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German companies from various economic sectors are linked to many different
locations throughout the world. As a first step, German companies must better
understand their water risks in order to properly recognise their particular risk
exposure. This understanding is vital when seeking to reduce risks linked to
their production. The Water Risk Filter (see Side Note 1), developed by WWF
and the German development bank DEG, provides one approach for analysing
a company’s water risks in a certain geographical region.
Side Note 1: The Water Risk Filter (WWF/DEG)
The Water Risk Filter is the first tool to quantify water-related risk for all industries in all countries. It empowers
companies and investors to make informed decisions in order to avoid any negative impacts to the company, surrounding
communities, and other water users. The results can inform internal water management processes and help
developing location specific water risk reducion measures.This ultimately improves water management at a company
level and water stewardship at a basin level.
In a world of growing disclosure demand, this tool not only raises awareness of relevant water issues, but also helps
the user identify risk hotspots as a starting point for developing further steps.
Company related risk
Basin related risk
Physical risk
3.4 2.7
Scarcity (quantity)
3.6 2.5
Pollution (quality)
3.7 4.0
Impact on ecosystem
3.9
Supplierʼs water risks
3.1
Regulatory risk
2.5 2.6
Reputation risk
1.7 3.5
Total company and basin risk
2.7 2.8
A sample Water Risk Assessment for a company
For more information visit http://waterriskfilter.panda.org/
The Water Risk Filter
provides one approach
for analysing a
company’s water risks
in a certain
geographical region.
Water footprint
Each company also has a so-called “water footprint”, which is the total amount
of water consumed when producing a good related to direct operations or supply
chains (see Side Note 2).
The difference between water footprint and water risk is important because
the amount of water used does not necessarily indicate high risk. For example,
risk may evolve even if a company is using a small amount of water but is located
in an area with a highly unreliable water supply, or is located in an area
where water is plentiful but risk remains high because of poor governance. If
a company is focused on reducing its footprint without looking at risk, it may
succeed in becoming more efficient while still failing to reduce risk.
THE IMPORTED RISK Germany’s Water Risks in Times of Globalisation | 13