Thursday, July 22, 2010

Water as 'shared value' for business and society

Water as 'shared value' for business and society
The Philippine Star
July 22, 2010

MANILA, Philippines - A report from the Asian Development Bank (ADB) states that as of 2002, some 699 million people in the Asia-Pacific region had no access to safe drinking water.

The report, “Asia Water Watch 2015,” published jointly by the Asian Development Bank, UNDP, UNESCAP and the World Health Organization in 2006, also mentioned that the Philippines’ water use and water supply situation have actually regressed — that is, as more and more Filipinos need water in rural and urban areas, water supply is actually decreasing.

In the next few years, the Philippines could be facing a water crisis with tragic consequences. How do we deal with this emerging crisis?

The recent Creating Shared Value (CSV) Forum held at the New World Hotel discussed how corporations could work with government, NGOs and other stakeholders in ensuring water for both urban and rural communities.

The resource expert who led the discussion was Arjun Thapan, special senior adviser to the ADB president on infrastructure and water.

The CSV Forum sought to encourage corporations to invest in business strategies, practices and programs that are not only profitable but are also catalysts for social progress.

As the CSV Forum’s main speaker, Harvard professor and social responsibility expert Mark Kramer defines it: “Creating Shared Value means policies and practices that enhance the competitiveness of a company while simultaneously advancing economic and social conditions in the communities in which it operates.”

Thapan revealed that the ADB is encouraging the private sector and government to invest in water, specifically targeting the poorest areas, where people need water and sanitation most urgently.

ADB has also done a cost-benefit analysis, proving that investing in water will result in tremendous returns. Essentially, for every dollar spent on water and sanitation for the poor, $6 is generated.

“Here’s the big picture. Even if we only invest to meet the minimum requirement set by the United Nations for providing water and sanitation to the world’s poor — known as Millennium Development Goal (MDG) Target 10 — the economic benefits will amount to $54 billion. If we exceed MDG Target 10 and invest in water, sanitation, together with piped-in water to houses, sewage and partial water treatment for all, around $241 billion in economic benefits are generated,” Thapan said.

“More simply, if we invest $8 billion annually in water and sanitation to meet Target 10, we get an annual return of $54 billion in economic benefits. If you think about it, very few other business investments result in such a high rate of return,” Thapan added.

CSV for water investments
How are the economic benefits of investing in water determined? The ADB report explained that these are usually measured in terms of “time savings” which are divided into two types: gains from lower morbidity and fewer deaths; and gains from spending less time and energy to fetch water.

Other ways to measure cost benefits from water investments is in the cost saved from health care, since the lack of clean water for drinking and hygiene contributes to many illnesses.

Thapan also pointed out that investing in water improves a community’s state of nutrition, hygiene and health — leading to many other beneficial results that impact society and business.

“When people in poor areas gain access to safe water, they become more nourished and healthier. This increases their productivity. It also increases the likelihood that children will be attending school, since they are healthy enough to show up in their classes,” Thapan said.

“These improvements in productivity and educational attainment will lead to greater livelihood among the poor. As livelihood among the poor increases, incomes go up along with purchasing power. This opens up new markets for businesses that are willing to invest in water as well as products that are affordable to these emerging markets,” Thapan added.

Water: Agriculture, corporate, domestic use
Thapan also clarified a few things about the efficient use of water. He said that in reality, the inefficient use of water that results in wasted resources and shortages is not primarily the fault of corporations and households.

The major contributor to dwindling water supply in the Philippines and other countries is agriculture — more precisely, the inefficient use of water in the agricultural sector.

“The Philippines has a low rating when it comes to the efficient use of water in its agriculture sector. Both the government and the private sector can work together to improve that efficiency. The efficient use of water in agriculture ensures not only water supply but food supply as well,” said Thapan.

Since coffee is an agricultural product, Nestlé Philippines is doing its part in ensuring the efficient, safe, responsible, sustainable and ecologically sound use of water, according to Edith de Leon, SVP and head of corporate affairs of Nestlé Philippines’.

“Nestlé has practiced CSV long before the term was invented — since it was founded 140 years ago, in fact. The efficient, safe and sustainable use of water is actually one of the pillars of the Nestlé CSV approach. The other two are nutrition and rural development. We have several programs that ensure efficient, sustainable and responsible water use,” said De Leon.

De Leon pointed out that Nestlé is implementing the Sustainable Agricultural Initiative and the Coffee-Based Sustainable Farming System.

These programs teach farmers coffee-growing methods that improve the quantity and quality of their coffee beans in the most environment-friendly and sustainable way.

“Nestlé agronomists teach farmers to construct catch basins in their farms — essentially these are ponds designed to catch and store rainfall for use as irrigation. These ponds can also be used in raising fish for extra income. At the coffee roasting facility, water used in cleaning and processing coffee beans is recycled. Sustainable agriculture promoted by Nestlé even goes beyond efficient water use,” De Leon said.

“Coffee farmers who are trained — for free — at the Nestlé Experimental and Demonstration Farm in Davao learn to plant other cash crops alongside their coffee trees for added income. They are taught to plant crops that help prevent soil erosion. They learn farming methods that minimize the use of pesticides and fertilizers in order to preserve the soil’s arability,” said De Leon.

Nestlé Philippines, in partnership with the ADB, the Philippine Business for Social Progress and the Asian Institute of Management RVR Center for Social Responsibility, organized the Philippine CSV Forum to encourage corporations, government and other society stakeholders to embrace Creating Shared Value as a catalyst for social progress.