It is nearly a year since we launched our group water risk assessment process, a progression from the high level view we have been taking on water risk for several years now to a very localised approach. The initiative, launched in July 2013, was designed to provide us with a detailed understanding of the potential water risks facing all our breweries, globally. The risks assessed cover a range of issues including: water availability, water quality, the strength of regulatory systems, and reputation risk. Importantly, these reviews cover the watersheds that our operations are located in to ensure we have an appreciation of not only what risks face our breweries, but also those living in the broader communities in which we operate.
To date we have assessed 29 breweries across 14 countries, which represents approximately 33% of our beer production volume. We have learnt a significant amount in this period and three themes stand out in particular.
1. We need the best possible data on how local water availability varies from place to place and through different times of the year
At a global level, much has been done to provide open access to water stress data through mapping tools such as Aqueduct and the WWF Water Risk Filter. These tools provide a very good, high level, understanding of areas of risk exposure; however it is detailed research of local watersheds that is needed to make informed business decisions.
This more detailed watershed research relies on the availability of well researched local watershed data which, in some cases, can be either absent or unreliable. This is particularly the case for groundwater resources, which tend not to be as well studied or documented as surface water (for example, rivers and lakes). Accurate hydrological data is very important for our breweries as they rely on this information to ensure appropriate water stewardship measures are put in place to manage the resource. This is now a distinct step in our water risk evaluation process. In India for example, our local subsidiary has undertaken extensive research to understand the condition of the aquifers they rely on. This has resulted in a number of partnerships being formed with local stakeholders to manage both the demand and supply of water from these aquifers.
2. We need to understand how different stakeholders are affected by water shortages – and how they can be involved in tackling the problem
Engaging local stakeholders is a fundamental element of both understanding and mitigating long-term water risk. Local stakeholders not only share the same water resources, and hence play a key role in any mitigation actions, but also have nuanced insights that build a rich picture of the dynamics of a watershed.
An important step of our water risk assessment process maps the stakeholder environment around our breweries. In this way we understand who impacts and who is impacted by water stress in the watershed and which stakeholders we should be engaging with. For example, working with our partners in Bogota, we were able to identify a group of farmers who were active in a particularly sensitive ecosystem. Subsequently we engaged with them and they helped play an important role in helping to restore a local river system.
3. We need to express the issue in terms of business risk, not hydrological risk
Hydrology is not typically a subject that the average business MD or plant engineer is familiar with. Therefore it is essential to find ways to make water resource risks understandable and actionable. An important aspect of our approach was to ensure that our water risk assessment process dovetailed into the company’s overall enterprise risk management approach.
To do this we used a replica risk matrix and ensured that water risks are assessed in a similar manner to other company risks. This included evaluating both the probability and severity (attaching a financial value where possible) of water risks should they materialise. This not only increased understanding among our country and divisional managers, but also enabled water risks to be elevated within the company’s overall risk hierarchy, ensuring resources are made available to mitigate the risks where necessary.
While we have learnt a lot, we are under no illusion that there is still a significant amount that we do not know and we continue to work with our partners to help bridge these gaps. Over the next two years we will be assessing our remaining breweries in the group, with a focus on Africa and Europe in 2015.
Our latest efforts around water can be seen in SABMiller’s latest Sustainable Development Report 2014 and the section on our website covering our Shared Imperatives: Secure shared water resources for our business and local communities. We would also encourage you to engage with us on some of the big questions facing water resources through our online platform.