Water Scarcity and Steel Companies

India has 18 percent of the world’s population and 4 percent of the globe’s water resources. According to a study by HSBC, India might be the most water-stressed among the Group of 20 nations by 2025. Water scarcity and water quality are predicted to be one of the largest economic and health concerns in the coming decade, meaning that businesses will need to take into account an area’s water resources before developing a region. Hence water scarcity is being increasingly featured as a corporate risk. This risk needs to be addressed for all water intensive companies. This is a major worry for industries belonging to the sectors like steel, thermal power plants, chemicals, textiles, cement and manufacturing.

Business risks of water scarcity are many. These include decreased water supply for business activities, higher water costs, operational disruptions and associated financial losses, impacts on future growth and license to operate, regulatory caps for water use and conflicts with local communities and other large-scale water users.

In light of all the above issues and challenges, The National Water Policy which was last revised in 2002 is being redrafted to bring in necessary policy changes with so many alarming trends in usage and management of water. It talks of imposing regulatory measures to prevent the misuse of water and introducing rewards and punishment to encourage judicious use of water.

We look at the steel industry which is one of major users of waters. As with most industrial processes, steel production requires billions of gallons of water. According to the National Steel Policy 2012 consumption of water by the steel industry is estimated to go up from 360 million cu. m. in 2016?17 to around 650 million cu. m. in 2025?26. While these numbers may see revision because of the recent pullout of global steel giants such as ArcelorMittal and Posco, the concern on industrial water consumption remains.

Not only will the National Water Policy impact the steel industry The National Steel Policy that is being drafted also talks of various initiatives to minimize the deleterious inter?generational environmental and social impacts of depletion in ground water resources. It states that efforts will be made to

  1. Involve all stake?holders i.e., local community, the steel plants, the state agencies, in chalking out an optimum water sharing agreement and monitoring of the quality of water in the various water sources in the vicinity of steel units.
  2. The government will initiate water footprint mapping and rainwater harvesting in steel industry and related mining areas.
  3. Fix a system of penalty and rewards aimed at bridging the gap between international best practice norms of water use or recycling in steel plants and the Indian standard practices.

We studied the annual reports and websites of steel companies and found that 9 out of 22 companies do not have any information on water related initiatives. It is indeed possible that the 9 companies may be undertaking these activities but may not have mentioned them on the websites. Many steel companies fall under the new companies bill where it is mandatory to spend 2 % of their three-year average annual profit towards corporate social responsibility (CSR). It is of concern that companies with large scale water usage do no have water based initiatives.

Of the companies that list water based initiatives, the activities consist of

  1. Recover, Recycle, Reuse – Recover, recycle and reuse of wastewater streams.
  2. Rain water Harvesting – Harvesting structures are built within manufacturing units and village community to utilize rain water.
  3. Chemical Treatment – Usage of chemicals for water treatment.
  4. Wastewater treatment – Treatment of highly contaminated wastewater before its disposal
  5. Cooling Pond – A cooling pond is a body of water primarily formed for the purpose of supplying cooling water to a nearby plant
  6. Water Supply in and around Plants – The company uses discharged water on roads, toilets, horticulture activities, creating artificial lakes, fountains around the manufacturing plants.
  7. Water Supply to Community – The company constructs and provides drinking water supply through water tanks, pipelines, tube wells to the communities living neighbouring areas

According to the UN Global Compact – CEO water mandate once a company understands global water challenges and how they affect and create risk for their business, there are many things it can do to manage these risks. The first step in this process is using corporate water assessment to better understand 1. How the company uses water; 2. How the company’s water practices affects communities, ecosystems, and watersheds; and 3. How watershed conditions exacerbate and create business risks. Business future is about incorporating water wisdom at a strategic level and the readiness to pay the full and true ecological and other cost of water.

Table1: Companies that have information on water initiatives

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Table2: Companies that don’t have any information on water initiatives

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Article coauthored with Utkarsh Majmudar and originally published in Economic Times.

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