Why companies should care about the human right to water
This month I am compelled to stay on the topic of water’s cost and value for several reasons. First, while discussions of the “full cost” or “true cost” of water are helpful, they do not capture the complexity of all of the issues related to the value of water. I also believe the human right to water needs to be part of this discussion.
When evaluating the impact of water-related risks on business value, companies will analyze and, if feasible, quantify regulatory and reputational risks. Once physical risks — water quantity and quality — are included, companies can get close to an understanding of their value at risk.
But what this evaluation does not include is a consideration of stakeholders, in terms of how they value water and the cultural and social values associated with water. Not only do stakeholders within a watershed care about how a company values water but stakeholders outside a watershed also can care.
Stakeholders care about water and very likely will value it differently from companies. They also can have different values and cultural norms regarding water.
Taking this further is the “human right to water” and how it relates to water pricing. Recent discussion in the media has left the impression that these two issues are in conflict. In fact, the pricing of water — according to its value — is not in conflict with the human right to water.
First, here is a little background on the human right to water.
In July 2010, the United Nations General Assembly adopted a resolution recognizing the human right to water and sanitation. The resolution declared clean drinking water and sanitation to be essential to the realization of all human rights. It also called upon states and the international community to help countries, especially developing nations, to provide clean and affordable drinking water and sanitation through funding, capacity building and technology transfer.”
In November 2002, the U.N. Committee on Economic, Social and Cultural Rights proclaimed “the human right to water is indispensable for leading a life in human dignity. It is a prerequisite for the realization of other human rights.” It also defined the right to water as “the right of everyone to sufficient, safe, acceptable and physically accessible and affordable water for personal and domestic uses.”
Water pricing, the business value of water and the human right to water are all issues that businesses now face, particularly in emerging economies. Several companies have integrated these issues into their water stewardship strategy and have benefited by reducing water-related risks and accruing brand value.
PepsiCo is one example of a company that has acknowledged the human right to water. This acknowledgement aligns well with its sustainability strategy of “Performance with Purpose.”
In 2009 PepsiCo was the first publicly traded, multinational corporation to create a policy in support of the human right to water. PepsiCo describes its commitment in the following manner:
“We at PepsiCo respect the human rights recognized by the countries in which we operate, and will not take any action that would undermine a state’s obligation to its citizens to protect and fulfill the Human Right to Water and, absent of a country’s Human Right to Water Policy, we commit to operate within the principles of the Human Right to Water Policy as defined by the United Nations.”
While our discussion of full cost, pricing and value are essential in crafting a water stewardship strategy, we must acknowledge that water is unique. It has economic, environmental, social and cultural dimensions, all of which must be addressed.
Companies that only focus on a subset of these dimensions may have an incomplete view of the value and values of water and can be exposed to unexpected risks.