Navigating Water Risks: Safeguarding Your Supply Chain's Future

Adopting a vision involving the entire supply chain and the catchment basin is crucial to ensure long-term water availability. When water is used in large quantities in final production, it often becomes a material issue for a company. Even companies with low direct water consumption may depend on inputs and services heavily linked to water resources. Therefore, assessing water use across the entire supply chain is essential for defining material issues and identifying and mitigating associated risks.

Among the risks that can directly impact the supply chain and, consequently, the sustainability of the business are:

1. Regulatory Risks: Ensuring the entire supply chain complies with local and international norms and regulations can be quite challenging. Risks in this area may involve meeting regulations on water withdrawal and discharge limits, maintaining water and effluent quality, and ensuring the condition of the receiving body of water. Other concerns may include issues related to water withdrawal and storage structures, such as dam licensing. Moreover, keeping track of legislative changes is essential to prevent penalties and operational disruptions.
2. Reputational Risks: A company's reputation can be severely affected if its suppliers do not ensure adequate conditions for water access and sanitation. In this risk category, it is crucial to verify that all workers in the supply chain have guaranteed access to drinking water and adequate sanitation and hygiene conditions. Transparency and effective communication with stakeholders about water management practices are essential to prevent potential crises that could harm the brand's image.
3. Physical Risks: Whether qualitative or quantitative, water scarcity can cause significant disruptions in the supply chain. Therefore, it is essential to identify if suppliers operate in water-scarce regions and consider the impacts of climate change, which may exacerbate water scarcity or cause floods, affecting production and supply. Continuously monitoring these variables helps anticipate problems and implement mitigation strategies, such as developing alternative water sources or strengthening partnerships with suppliers located in less vulnerable regions.

In projects carried out by Antea Group, this approach has been fundamental in identifying critical water risks that go beyond the company’s direct use but may be overlooked by sustainability strategies, demonstrating the importance of integrating water management into the supply chain. Finally, once risks are identified, it is important to adopt collective actions to ensure more effective mitigation of the identified risks.