From Risk to Strategic Asset: Companies Must Transform Their Operational Approach to Water

Water as a Defining Challenge – and Opportunity – for Business

A Crisis at the Intersection of Demand and Growth

Water is a critical enabler of the global economy and one of the most important shared resources for business today. An estimated 60% of global GDP depends on reliable access to water, making it a top global business risk as competition for supply intensifies. Water directly supports water intensive sectors such as agriculture and manufacturing and underpins complex global supply chains that touch nearly every product we use. As water availability becomes more constrained, its role in sustaining operations, protecting supply continuity and enabling economic growth is becoming increasingly central to business performance and resilience.

Compounding the issue is the explosive rise of digital technologies – especially artificial intelligence (AI) – which are driving enormous increases in water and energy demand. Data centers powering AI advancements are projected to consume 8% of U.S. power and more than 1 trillion gallons of global freshwater annually by 2027. This dual requirement places intense strain on local water basins and complicates sustainability planning for both businesses and communities.

Yet AI also holds the potential to solve the very crisis it accelerates. AI-driven water management can enhance visibility, improve efficiency and enable predictive insights that help reduce consumption, manage quality and secure long-term supply.

Corporate Accountability is Increasing,

Pressure is mounting for companies to act. In 2024, a record 1,000+ high-impact companies were specifically requested by financial institutions to report data to CDP on their water-related impacts and risks – marking a 122% increase on requests in the previous year and signaling a heightened expectation for corporate accountability. However, disclosure alone is insufficient. According to Ceres, the pace and scope of action fall short of what’s needed to address intensifying water challenges. While companies continue to focus on water quantity, only half factor in unique local challenges – like quality and WASH (Water, access, sanitation and hygiene) factors, among others – to fully address water-related risks that could lead to disruptions and additional costs.

The expectation is clear: companies must move beyond reporting and take concrete action to reduce, reuse and responsibly manage water resources, particularly in high-risk areas.

Consumers Expect Smart Water Management

One of the clearest drivers of corporate action is the growing concern among consumers regarding water security and sustainability. Findings from the latest Ecolab Watermark™ Study underscore the public’s rising expectations:

• While most consumers see smart water reuse as a solution for businesses to help address water scarcity, fewer believe organizations are effectively putting these strategies into practice
• There is a strong belief that businesses must invest in resilient water technologies and infrastructure
• Consumers are eager to prioritize businesses that use responsible water practices

These insights highlight a reputational imperative: companies perceived as lagging on smart water management risk damaging consumer trust, brand equity and social license to operate.

Why Water Must Be Viewed as a Strategic Business Asset

Water Related Events Are Increasing – and So Are Business Impacts

Water is emerging as one of the most visible indicators of climate change. From lethal heatwaves across Europe to catastrophic wildfires in Southern California to record rainfall and monsoon floods in Asia, global water stress factors are intensifying across geographies and sectors. Beyond environmental consequences, water reliability presents significant operational and economic risk:

• Reduced availability disrupts manufacturing, agriculture, energy generation and logistics
• Declining basin health threatens long-term supply chain stability
• Rising water costs increase financial pressure on already resource-intensive industries

Water poses extraordinary risks to supply chains, corporate profits and community well-being, underscoring the urgent need for businesses to change how they manage water resources.

A Catalyst for Resilience and Sustainable Growth

Water-resilient companies don’t just mitigate risk; they unlock operational efficiencies, strengthen supply chains, reduce energy use and drive profitable growth. Well-designed smart water strategies can result in double-digit reductions in water consumption, energy demand and greenhouse gas emissions, delivering environmental and cost benefits simultaneously.

Achieving water circularity – reducing, reusing and reclaiming water – will be essential. AI-enhanced water management tools can help companies anticipate risks, optimize processes and secure long-term access while enhancing productivity and sustainability outcomes.

Tools for Connecting Water Risk Insight to Enterprise Action

Transforming water from a risk to a strategic asset requires more than intent—it requires the right tools, applied in the right sequence. Leading organizations are increasingly using a layered approach that moves from understanding local water context and risk, to establishing strong governance and collaboration and finally to executing at scale across operations and portfolios.

1. Grounding Strategy in Water Context

   Effective water strategy begins with clarity. Tools like the World Resources Institute Aqueduct Water Risk Atlas and the WWF Water Risk Filter provide basin‑level insights into water scarcity, quality, regulatory conditions and future risk scenarios.

   Together, these platforms help companies build a shared understanding of water context – identifying priority locations, anticipating emerging risks and informing early strategic decisions around sourcing, siting and long‑term planning.

2. Turning Insight into Shared Direction

   Risk insight alone is not enough. Translating awareness into impact requires governance structures, clear accountability and collaboration beyond company boundaries. The UN Global Compact Water Action Hub supports this step by helping companies connect water risk to broader stewardship strategies and basin‑level collective action.

   By linking organizations to shared water resilience initiatives and peer networks, the Water Action Hub enables companies to align internal strategies with external action – strengthening credibility, accelerating progress and addressing shared water challenges that no single organization can solve alone. The Hub is further backed by the UN CEO Water Mandate’s Water Stewardship Toolbox which includes frameworks, case studies and best-practice tools for companies at all stages of their water journey.

3. Executing with Precision

   Execution is where strategy becomes measurable business value. The Ecolab® Water Navigator IQ^TM brings water risk intelligence, target setting, action planning, performance tracking and reporting into a single, AI‑enabled enterprise platform.

   By translating complex water data into business‑relevant insights, the tool helps organizations answer critical execution questions: Where should we act first? Where should we invest? And how do we enable consistent execution across facilities and regions?

   With predictive analytics and performance tracking, companies can prioritize high‑impact actions, allocate capital more effectively and monitor progress over time, turning water strategy into sustained operational performance and resilience.

The Path Forward: Creating a Future Where Water Powers Possibility

Companies are approaching a pivotal point. AI is accelerating resource demand, water scarcity is growing and societal expectations are increasing. To thrive amid these challenges, business leaders must transform water from a passive risk into an active driver of resilience, profitability and sustainable growth.

This transformation requires:

1. Recognizing water as a strategic asset essential for operations, supply chains, and long-term stability.
2. Responding to stakeholder expectations for transparency and leadership in water stewardship.
3. Leveraging tools and technologies, including AI-driven technologies like the Ecolab Smart Water Navigator IQ, and basin risk platforms, like the WRI Aqueduct and WWF Water Risk Filter.

By embracing water stewardship today, companies can create a future where water supports – not constrains – innovation, environmental health, business continuity and community well-being.

The message is clear: water is no longer a compliance checkbox. It is a catalyst for competitive advantage and a foundation for a sustainable, resilient future. Companies that act boldly now will be the ones best positioned to lead in the years ahead.