Maturity and Challenges of Water Sustainability across the Supply Chain

Abstract

Corporate engagement in water sustainability from a supply chain perspective is limited but growing, as a clear business case is manifesting. Increasingly, water is becoming a serious risk for companies with global operations, since water stress and water access problems are growing. To date, companies have cited water as a sustainability priority but often fall short of reporting sufficient data and progress on goals. However, the food and beverage industry has been active in this space, because water is an integral part of their business and touches most aspects of the supply chain. This project attempts to map the current landscape where companies are engaging in water sustainability across their supply chains and to identify various types of engagement, in order to draw out leading practices that will help companies better understand ways of advancing their level of engagement. Three companies were chosen for analysis – Nestlé Waters North America, PepsiCo, Inc., and The Coca-Cola Company – as they met the criteria of being engaged for two or more years, were within the food and beverage industry, and were willing to be interviewed. I created my own Sustainable Value Chain Collaboration Index to map out the companies’ maturity levels based on my own research and corporate interviews. The Index encompasses four key indicators (“Corporate,” “Internal Practices & Policies,” “Value Chain Collaboration,” and “External Stakeholder Collaboration”) with five stages of collaboration. The results from the Index indicate that there are some leading practices upstream with suppliers but still no standardization for best practices (i.e., none reached stage 5) and downstream engagement with customers is very limited. In addition, no company has incentives and accountability for desired behavior for their suppliers when looking at “Value Chain Collaboration.” I then conclude with some recommendations on ways companies can employ the Index and improve their level of collaboration with the value chain.