an appreciation of the potential risks and perverse outcomes to communities, the environment, and others, and the reality that greater due diligence, dialogue, and transparency are essential to success.

Following is a list of some of the most salient tensions and barriers to beneficial private sector involvement in water policy and management. Explicitly recognizing these barriers can help us navigate them as we go forward.


Many companies will not actively promote stringent regulatory frameworks that increase operational costs, limit production, or significantly undermine company influence in water decision making

Tension exists between (a) a company’s desire for a governance system that effectively manages others’ water use (and therefore prevents water scarcity and pollution challenges) and (b) its desire to prevent limitations to its own water use or stringent guidelines on water quality that drive up operational costs.Such conflicting interests may not discourage company investment in or promotion of water-use efficiency among other water users in a particular basin, but they do call into question a company’s incentive to meaningfully facilitate development of a governance scheme that could potentially limit its own production or increase operational costs. Similarly, while many companies may seek to implement projects that have public interest outcomes (e.g., addressing municipal nonrevenue water losses or riparian restoration/source water protection) and therefore build their reputation among local stakeholders, only the rare company will choose to promote water governance processes such that their own influence on water decision making is significantly lessened.


Companies are unlikely to be the leading advocates for prioritizing domestic water uses (i.e., meeting basic human needs) over their own water use

In light of the recently affirmed human rights to water and sanitation (United Nations 2010), water governance systems and legal frameworks in the 21st century are increasingly likely to include provisions that prioritize domestic and other water uses above those for industry. For example, the State Water Policy in Rajasthan (where Kaladera is located) stipulates that water allocations should be prioritized to drinking water, irrigation, power generation, and industry, in that order (Department of Water Resources 2000). While water uses to meet basic human needs are a clear societal priority (and in fact typically represent only a small proportion of water use in a basin), companies may not be inclined to proactively advocate for water management regimes that deprioritize their own water use. Thus, champions of such causes will typically need to come from other segments of society, including explicit government commitment.


The potential exists for greenwashing: company claims and/or industry initiatives that create the perception of responsible practice without tangible water sustainability or public interest outcomes

As demonstrated in this paper, there are economic drivers for companies to invest in and promote sustainable water management inside and outside of their fencelines, such that watershed challenges and associated business risks are better managed. However, history also shows that some of these drivers, especially those regarding license to operate and brand value, can hinge on the perception of action, rather than genuine action itself. This leaves open the potential for greenwashing initiatives that foster a perception of good practice without any tangible benefits to the public interest. As the issue of water is tackled by a growing number of companies, we are likely to see a growing number of claims of stewardship and industry-led initiatives that serve a corporate social responsibility (CSR) agenda far more than they do a strategic one. The onus will be on many of the practitioners and NGOs that support corporate water stewardship, as well as on academics and peer businesses, to differentiate between spurious claims and substantive efforts. While many critics will use these examples as straw men to criticize all corporate action on water, the case for validating claims and auditing performance should create stronger accountability and monitoring toward genuine shared outcomes. It should be noted that the maturity and experience level of companies varies a great deal and that even within the same company, responses at basin level differ depending on the local situation.


Some investors and corporate executives may be prone to react to short-term pressures that conflict with sustainable water management and shy away from tackling long-term sustainability drivers

Much of the rationale behind shared water challenges and collective action implicitly hinges on companies’ assessing and managing risk on a long-term time horizon. For instance, companies considering long-term business viability will be much more likely to invest in water-use efficiency measures and sustainable water supply than companies seeking to maximize profit in the near term. Likewise, many investors who have a short-term perspective and continue to orient around quarterly earnings statements may find it difficult to fathom the justification for a long-term engagement in water governance in a particular region, when that engagement will only garner positive results over a five-to ten-year time horizon. Even within a company, CSR and Sustainability departments may seek approvals for programs and corollary expenditure based on long-term considerations and planning only to be confronted by unsupportive senior executives and legal departments who are requiring shorter-term returns on investments.


Some business models and operational contexts may not offer strong drivers for action

A significant number of companies have strong incentives to ensure sustainable access to water in a single location over the long term. These businesses, such as geographically bound mining or oil and gas companies, typically must operate in particular locations to be economically viable. Furthermore, SMEs may not have the economic means to simply move away from water-stressed settings. Others, however, have greater flexibility in the location of their facilities and supply chain and may not intend to remain in one watershed for long. Such enterprises might be inclined to shift operations and supply chains away from water-challenged areas. As a result, they are less dependent on those regions, and their move perhaps even improves how they are perceived by some key stakeholders. This “move away from the problem” alternative undermines incentives for companies to make substantial long-term investments in improving water governance in water-stressed areas.

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