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1 Executive Summary
In comparison with other countries, water resources
in Germany are sufficiently available and
well governed. However, being the world’s third
biggest import nation Germany is depending on goods and resources from
abroad. Most of these goods inherit so-called water risks, since they originate
in locations with water scarcity, deteriorating water quality, weak governance
and regulatory challenges, poor infrastructure, vulnerable communities, and
fragile ecosystems. Water risks can be defined in three categories – physical,
regulatory, and reputational – and are embedded in a company’s direct operations
(company-related) and the location of production (river basin-related).
Water is therefore not an issue of the future; rather, it is hitting the bottom line
of companies today – and water risk situations around the globe are increasing.
Rising populations, changing consumption patterns, and climate change will
directly affect water availability and quality, which puts additional pressures
onto politics, companies and the society.
Water is not an issue of
the future; rather, it is
hitting the bottom line
of companies today.
Key findings
Based on a combination of their high water dependence and exposure to water
risk, four sectors with direct water risks (agriculture, chemical, textiles &
apparel, and extractives) and two sectors with indirect water risks (financial
services and retail) were selected and analysed. The water risks for the retail
and financial services sectors are mostly indirect since they are mostly connected
to suppliers and investments. Some examples of countries related to
German imports and with high water risk in at least one economic sector are:
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Textiles & apparel – China, Bangladesh and India
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Extractives – Russia, Libya, South Africa
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Agriculture – Ethiopia, Indonesia, Argentina
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Chemicals – China, India, Morocco
Though each sector is exposed to water risks, the stage and intensity at which
they arise in the value chain differs. For example, cotton production is the
most water-intense segment in the textiles and apparel sector’s value chain
and is also the segment most vulnerable to climate-induced physical water
risks. On the other hand, the chemical industry faces the greatest risk (in
countries with lax regulation) during the processing stage due to pollution or
connected to the sourcing of raw materials.
Call to action
To reduce water related risks, WWF developed the Water Stewardship concept.
This step-by-step approach enables companies to create internal water awareness,
analyse their water risks and reduce these through internal and external
measures.
A company can rarely reduce all of the water risks it shares with water users in
the same basin or other companies along its supply chain on their own. Water
stewardship activities aim to drive companies towards collective action with
other water users, public authorities or civil societies in a given river basin.
The root cause of water risk is often not the availability or use of water, but
governance. Water stewardship is an opportunity for companies to contribute
to the responsible and sustainable management of freshwater resources in a
river basin.
THE IMPORTED RISK Germany’s Water Risks in Times of Globalisation | 5