Key Water Risks in Automotive Business. Maurie Carr

Transcription

1 Key Water Risks in Automotive Business Maurie Carr

2 GETF History and Background Established in 1988 as a 501(c) 3 nonprofit Promote sustainable development through partnerships and targeted action 28 year history of successful sustainability partnerships 2

3 Representative Clients GETF Services Offering GETF Service Offering Strategy Development Program launch and external affairs/comms support Leverage Program delivery, management & coordination Monitoring, evaluation & reporting Internal & external stakeholder mgmt; risk analysis; geographic prioritization; target setting Event and partner coordination; commitment framing; partner identification; and development of comms Co-finance identification; collective action; developing pathways from pilot to scale Turnkey mgmt; technical support & oversight; liaison between global & local teams; business unit & brand engagement Target verification; support for corporate reporting; program evaluation 3

4 Why Water? 1 in 10 people lack access to clean water 35% of the world s population lack adequate sanitation facilities Universal access to water and sanitation would yield $220 billion in economic benefits 4 Water is a catalyst. healthy children sanitation women disease food supply agriculture multiplier gender equality economic growth hygiene education

5 Water Scarcity Source: IWMI 2025: over 1 billion people will face absolute water scarcity 5

6 Building the Business Case By the year 2025, consumption in emerging markets will reach $30 trillion per year, representing the BIGGEST GROWTH OPPORTUNITY in the history of capitalism. MCKINSEY WINNING THE $30 TRILLION DECATHALON The key to bringing people and markets to their POTENTIAL starts with WATER. Investing in water and sanitation BOOSTS ECONOMIC GROWTH: For every $1 invested in water and sanitation, there is a $4 return Improvements in access to clean water can results in an annual increase in GDP between 2% and 7% By year 2050, population in emerging markets will have doubled; population in the developed world will remain the same 6

7 From Headlines to Bottom Lines: Water Risk in the News 7

8 Water Footprint in the Auto Supply Chain The average U.S. vehicle uses 59,365 liters of water throughout its lifetime (from pre-production to post-production).* Pre-Production: Materials manufacturing (metals, rubbers & plastics) Parts production Post- Production: Fuel Processing Post-use Recycling Water Usage in Vehicle Life Cycle 1% 11% 88% Production: Vehicle Assembly Facility operations (e.g. restrooms, cooling towers) Pre-Production Production Post Production *Source: Quantifying the Life Cycle Water Consumption of a Passenger Vehicle. Burt Bras, Francisco Tejada, Jeff Yen, John Zullo and Tina Guldberg. Georgia Institute of Technology,

9 Water Use in Electric Vehicles Increasing vehicle electric use Increasing water footprint SOURCE: Noori M, et al., Electric vehicle cost, emissions, and water footprint in the United States: Development of a regional optimization model, Energy (2015), 9

10 Financial Risk Example Price Hikes In 2013, water prices rose as much as 300% in Mexico. Water is highly undervalued and prices are increasing. Consequences: Increased operating costs Affected revenues and constraints on growth Higher costs of goods sold Decreased shareholder value Financial Operational Product Reputation Regulatory/ Compliance 10

11 Operational Risk Factors affecting business continuity Consequences of Interruption: Closure of operations Delays in permitting Property damage Supply chain disruption Transport disruption Constraints to growth Poor water quality Major flooding events Competition for allocations between agriculture, human consumption and industry Availability of water resources Fluctuating water prices due to regulatory or changing resource constraints Financial Operational Product Reputation Regulatory/ Compliance 11

12 Product Risk Definition: how do products and services affect communities and ecosystems? Considerations: Increasing water footprint of electric vehicles Water use of vehicle inputs (synthetic materials, leather, agricultural derivatives, etc.) Water use for fuel production (biofuels, gasoline, etc.) Financial Operational Product Reputation Regulatory/ Compliance 12

13 Reputational Risk Example Loss of Social License to Operate In 2015, Coca-Cola decided not to move forward with the development of an $81 MM bottling plant in southern India due to resistance from local farmers related to strains on groundwater supplies. Consequences: Disruption to operations and supply Affected revenues and constraints on growth Brand damage Fines and Penalties Social unrest can cause interruptions to water supply. In February 2016, 10 MM people in Delhi were without water as protesters sabotaged the supply canals. Financial Operational Product Reputation Regulatory/ Compliance Kazmin, Amy, Coca-Cola Forced to Abandon India Bottling Plant Plans, The Financial Times, 22 April, 2015, feab7de.html d940-11e5-9ba8-3abc1e7247e4

14 Regulatory/Compliance Risk Poor policy frameworks + Low institutional capacity + Lack of political will poor management of demand and supply, competing uses, permitting, etc. AND uncertain regulatory environment Consequences: Disruption to operations and supply Increasing operating costs Affected revenues and constraints on growth Fines and penalties Increased capital expenditures Financial Operational Product Reputation Regulatory/ Compliance 14

15 Risk Assessment Tools and Methodologies Understanding internal water management and use Identify external water risks Evaluate exposure to and likelihood of risks Development of strategies - Internal and external action Building a baseline Determining operating environment Prioritizing relevant and immediate risks Making the case for water Assessment Tools: 15

16 Aqueduct Example - Tool to Identify Risk 16

17 Prioritizing Risk Validating global assessments with local information and inputs Facility surveys News reports Determining likelihood, type and severity of impact Example Questionnaire: Water Risk Filter 17

18 Access to Guidance and Tools Determining which resources are right for you Ceres Aqua Gauge Water Stewardship Toolbox 18

19 19 Building a Water Strategy: Elements of the CEO Water Mandate Direct Operations Managing use efficiently; ensuring all employees have access to WASH in the workplace Supply Chain and Watershed Management Engaging with suppliers on water stewardship and stakeholders in shared watersheds Collective Action Partnering with key stakeholders on water management Public Policy Engaging in local, regional and national policy discussions to support sound water management Community Engagement Ensuring communities and environments beyond factory fence line have sustainable access to WASH Transparency Reporting, communicating and disclosing important water information

20 Integrating Water - Internal Engagement Facilities/ Operations Making the case for crossfunctional collaboration on water risk Finance Marketing Risk Mitigation Strategies Risk/ Insurance Government /Public Affairs 20 Supply Chain and Procurement

21 Engaging External Partners Example Water Action Hub 21

22 Taking the First Step Build understanding of water footprint Get house in order Engage operating communities Join in collective action 22

23 Questions? Maurie Carr Vice President, Partnerships & Development Global Environment & Technology Foundation 23