Corporations as Custodians of the Public Good?: Exploring the Intersection of Corporate Water Stewardship and Global Water Governance [1st ed.] 978-3-030-13224-8, 978-3-030-13225-5

Table of contents :
Front Matter ....Pages i-xxiii
Introducing Corporate Water Stewardship in the Context of Global Water Governance (Thérèse Rudebeck)....Pages 1-17
Front Matter ....Pages 19-19
Understanding the Enabling Environment (Thérèse Rudebeck)....Pages 21-55
The Rise of Corporate Water Stewardship (Thérèse Rudebeck)....Pages 57-80
Front Matter ....Pages 81-81
Companies and Water Resources Management (Thérèse Rudebeck)....Pages 83-106
Companies and Water Sanitation and Hygiene (Thérèse Rudebeck)....Pages 107-130
Front Matter ....Pages 131-131
Corporate Legitimacy in Collective Action (Thérèse Rudebeck)....Pages 133-157
Corporations and the Shaping of the Global Water Agenda (Thérèse Rudebeck)....Pages 159-179
Imagining Pathways Forward: Corporate Water Stewardship and the Future of Global Water Governance (Thérèse Rudebeck)....Pages 181-196
Back Matter ....Pages 197-198

Citation preview

Water Governance - Concepts, Methods, and Practice

Thérèse Rudebeck

Corporations as Custodians of the Public Good? Exploring the Intersection of Corporate Water Stewardship and Global Water Governance

Water Governance - Concepts, Methods, and Practice Series editors Claudia Pahl-Wostl, University of Osnabrück, Osnabrück, Germany Joyeeta Gupta, Faculty of Earth and Life Sciences, University of Amsterdam, Amsterdam, The Netherlands

This book series aims at providing a platform for developing an integrated perspective on major advances in the field of water governance. Contributions will build bridges across established fields of expertise, across disciplinary perspectives, across levels from global to local and across geographical regions. Topics to be covered include conceptual and methodological advances capturing the complexity of water governance systems, institutional settings, actor constellations, diagnostic approaches, and comparative studies of governance systems. The book series encompasses monographs, textbooks and edited, coordinated volumes addressing one theme from different perspectives. The book series will address mainly a wider scientific audience, but will also provide valuable knowledge to interested practitioners. The sustainable management of fresh water resources and the ecosystem services that they provide is one of the key challenges of the 21st century. Many water related problems can be attributed to governance failure at multiple levels of governance rather than to the resource base itself. At the same time our knowledge on water governance systems and conditions for success of water governance reform is still quite limited. The notion of water governance aims at capturing the complexity of processes that determine the delivery of water related services for societal needs and that provide the context within which water management operates. Water governance is a fast growing field of scholarly expertise which has largely developed over the past decade. The number of publications in peer reviewed journals has increased from less than 20 in the year 2000 to nearly 400 in the year 2013. The increasing popularity of the term in science and policy has not lead to conceptual convergence but rather to an increasing vagueness and competing interpretations of how the concept should be understood, studied, and analyzed; which disciplines are involved; and what methodological approaches are most suitable for the study and analysis of water governance. The time seems to be ripe for comprehensive synthesis and integration. More information about this series at http://www.springer.com/series/13400

Thérèse Rudebeck

Corporations as Custodians of the Public Good? Exploring the Intersection of Corporate Water Stewardship and Global Water Governance

Thérèse Rudebeck School of Geography & Sustainable Development University of St Andrews St Andrews, UK

ISSN 2365-4961     ISSN 2365-497X (electronic) Water Governance - Concepts, Methods, and Practice ISBN 978-3-030-13224-8    ISBN 978-3-030-13225-5 (eBook) https://doi.org/10.1007/978-3-030-13225-5 © Springer Nature Switzerland AG 2019 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To Darren, Sue and Keith. I would never have made it this far without you.

Foreword

The past several decades have seen many corporations move from a water management strategy to one of corporate water stewardship (CWS). In general, water management was framed as compliance with environmental regulations and improvements in water efficiency, reuse and recycling. It was very much an inside-­ the-­fenceline strategy. Water management created limited value for both the private and public sectors. CWS provided a framework for companies to consider water as a business risk and for managing these risks with the resulting improvement of stakeholder engagement and investment in conservation, technologies and partnerships to name a few. It is now time for a critical examination of CWS, and this book is an essential contribution in this effort. Many of my colleagues believe water stewardship has stalled and I share this view. However, it is more than a lack of corporate investment when compared to the magnitude of the issues of water scarcity, declining water quality and lack of access to safe drinking water. Other critical issues that need to be addressed include the role of the private sector in solving water challenges, the failure of adequate public policy to address these challenges and the interplay of the private sector with the public sector and non-governmental organisations (NGOs) in global water governance. Without understanding the roles of the private sector, public sector and NGOs in finally solving twenty-first-century water challenges, we have little hope of achieving Sustainable Development Goal (SDG) 6. Water is increasingly framed as a “wicked problem” (Rittel and Webber 1973). Wicked problems have several characteristics. Wicked problems are difficult to clearly define, are often multicausal, often lead to unforeseen consequences, are often unstable, usually have no clear solution, are socially complex, hardly ever sit conveniently within the responsibility of any one organisation and involve changing behaviour, and some are characterised by chronic policy failure. It is time to embrace water as a wicked problem and be open to addressing its unique challenges and solutions. For companies to frame water stewardship as merely a risk mitigation strategy (quantifying business value at risk) or as a corporate social responsibility function vii

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Foreword

does not create adequate business value to drive investment or to actually solve twenty-first-century water challenges. It also fails to position the private sector as a valuable resource for supporting innovation in public water governance. We need to better frame the opportunity for corporations to be part of the solution to this century’s water challenges. What needs to change? In my view, stewardship needs to be reframed as a water strategy to capture value creation from innovation in technology, financing, partnerships, business models and brand. This is not semantics; it is a pivot from solely water risk to value creation in economic development, business growth, ecosystem health and social well-being. Water strategy would build upon water stewardship and critical initiatives such as working with NGOs on conservation programmes, industry sector initiatives and reporting frameworks. If companies can move past viewing water solely as a business risk and social licence to operate challenge and instead as a value creation strategy for both themselves and the public sector, we will have a chance to solve our water challenges. What might this look like for a company and its relationship with the public sector, NGOs and civil society? It would include supporting the public sector in creating sound water governance, being a bridge between entrepreneurs and the public sector in bringing innovation to scale and embracing innovation as part of their water strategy. This is not just for water “intensive” companies. It would create opportunities for information and communication technologies companies to develop digital solutions to water scarcity and quality challenges. A water strategy would open up new opportunities for the public and private sectors and NGOs. A couple of examples where new partnerships are creating an expanded approach to addressing water challenges are the AB InBev 100+ Sustainability Accelerator and the Techstars Sustainability Accelerator’s partnership with The Nature Conservancy. This book is timely as it critically challenges CWS and its relationship with the public sector and NGOs. For the world to finally solve water scarcity, water quality and lack of equitable access to safe drinking water, we need new thinking and new voices. Dr. Rudebeck provides a rigorous examination of what has worked and what is needed. This book gives me hope that we can solve water challenges in this century. Founder and CEO of Water Foundry Denver, CO, USA December 2018

Will Sarni

Reference Rittel, H., & Webber, M. (1973). Dilemmas in a general theory of planning. Policy Sciences, 4, 155–169.

Preface

What happens when companies are inserted in the interface between global governance and natural resources management? This is a complex and loaded question and one that could be approached from numerous angles. This book is the product of a personal quest, seeking a pathway to answer this question. On my journey, I have met countless people who have shaped the road I have taken. Equally important, others have simply walked with me and made the journey more enjoyable. Of these people, I am particularly indebted to those in the water sector who agreed to participate in this study. Without their generous and whole-­ hearted contribution, giving me their (often very limited) time and sharing their knowledge, this book would not exist. Beyond those directly informing the findings of this book, I am also grateful to all the people in the sector I have encountered through my research, who have welcomed me into the global water community and encouraged my work. I would like to extend a special thanks to Will Sarni who enthusiastically wrote the foreword to the book. Conducting this research, I have also been blessed with two wonderful supervisors: Susan Owens and Keith Richards. With a seemingly endless capacity to spark new ideas and provide constructive feedback, I feel immensely privileged to have been able to learn from them and share the experience with them. I am thankful also of the United Kingdom’s Economic and Social Research Council that generously provided funding for this research. Finally, I would like to thank my friends and family who have stood by me and whose continuing patience, encouragement and support enabled me to reach my destination. St Andrews, UK

Thérèse Rudebeck

ix

Contents

1 Introducing Corporate Water Stewardship in the Context of Global Water Governance��������������������������������������������������������������������    1 1.1 Corporate Water Stewardship������������������������������������������������������������     1 1.2 Global Water Governance ����������������������������������������������������������������     2 1.3 Approach������������������������������������������������������������������������������������������     7 1.4 Structure of the Book������������������������������������������������������������������������     9 1.4.1 Incorporation (Part I)������������������������������������������������������������     9 1.4.2 Involvement (Part II)������������������������������������������������������������    10 1.4.3 Influence (Part III)����������������������������������������������������������������    12 References��������������������������������������������������������������������������������������������������    14 Part I Incorporation 2 Understanding the Enabling Environment����������������������������������������������   21 2.1 Waves of Water Management Practices��������������������������������������������    22 2.1.1 Command-and-Control Management ����������������������������������    22 2.1.2 Integrated Water Resources Management����������������������������    23 2.1.3 Ecosystem-Based Management��������������������������������������������    24 2.2 Rising Tides of Criticism������������������������������������������������������������������    27 2.2.1 Gap 1: The Governance Deficit��������������������������������������������    28 2.2.2 Gap 2: The Implementation Deficit��������������������������������������    29 2.2.3 Gap 3: The Participation Deficit ������������������������������������������    30 2.3 Renegotiating the Business-Society Relationship����������������������������    31 2.3.1 Questioning the Conventional Business-Society Relationship��������������������������������������������������������������������������    31 2.3.2 Strategies for Renegotiating the Business-Society Relationship��������������������������������������������������������������������������    33 2.3.3 Strategies for Renegotiating the Business-Nature Relationship��������������������������������������������������������������������������    37 2.3.4 Strategies for Renegotiating the Business-Water Relationship��������������������������������������������������������������������������    41 xi

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2.4 Shaping Governance ������������������������������������������������������������������������    42 2.4.1 Enacting Influence����������������������������������������������������������������    42 2.4.2 Producing Knowledge����������������������������������������������������������    45 References��������������������������������������������������������������������������������������������������    49 3 The Rise of Corporate Water Stewardship����������������������������������������������   57 3.1 Drivers of Business Engagement������������������������������������������������������    58 3.1.1 Water as a Business Risk������������������������������������������������������    58 3.1.2 Water as a Business Opportunity������������������������������������������    61 3.1.3 Expanding the Scope of Water Engagement������������������������    61 3.1.4 External Pressures����������������������������������������������������������������    64 3.2 Drivers of NGO Engagement������������������������������������������������������������    66 3.2.1 Water as an Environmental and Social Risk ������������������������    66 3.2.2 Insufficient Finance��������������������������������������������������������������    68 3.2.3 Insufficient Power ����������������������������������������������������������������    69 3.3 The Evolution of CWS: The Role of NGOs ������������������������������������    70 3.3.1 The Water Footprint��������������������������������������������������������������    70 3.3.2 Shared Risk ��������������������������������������������������������������������������    71 3.3.3 Shared Value at Risk ������������������������������������������������������������    73 3.4 Discourse Institutionalisation of CWS����������������������������������������������    74 References��������������������������������������������������������������������������������������������������    77 Part II Involvement 4 Companies and Water Resources Management��������������������������������������   83 4.1 Guiding Stewardship Activities��������������������������������������������������������    83 4.2 The Food and Beverage Sector ��������������������������������������������������������    84 4.2.1 Water Use������������������������������������������������������������������������������    85 4.2.2 Water Risk����������������������������������������������������������������������������    86 4.2.3 Stewardship Actions��������������������������������������������������������������    86 4.3 The Textile and Apparel Sector��������������������������������������������������������    89 4.3.1 Water Use������������������������������������������������������������������������������    90 4.3.2 Water Risk����������������������������������������������������������������������������    91 4.3.3 Stewardship Actions��������������������������������������������������������������    92 4.4 The Metals and Mining Sector����������������������������������������������������������    94 4.4.1 Water Use������������������������������������������������������������������������������    94 4.4.2 Water Risk����������������������������������������������������������������������������    96 4.4.3 Stewardship Actions��������������������������������������������������������������    98 4.5 Explaining Divergence����������������������������������������������������������������������   101 4.5.1 Differences Across Sectors ��������������������������������������������������   101 4.5.2 Differences Within Sectors ��������������������������������������������������   102 References��������������������������������������������������������������������������������������������������   103

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5 Companies and Water Sanitation and Hygiene��������������������������������������  107 5.1 The Emergence of ‘Development Agents’����������������������������������������   108 5.1.1 Linking ‘Insufficient Development’ to ‘Insufficient Economic Growth’����������������������������������������������������������������   108 5.1.2 Reconceptualising Companies as ‘Development Agents’����������������������������������������������������������������������������������   110 5.1.3 Transforming ‘Development’ into ‘Business Opportunities’ ����������������������������������������������������������������������   111 5.2 Making the ‘Business Case’ for WASH��������������������������������������������   113 5.3 WASH in the Workplace ������������������������������������������������������������������   114 5.4 Community Engagement 1: Access to Water������������������������������������   117 5.4.1 Mitigating the Public-Sector Capacity Gap��������������������������   117 5.4.2 Mitigating ‘Stunted’ Consumer Spending����������������������������   118 5.4.3 Corporate Water Service Provision: Emerging Debates����������������������������������������������������������������������������������   120 5.5 Community Engagement 2: Hygiene Products��������������������������������   121 5.5.1 Creating the BoP ������������������������������������������������������������������   122 5.5.2 Tapping the BoP��������������������������������������������������������������������   123 5.6 WASH and Reputational Enhancement��������������������������������������������   124 5.7 Questioning Win-Win Outcomes������������������������������������������������������   126 References��������������������������������������������������������������������������������������������������   127 Part III Influence 6 Corporate Legitimacy in Collective Action ��������������������������������������������  133 6.1 Revisiting Multi-Stakeholder Governance����������������������������������������   134 6.1.1 Collective Action������������������������������������������������������������������   134 6.1.2 Why Has Collective Action Emerged? ��������������������������������   136 6.1.3 Companies, NGOs and Collective Action����������������������������   136 6.2 Alternative Sources of Legitimacy����������������������������������������������������   138 6.3 Source-Based Legitimacy ����������������������������������������������������������������   140 6.3.1 Expertise ������������������������������������������������������������������������������   141 6.3.2 Challenging Source-Based Legitimacy��������������������������������   141 6.4 Process-Based Legitimacy����������������������������������������������������������������   142 6.4.1 Representation����������������������������������������������������������������������   143 6.4.2 Transparency������������������������������������������������������������������������   144 6.4.3 Accountability����������������������������������������������������������������������   146 6.4.4 Companies and Good Governance����������������������������������������   146 6.5 Outcome-Based Legitimacy��������������������������������������������������������������   148 6.5.1 Effectiveness ������������������������������������������������������������������������   148 6.5.2 Equity������������������������������������������������������������������������������������   150 6.5.3 Assessing Outcomes ������������������������������������������������������������   153 References��������������������������������������������������������������������������������������������������   154

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7 Corporations and the Shaping of the Global Water Agenda ����������������  159 7.1 Shaping Objectives ��������������������������������������������������������������������������   160 7.1.1 ‘Constraining’ and ‘Constructing’ Global Water Governance ��������������������������������������������������������������������������   160 7.1.2 A Note on Influence��������������������������������������������������������������   161 7.1.3 The Corporate Storyline��������������������������������������������������������   162 7.2 Integrating the Corporate Storyline into Global Water Governance ��������������������������������������������������������������������������������������   164 7.3 Commercialising Water Management����������������������������������������������   166 7.3.1 Commercial Principles: Connecting Efficiency, Scarcity, and Savings������������������������������������������������������������   166 7.3.2 Questioning the Efficiency Principle������������������������������������  167 7.3.3 Market Instruments: Applying Hydro-Economic Analysis��������������������������������������������������������������������������������   169 7.3.4 Questioning Hydro-Economic Analysis ������������������������������   170 7.4 Economic Valuation of Water (Risk)������������������������������������������������   171 7.4.1 Valuation: The Corporate Perspective����������������������������������   171 7.4.2 Valuation: A Discursive Shift Amongst NGOs ��������������������   173 7.5 Liberalisation of Water Governance ������������������������������������������������   174 7.5.1 Consultation or Liberalisation?��������������������������������������������   175 7.5.2 Neutralising ‘The Business Voice’����������������������������������������   176 References��������������������������������������������������������������������������������������������������   178 8 Imagining Pathways Forward: Corporate Water Stewardship and the Future of Global Water Governance������������������������������������������  181 8.1 Promising Developments: How Companies May Help��������������������   182 8.2 Potential Roadblocks: How Companies May Hinder ����������������������   184 8.2.1 The Nature of Business��������������������������������������������������������   185 8.2.2 Discursive Capture����������������������������������������������������������������   186 8.3 Paving a Pathway: Overcoming Obstacles���������������������������������������   188 8.3.1 Aligning Agendas�����������������������������������������������������������������   189 8.3.2 Building Strong Partnerships������������������������������������������������   189 8.3.3 Recognising Differentiated Responsibilities������������������������   191 8.3.4 Designing Appropriate ‘Checks and Balances’��������������������   191 8.4 Concluding Thoughts������������������������������������������������������������������������   194 References��������������������������������������������������������������������������������������������������   195 Appendix: List of Organisations Interviewed ����������������������������������������������  197

Abbreviations

2030 WRG AAAA AB InBev AGWA AWS BCI BIER BSR CAPEX CCE CCEG CCEP CCIP CDA CDP CEO CSR CSV CWS DAC DEFRA DFID EBM EWP EWS FT GDP GIZ GNI GWG GWP

2030 Water Resources Group Addis Ababa Action Agenda Anheuser-Busch InBev Alliance for Global Water Adaptation Alliance for Water Stewardship Better Cotton Initiative Beverage Industry Environmental Roundtable Business for Social Responsibility Capital expenditure Coca-Cola Enterprises Coca-Cola Erfrischungsgetränke GmbH Coca-Cola European Partners Coca-Cola Iberian Partners Critical discourse analysis Former Carbon Disclosure Project, now CDP Chief executive officer Corporate social responsibility Creating shared value Corporate water stewardship OECD’s Development Assistance Committee UK Department for Environment, Food and Rural Affairs UK Department for International Development Ecosystem-based management European Water Partnership European Water Stewardship Financial Times Gross domestic product Deutsche Gesellschaft für Internationale Zusammenarbeit Gross national income Global water governance Global Water Partnership xv

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HLP ICESCR ICMM IFC IFPRI IGO IMF IPIECA IRBM IUCN IWA IWaSP IWMI IWRM JMP KPI LDC M&S MDG MNC NGO ODA ODI OECD OPEX OWG PiP PPP RAIN SAI SDC SDG SDSN SIDA SIWI SME STWI SVA TNC UDHR UN UNCSD UNDP UN DSA

Abbreviations

High-Level Panel International Covenant on Economic, Social and Cultural Rights International Council on Mining and Metals International Finance Corporation International Food Policy Research Institute Intergovernmental organisation International Monetary Fund Oil and Gas Industry Association for Environmental and Social Issues Integrated river basin management International Union for Conservation of Nature International Water Association International Water Stewardship Programme International Water Management Institute Integrated water resources management WHO/UNICEF Joint Monitoring Programme Key performance indicator Less developed countries Marks & Spencer Millennium Development Goal Multinational corporation Non-governmental organisation Official development assistance Overseas Development Institute Organisation for Economic Co-operation and Development Operating expenditure Open Working Group Partnerships in Practice Public-private partnership Replenish Africa Initiative Sustainable Agriculture Initiative Platform Swiss Agency for Development and Cooperation Sustainable Development Goal Sustainable Development Solutions Network Swedish International Development Cooperation Agency Stockholm International Water Institute Small and medium enterprise Sweden Textile Water Initiative Source vulnerability assessment The Nature Conservancy Universal Declaration of Human Rights United Nations UN Conference on Sustainable Development (Rio+20) United Nations Development Programme United Nations Department of Economic and Social Affairs

Abbreviations

UNEP UNESCO-IHE UNGC UNHRC UNICEF UNIDO USAID VaR WASH WBCSD WEF WFN WHO WIN WSUP WTO WWAP WWC WWF WWI

xvii

United Nations Environment Programme Institute for Water Education United Nations Global Compact United Nations Human Rights Council United Nations International Children’s Emergency Fund United Nations Industrial Development Organisation United States Agency for International Development Value at risk Water, sanitation and hygiene World Business Council for Sustainable Development World Economic Forum Water Footprint Network World Health Organisation Water Integrity Network Water & Sanitation for the Urban Poor World Trade Organisation World Water Assessment Programme World Water Council World Wide Fund for Nature Water Witness International

List of Boxes

Box 3.1 Institutionalising CWS – The Case of the CEO Water Mandate�������   75 Box 4.1 Coca-Cola and corporate water stewardship�������������������������������������   87 Box 4.2 H&M and corporate water stewardship���������������������������������������������   93 Box 4.3 BHP Billiton and corporate water stewardship���������������������������������  100

xix

List of Figures

Fig. 2.1 The CWS storyline����������������������������������������������������������������������������   48 Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 4.4

Corporate water stewardship activities���������������������������������������������   84 Food and beverage value chain���������������������������������������������������������   85 Textile and apparel value chain���������������������������������������������������������   90 Metals and mining value chain���������������������������������������������������������   95

Fig. 5.1 Intersection between WASH and business viability. (CEO Water Mandate 2014a: 11)������������������������������������������������������  113 Fig. 7.1 The CWS storyline 2�������������������������������������������������������������������������  162 Fig. 7.2 Valuation in CWS�����������������������������������������������������������������������������  173

xxi

List of Tables

Table 1.1 Companies included in this study���������������������������������������������������    8 Table 2.1 Processes of Market Environmentalism�����������������������������������������   40 Table 3.1 Organisations, partnerships and industry associations of CWS�������������������������������������������������������������������������������������������   75 Table 5.1 Classification of Corporate Interventions in WASH�����������������������  115 Table 6.1 Source-based, process-based, and outcome-based legitimacy�������  139 Table 6.2 Companies appropriation of ‘Creating shared value’���������������������  151

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Chapter 1

Introducing Corporate Water Stewardship in the Context of Global Water Governance

Ten years ago, the private sector was not in the game. Now there is a whole new world of corporate water governance out there. Interview 5, 2015 unpublished

The water crisis not only impacts people and planet, but also profits. Consumer goods like the clothes we wear, the food we eat, and the beverages we drink would not exist without water. Neither would cars, the fuel that moves them, computers, or the electricity that powers them. Large quantities of water are required to produce almost all goods and services. Companies sit in the centre of these production processes. As water issues worsen – implying quantity as well as quality related issues – these companies can no longer assume a stable supply of freshwater. For companies that rely on water to produce their goods and services, mounting water issues therefore constitute a direct threat to business operations. In consequence, water issues have been subjected to a dramatic and swift transformative reconceptualisation within the business community: from a peripheral environmental issue, to a risk that is directly linked to businesses’ bottom lines and financial returns. Water has, to put it succinctly, become a material business risk.

1.1  Corporate Water Stewardship To mitigate water risks, more and more companies have started to practice Corporate Water Stewardship (CWS). CWS comprises “actions by water users themselves to contribute to the management of the shared resource towards public-good outcomes” (Morgan and Orr 2015: 19). These actions should reflect “the use of water that is socially equitable, environmentally sustainable, and economically beneficial, achieved through a stakeholder-inclusive process that involves site- and catchment-­ based actions” (AWS 2018). CWS can be broadly categorised as a progression of

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_1

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corporate activities: from internal measures to catchment-wide collective action initiatives. Thus, whilst individual companies’ approach to stewardship differs, engagement typically follows the same general pattern. The first step for a company typically involves acknowledging the water challenges the world faces, and recognising its own dependency on freshwater for the production of its goods. After making a commitment to engage, a company normally starts by gathering hydrological data for its production sites to assess the interrelationship between its dependency on water, and the impact of its operations on surrounding communities and environments. Of particular significance are estimates of the extent to which scarcity, or water quality issues affect business activities, and the degree to which the company itself exacerbates these issues through its activities. If the assessment demonstrates that the company is at risk at a production site, it usually starts by taking ‘internal’ action, that is action within its own production facilities. This might include technical solutions to improve wastewater treatment and measures to reduce water consumption by improving internal water-use efficiency. If these measures are not enough to mitigate the water risks, the company may take ‘external’ action and engage with other stakeholders to address the water challenges in the wider watershed collectively. Because of the multi-faceted nature of water as a resource, holding as it does a central position in environmental systems, human livelihoods, and economic activities, companies increasingly find that they have to move beyond their operations to tackle the issues facing them. However, as they venture out, they acquire a prominent position amongst the various stakeholders who determine who gets water, how, and why. In short, companies shift realms from that of internal water management to that of water governance. Yet, despite a rapid proliferation of corporate interest in entering this latter realm, CWS has received limited scholarly attention, and the effects of corporate activities and decisions are, as yet, insufficiently understood. This book tackles this challenge. It provides an in-depth empirical and conceptual analysis of why companies engage with water issues, how they engage, and the effect their actions have on the norms and practices promoted by the global water governance system.

1.2  Global Water Governance To show how corporations have intersected Global Water Governance (GWG) systems through engagements in CWS, it is first necessary to obtain a common understanding of the still evolving concept of global governance. As the Westphalian temple1 is crumbling around us (Zacher 1992), and a new ‘post-sovereign’ world 1  The treaty of Westphalia, signed in 1648, put an end to the Thirty Years War. The war began in the former Holy Roman Empire, but it eventually spread to involve all the (at the time) major powers of Europe, with Sweden, France, Spain, and Austria all waging campaigns, primarily on German soil. The treaty in 1648 set up the system of sovereign nation states, and has long dominated the

1.2  Global Water Governance

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order is arising from its ruins (Karkkainen 2004), global governance has emerged as a conceptual panacea to explain the inner working of modern international relations. This section unpacks the debate surrounding the global governance concept by teasing apart its different meanings, and provides an overview of how this widely debated concept is understood in this book. The section then moves on to discuss the even more contested idea of GWG, and the evidence pointing to the prominent position corporations now hold in this system. Teasing apart the different meanings attached to ‘governance’ is far from straightforward; the term is used as a label to denote a range of distinct phenomena. A large body of literature uses the phrase ‘global governance’ to characterise and explain the structure of governance beyond the sovereign state. These scholars are united in their treatment of ‘governance’ as a complex, yet interconnected, structure. For example, Rhodes (1996: 660) perceives governance as “self-organizing, interorganizational networks”, characterised by “game-like interactions, rooted in trust and regulated by rules of the game negotiated and agreed by network participants”. Campbell et al. (2014: 3) also perceive governance as ‘networks’, and define it as “formal and informal bundles of rules, roles, and relationships that, distributed as they are within networks, can be difficult to ‘see’.” Comparably, Rasche and Gilbert (2012) characterise governance as ‘Global Public Policy Networks’, and Rosenau (2003) typifies global governance as a ‘Mobius-web’, which is “the sum of myriad – literally millions of – control mechanisms driven by different histories, goals, structures, and processes” (Rosenau 1995: 16). By contrast, another group focuses on global governance in the context of its function. Castro (2007) notes that, within this perspective, governance is commonly conceptualised in one of two ways: as an instrument, or as a political process. As an instrument, it is perceived as an administrative device, and a technical toolkit used to achieve and implement a certain objective. Delmas and Young (2009: 6), for example, understand governance as “a social function centred on efforts to steer societies or human groups away from collectively undesirable outcomes (e.g., the tragedy of the commons) and toward socially desirable outcomes (e.g., the maintenance of a benign climate system).” As a political process, governance is comprehended as revolving less around the implementation of a decision, and more around the deliberative practices of decision-making. For example, Bulkeley (2005) recognises governance broadly as a system of governing, and for Castro (2007: 106) it is “a political process involving the exercise of political power by political actors who seek to define the ends and values that must inform social development.” Going beyond the quest for a definition, Hajer and Versteeg (2005: 341) focus on the conditions under which this political process operates, and argue that it is characterised

perception of how international politics operates, by placing states as the prime actors and the principle of sovereignty above all else. However, it should be noted that not all scholars take for granted the alleged stability and universality of the Westphalian state. For example, Osiander (2001: 284) characterises it as “a figment of the nineteenth-century imagination, stylized still further, and reified, by the discipline of IR [International Relations] itself in the twentieth century.”

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by two features: ‘institutional ambiguity’2 and ‘multi-signification’. The former suggests that in governance networks, “there are no agreed-upon norms, procedures, or ‘constitution’ to predetermine where and how a legitimate decision is to be taken” (2005: 341). The latter denotes “that actors may conceive of the world in different terms, which implies that the very meanings at stake for the participants are often unclear to each other” (ibid). Finally, a third faction analyses global governance from the perspective of the actors involved, emphasising the inclusion of actors beyond the state. These scholars often place ‘governance’ in contrast to ‘government’, which Bodin et al. (2011: 6) characterise as a system “where one designated actor (typically the state in political science) is the one and only actor being in charge”. Governance, on the other hand, is according to Rasche and Gilbert (2012: 103), “based on a decentralized multiactor approach that includes and links actors from three domains: the (global) economy, the (inter)national political system, and (inter)national civil society.” Similarly, Biermann et al. (2009: 15–6) also emphasise the multi-stakeholder nature of governance, and define it as “the overarching system of public and private institutions that are valid or active in a given issue area of world politics”. Placing particular emphasis on the inclusion of private actors, Biermann and Pattberg (2008: 282) argue that governance is characterised by “public-private and increasingly private-­ private cooperation”. Embedded in this debate is also a focus on whether an expansion in the number of stakeholders involved results in diminishing state power. However, the general consensus is that, although states can no longer be conceptualised as the only important actor, polycentrism need not imply a reduced role for the state (Reed and Bruyneel 2010; Zacher 1992). Despite the emphasis placed on ‘actors’ within this group, Avant et  al. (2010: 1) note that, when speaking of governance, these scholars often treat it as a depoliticised structure or process. They argue that governance, when analysts speak of it, “is something that happens; no one, apparently, actually does it. Analysts rarely talk about global governors and have not made the agents in this process central to their analysis.” Barnett and Duvall (2005) trace the reluctance to acknowledge power dynamics across agents back to the liberal undertones of the definition and understanding of governance. They argue that, in any discussion regarding governance, there are underlying assumptions that actors have shared interests, and that they are willing to compromise and collaborate to achieve these interests. Resting on liberal precepts, and a rhetoric of social choice, these discussions effectively mask the presence of power since they often fail to include an analysis of whose interest is represented, and how power dynamics steer outcomes. In this book, all three understandings of governance are addressed, because it is acknowledged that they will explain different parts of this multifaceted issue: how governance is structured, how it is utilised, and how unconventional actors assemble and work together. Moreover, all three understandings must be considered because, although it is tempting to focus on specific aspects to make a versatile topic like governance manageable and susceptible to analysis, it inevitably reduces its ­complexity. But it must be recognised that, whether focusing on global governance  In earlier work, Hajer (2003) defined this as the ‘institutional void.’

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as a structure, a function, or an unconventional set of actors, these scholars – and this book – assemble around a shared perspective that governance breaks from the Westphalian tradition, and constitutes a progressive advancement of practice in the realm of international policy-making. Looking specifically at GWG, this regime has emerged alongside traditional local, as well as regional and national, water governance. Following Levy and Prakash (2003), a regime is understood as the rules, norms, codes of conduct, and standards that constrain, facilitate, and shape the behaviour of the actors in a system. Aligning with this understanding, Pahl-Wostl et al. (2008: 422) define GWG as “the development and implementation of norms, principles, rules, incentives, informative tools, and infrastructure to promote a change in the behavior of actors at the global level in the area of water governance.” Because water and its associated issues are contextual, local management and governance of water has long been the norm. However, as local issues accumulate and collectively amass to a global crisis, water has emerged as a central issue for global politics (Salman 2003). Water’s place in the global political arena has been further solidified through its interconnectedness with global climate change discussions, as water is recognised as the medium through which climatic changes are often expressed (UN 2016). Moreover, water issues were raised during the formulation of the 2015 Sustainable Development Goals (SDGs), which resulted in a dedicated water goal (Goal 6) to ‘ensure availability and sustainable management of water and sanitation for all’. Additionally, in 2010, the UN General Assembly declared water to be a human right (Res.64/292), further reinforced in 2011 in the Human Rights Council (A/HRC/15/L.14).3 Moreover, whilst water has long been thought of as flowing through a global hydrological system, studies of virtual water trade (Allan 1998, 2011) have also illustrated how water flows through the global economic market. It is necessary to analyse the global dimension of water governance in order to understand why and how water is governed and managed at lower scales. This is because, although GWG is not associated with setting particular rules, it “provide[s] a framework of reference [and it] shapes and steers the dialogue” (Interview 20, 2015, unpublished). Studying the GWG processes that disseminate norms and principles is challenging, however, because GWG is essentially an intangible construct. To ground the analysis, previous studies of GWG have focused on deciphering its key players, in other words, the types of actor who help to ‘promote change in behaviour’. For Cooley et al. (2014: 6), GWG “comprises formal and informal instruments – including global governmental and nongovernmental organizations, regimes, actors, frameworks, and agreements – created to balance interests and meet global water challenges that span national and regional boundaries”. For Gupta and Pahl-Wostl (2013), the diffuse structure of GWG similarly includes a myriad of organisations 3  These resolutions formally place water under the International Covenant on Economic, Social and Cultural Rights (ICESCR), one of the legally binding covenants to the Universal Declaration of Human Rights (UDHR). However, due to the weak nature of the ICESCR in terms of enforcing implementation, it remains unclear to what extent the right to water is legally enforceable.

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and actors; for example UN agencies, epistemic communities such as the International Water Association (IWA), global water treaties, and public-private bodies such as the World Water Council (WWC). Referring to ‘the global politics of water’ rather than GWG, Mollinga (2008) makes a similar argument to Gupta and Pahl-Wostl, but further adds the World Commission on Dams, the global advocacy network promoting water as a human right, as well as the World Trade Organisation (WTO) negotiations regarding water, as important features. Relatedly, Varady et al. (2009: 151) discuss ‘global water initiatives’, which consist of “networks of global-­ level organizations, professional societies, and events”. Despite the consensus that water is an issue of global concern, controversy around the existence of GWG remains. For instance, Gawel and Bernsen (2011) criticise the concept from two angles. Firstly, they question its necessity. In their understanding, GWG is put forward merely as a possible solution to the problem that many water issues are beyond the scope of national, local, or even water catchment-­oriented governance. In their discussion, they dismiss arguments made by, for example, Hoekstra (2011), who points to global ‘teleconnections’ (Hoff 2009) of water as a legitimate ground upon which to base a call for GWG. According to Hoekstra, these teleconnections are induced by natural features such as the flow of freshwater through the biosphere in a global hydrological cycle, and anthropogenic processes such as the flow of ‘virtual water’ through agricultural trade (Allan 1998, 2011). Gawel and Bernsen (2011) recognise that many water problems are widespread around the globe, but they argue that water issues – despite these teleconnections – are not truly global in nature. Secondly, going beyond judgements about the need for GWG, Gawel and Bernsen (2011) argue that, as it stands, it remains solely an academic thought-experiment, because a global water policy framework does not exist. Although there are global frameworks which cover aspects of water, such as the 1997 Convention on the Law of the Non-Navigational Uses of International Watercourses,4 the 2011 United Nation Human Rights Council’s resolution declaring access to safe drinking water and sanitation a basic human right, and the 2015 SDG Goal 6, there is no overarching framework. However, such an argument fails to acknowledge the nature of global governance. Like governance in general, GWG exists in a state of ‘institutional ambiguity’ (Hajer and Versteeg 2005). Drawing on Rosenau’s (2003) characterisation of global governance as a ‘Mobius-web’, Gupta and Pahl-Wostl (2013: 56) understand GWG as “bottom-up, top-down, and side-by-side governance… [operating] by networked and hierarchical interactions including many actors”. GWG is consequently about a complex web of formal – as well as informal – interactions that steer the overarching ‘rules of the game’. Nevertheless, those who engage with this field often fail to make explicit how it – and the various actors operating within it – interact with, and steer, more tangible water management practices. Even scholars who perceive GWG as an integral part of the water governance tapestry tend to treat it as something that is simply ‘floating above’ actions on the ground, somewhat discon4  The Convention did not come into force until 2014 when Vietnam became the 35th state to ratify it.

1.3 Approach

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nected. To understand how GWG interacts with water management, it is crucial to break away from this perception, and step outside what Rosenau (2000: 1) has termed “methodological territorialism”. To do this, Scholte’s discussion on ‘globality’ provides a powerful conceptual tool. Globality is a specific kind of social space that “transcends the confines of territorial space, territorial distance, and territorial borders” (Scholte 2002: 286). Issues like water, which display supra-territorial characteristics – which can appear simultaneously around the globe – attract actors situated across all interlinked levels to participate in the uncoordinated governance web, attempting to define the ends and means of the particular issue. Consequently, these actors, no matter the scale at which they operate, could be said to participate in global governance (Bexell 2014). Global governance could consequently be thought of as “innumerable situations involving localizing responses to globalizing stimuli” (Rosenau 2000: 5). Perceiving GWG in this way means that we can start to make the links – and even see the feedback mechanisms – between the intangible structure of GWG, and tangible water management practices as carried out by various actors on the ground. Among the multiple actors engaging in this governance structure, companies are emerging as key players. This is evident from their growing presence and participation in various high-level water events where the global agenda for water is set, like the Stockholm Water Week, the World Water Forum, and the Financial Times Water Summit (Newborne and Dalton 2016). Increasingly, scholars have also started to pick up on this emerging trend. For example, Daniel and Sojamo (2012) argue that through the development, implementation, and promotion of practices such as disclosure tools and management principles, CWS contributes to the emergence of a private GWG regime. Similarly, Vos and Hinojosa (2016: 42) suggest that corporate involvement in water management at the local level has created new forms of private control, which “redefine hydrosocial territories at a supranational governance level”. Although using slightly different terminology, and focusing on different actors, what these studies have in common is recognition of the intangible nature of GWG, but also companies’ contribution to “set global research and implementation agendas…and legitimize certain forms of water governance” (Varady et al. 2009: 152).

1.3  Approach Approaching a complex question like how corporations have become prominent players in GWG requires a triangulation of methods. A significant source of evidence has been 50 semi-structured interviews with corporate as well as non-­ corporate representatives who are, or have been, active in the water sector (for a complete list of represented organisations, see Appendix). The water sector is here taken to denote the whole ‘ecosystem’ of initiatives and actors – both private and non-private – involved in addressing water issues. To ensure additional breadth and depth of the evidence gathered, interview material has been complemented with textual analysis of over 550 documents.

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Table 1.1  Companies included in this study Company The Coca-Cola Company Coca-cola enterprises Diageo SAB miller Olam PepsiCo Nestlé Unilever H&M Levi Strauss Anglo American Barrick gold BHP Billiton Rio Tinto

Sector Beverage Beverage Beverage Beverage Food Food & Beverage Food & Beverage Food & Personal care Apparel Apparel Metals & Mining Metals & Mining Metals & Mining Metals & Mining

Headquarters Atlanta, USA London, UK London, UK London, UK Singapore New York, USA Vevey, Switzerland London, UK Stockholm, Sweden San Francisco, USA London, UK Toronto, Canada Melbourne, Australia London, UK

Rather than focusing on a specific case study, a number of Multinational Corporations (MNCs) have been utilised as analytical ‘research sites’ (Table 1.1). Whilst a case study can focus the research, and tighten its scope, it also confines the analysis. Given that the scope of this project is inherently global, and thus requires an outlook that was not embedded in a particular locale, the conventional use of a case study was deemed unsuitable. The selected companies represent various sectors: Food & Beverage, Textile & Apparel, Consumer Goods, and Metals & Mining, all of which typically have high water demands, directly and/or indirectly. Including corporations from different sectors provides the opportunity for a more nuanced analysis of how companies approach the topic of water, and moves the examination beyond the limited scope of treating ‘the private sector’ as one homogeneous entity. The focus on MNCs is necessary because “there is still a big gap between the large multinationals and the others” (Interview 35, 2016, unpublished). Small and medium enterprises5 have so far been largely absent from the global discussions revolving around water. As time moves fast in the world of business, some of these corporate ‘research sites’ have been significantly altered since this project commenced. In May 2016, Coca-Cola Enterprises (CCE) merged with Coca-Cola Iberian Partners (CCIP) and Coca-Cola Erfrischungsgetränke GmbH (CCEG), forming Coca-Cola European Partners (CCEP), the world’s largest independent Coke bottler. Similarly, SAB Miller has ceased to exist since its merger with Anheuser-Busch InBev (AB InBev) in October 2016. Although acknowledging these changes, the field will be treated as it stood when the research was initiated, and reference will still therefore be made to CCE and SAB Miller throughout the book. 5  SMEs are enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro (European Commission 2019).

1.4  Structure of the Book

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1.4  Structure of the Book The three questions driving this research  – why companies engage with water issues, how they engage, and the effects their actions have on the norms and practices promoted through the global water governance system  – have informed the core structure of this book in its three parts.

1.4.1  Incorporation (Part I) Part I addresses the various aspects around why companies engage. The level of corporate involvement in the water sector is unprecedented, and yet, surprisingly little scholarly attention has been given to making sense of this development. To incorporate multinational companies into fora that sets the agenda for who gets water, how, and why is simply unchartered territory. A rigorous analysis of how companies have acquired this ‘normalised’ status is therefore required. Any societal development has to be understood as the cumulative product of historical events; without a thorough understanding of the past, a rich analysis of the present is impossible. CWS is no exception. Chapter 2 takes up the task to conduct such an assessment. It sets out to analyse the broad societal trends that have created the enabling environment for CWS to emerge. In doing so, Chap. 2 brings together a wide-­ ranging body of existing  – albeit fragmented  – literature covering the historical development of water resources management, the nature of policy-making and governance, and studies of the business-society relationship. It finds that above all, CWS has emerged as a combined response to two wider societal trends: (1) a growing discontent with state-mandated water resources management and; (2) a renegotiation of the role of business in society. Chapter 2 also sets up the framework to theorise corporate participation in global governance, understand how it operates, and explain how new ideas are generated and established in the political context. Whilst understanding the enabling environment that allowed corporations to enter the GWG arena is critical, alone it is not sufficient to explain the emergence of CWS. It is also necessary, therefore, to analyse how the actors involved utilised the opportunity presented to them. Around the world, companies are now entering into collaborative partnerships with other stakeholders to ensure the health of wider watersheds (see H&M 2015; Nestlé 2014; PepsiCo 2014). For example, in 2016, the UK-based brewing company Diageo announced a five-year international partnership with WaterAid to “use their collective influence to advocate universal access to safe water, sanitation and hygiene (WASH) at local, national and global levels” (Diageo 2017). Similarly, The Coca-Cola Company [henceforth: Coca-Cola], has a partnership with the World Wide Fund for Nature (WWF), which in 2013 was expanded to include joint efforts to “maintain resilient freshwater systems...[in] 11 regions across five continents” (Coca-Cola 2013). Chapter 3 takes up the challenge to unveil why water has become a critical issue for business. But, moreover, it also

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investigates why other actors in the water sector have encouraged their engagement. Because, as alluded to through the above examples of corporate engagement, corporations are not furthering CWS on their own. That companies experience water risks as a result of growing freshwater insecurity has not gone unnoticed by other actors working in the water sector. In particular, many Non-Governmental Organisations (NGOs) see that “there is an opportunity, with the risks that companies face to kick-­ start greater global awareness on water issues…[and that] to a certain level, NGOs can use the ‘misfortune’ of companies to raise issues on water up the agenda” (Interview 31, 2016, unpublished). Together with donor agencies like the UK Department of International Development (DFID), and the German Gesellschaft für Internationale Zusammenarbeit (GIZ), NGOs like the WWF and the International Union for Conservation of Nature (IUCN) actively seek out corporate partners, and promote CWS as a ‘win-win’ tactic to tackle growing water insecurities, and the related corporate water risk. By promoting collaboration with companies to further their own environmental and social objectives, these non-private6 actors demonstrate a conviction that it is possible to “achieve positive environmental outcomes through the introduction of markets and market-derived institutions and organizations” (Bakker 2014: 475). Seeing parallels with wider conservationist trends like the valuation of ‘ecosystem services,’ Chaps. 2 and 3 collectively put forth CWS as a form of ‘Market Environmentalism’: “a doctrine premised on the synergies between environmental conservation and protection, economic growth, market economies, and neoliberal governance” (ibid: 474–5). As will become evident through the discussion in Part II and III, despite a seductive promise of generating win-win outcomes, the market environmentalist thinking that CWS embodies has a worrying tendency to ignore the different perspectives of the various actors, and the potential conflicts that might emerge when these are brought together.

1.4.2  Involvement (Part II) Rising water risks coupled with a growing acceptance of corporate involvement have culminated in a multitude of companies pledging to become good ‘water stewards’ and taking steps to address water issues. Outlining the manner in which they become involved and unpacking the drivers for their particular type of engagement is the main theme of Part II of this book. Companies’ approach to the water issue is to a large extent rooted in the manner in which they frame the water crisis itself. When companies discuss water issues, they tend to focus specifically on the volumetric availability – or lack thereof – of water. To a company, water scarcity is the primary concern because water is essentially understood as a factor of production; an input that is required of a certain quantity at particular times and in specific locations in the production process. 6  The term ‘non-private’ will be used throughout the book to denote a range of non-corporate actors, including public bodies and NGOs.

1.4  Structure of the Book

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Unlike many other water issues, scarcity therefore poses a direct threat to business viability. Moreover, because a company can calculate the amount of water ‘input’ that it needs for its production, scarcity  – again, unlike many other issues  – is a problem that can be quantified. To demonstrate that companies concentrate on the one issue that they perceive to be quantifiable adds an additional layer to previous research. Blowfield (2008) has previously suggested that, in the world of business, social and environmental issues are only acknowledged as important by a company if it can – in numerical terms – demonstrate a positive correlation between ‘doing good in the world’ and ‘doing well financially’. Thus, for Blowfield, the critical determinant of whether a company engages or not is whether it can quantify the benefit. This book shows that this is not the whole story; a company also needs to be able to quantify the problem. If the problem itself cannot be quantified, it is more difficult to construct the ‘business case’, because it is more challenging to set baselines and targets, and to measure success in ‘closing the gap’. Chapter 4 address how companies from different sectors have engaged in CWS in the context of water resources management. In general terms, it explores how and why companies from the food, beverage, textile, and mining sectors engage, and highlights how the water risks that each sector faces result in different approaches. It demonstrates that companies that engage are driven by ‘enlightened self-interest’: the realisation that engagement will contribute positively to business continuity. However, the discussion also illustrates that although the underlying driver may be the same for all companies, the actions taken will differ across, and even within, sectors. This is because although the level of risk in large part determines whether a company engages in stewardship, the level of control a company has in mitigating that risk will determine how it engages. Higher levels of control lead to more action being taken by the company itself, while lower levels of control lead to a higher degree of involvement in sector-wide initiatives (to mitigate risks in supply chains and in surrounding communities). Understanding action as an outcome of both the magnitude of the risk and the level of (company) control allowed me to produce a more nuanced understanding of why companies from different sectors act in particular ways, and to focus on different aspects of stewardship. Chapter 5 is concerned with how companies engage in the context of Water, Sanitation, and Hygiene (WASH). Linking back to the debate exploring the ‘business-­society relationship’ discussed in Part I, it assesses how companies have, to some extent, been reconceptualised from ‘development tools’ to ‘development agents.’ By shedding light on this transformation, the chapter shows how a space has been opened for utilising market-driven models to solve development issues. This lays the foundation for demonstrating the rationale behind integrating WASH into the CWS agenda and assessing how various companies take action. Chapter 5 presents the argument that companies’ engagement in WASH differs from their engagement in water resources management, because it is driven by utilisation of opportunities as well as risk mitigation. More specifically, this chapter shows that although companies’ engagement in this space is still in its infancy, there are early signs that companies will engage when they can align engagement with alleviating a risk, utilising an opportunity, or reducing inefficiency. Whilst it is too soon to

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make final judgements, the evidence critically points to a need for caution in always assuming win-win outcomes for business and society when companies engage in solving WASH challenges.

1.4.3  Influence (Part III) Part III tackles the third question: what effects do corporate actions have on the norms and practices promoted through the global water governance system? While it may be necessary to invite companies into the water sector because they are such large water users, it is nevertheless a move with high risks which, if not properly managed, could undermine the influence and interests of actors working for the public (rather than private) good. Amongst the stakeholders who are active in addressing water issues, corporations are amongst the most powerful players, and a critical study of how their incorporation and involvement influence the water sector is therefore imperative. The theoretical foundations for being able to answer this question are set out earlier in the book. Chapter 2 provides an overview of the study of the influence of ideas, and poses questions around how, when, and why certain ideas matter in the policy context. This is an extensive research field. Exploring how ideas intersect with changes in discourse, previous studies have highlighted the role of performativity (Hajer and Versteeg 2005), power and resources (Barnett and Duvall 2005; Börzel and Risse 2005; Jessop 2000), and the role of expertise and epistemic communities (Carrozza 2015; Owens 2015; Grundmann 2009; Haas 1992). Various other chapters in this book demonstrate that in the particular context of stewardship, the key factor that determines whether an actor has the capacity to influence the discussion is the amount of resource (financial, personnel, informational, expertise) at the actor’s disposal. Without sufficient resources, many potential actors are unable to access the ‘discursive space’ where agendas are set. Companies often have considerably more resources compared with other actors in the space, which means that the ‘playing field’ is by no means a level one. As a result, they have an overriding capacity to convey their ‘story’ and by extension set agendas. Understanding this provides a lens to explore how corporations may exert influence in different contexts. Chapter 6 looks at corporate influence in Collective Action. Collective Action has become an integral component of CWS and is used as a term to denote a multi-­ stakeholder partnership working together to find common solutions. The chapter tackles questions around how companies draw on non-conventional sources of authority to justify their activities. The processes of legitimation – understood as “the justification of authority” (Bodansky 1999: 601) – are of particular importance in the collaborative context because, through these projects, companies move beyond their own bounded sphere of influence (for example, a factory, farm, or plantation) into communities and political deliberations.

1.4  Structure of the Book

13

Because companies are non-elected entities, they cannot draw upon conventional forms of democratic legitimacy, as an elected government may. Instead, companies are required to invoke alternative sources of authority to establish themselves as legitimate actors. Building on the work of Bodansky (1999), Chap. 6 analysed how companies draw upon ‘source-based legitimacy’, ‘process-based legitimacy’, and ‘outcome-based legitimacy’ to position themselves as legitimate actors when they participate in collective action. The chapter finds that the legitimation process is not an isolated event, but a continuous, iterative process that requires active engagement on the company’s behalf to sustain its acquired legitimacy. Since legitimacy is a product of social interaction – obtained by the company and accepted and granted by the other actors with whom the company interacts – a company has to nurture its relationships to maintain its status as a legitimate actor. When conceptualising legitimacy in this relational manner, it is possible to place this discussion in the context of a wider scholarly debate. Analysing how companies are renegotiating the relationship with society by invoking ‘Corporate Citizenship’, Post (2000), for example, suggests that companies are being reconceptualised from a ‘portfolio of products’ to a ‘portfolio of relationships’. Following from this, Blowfield argues that Corporate Citizenship is above all an institution where values, rights, and responsibilities are claimed, enforced, and mediated between companies and non-­ business stakeholders. The findings presented in this book suggest that, in addition, embedded in the ‘portfolio of relationships’ is a continuous negotiation of companies’ claims for legitimacy. The discourse on how water should be governed and managed is at least to some degree set at the global level. Thus, whilst Chap. 6 investigates corporate influence in a micro perspective, Chap. 7 considers the bigger picture in analysing how CWS influences GWG.  Seeking an answer to this question, Chap. 7 demonstrates the importance of understanding GWG – and global governance more broadly – as a constraining, as well as a constructed network. Recognising that those within it generate the structure provides a powerful roadmap for producing change. When taken holistically, the book attests to the basic point that the inclusion of companies in the water sector matters; it changes the status quo of GWG. Chapter 7 demonstrates this by showing that companies exert influence by successfully infiltrating their ‘story’ into the global water discourse. Situating this work amongst scholars who adhere to the ‘linguistic turn’ (Cienki and Yanow 2013), the chapter draws upon the ideas of ‘storylines’ as an explanatory device in the context of policy change (Dryzek 2013; Molle 2008; Fischer 2003). Being particularly inspired by Roe (1994: 36), who suggests that policy narratives are set up as classic ‘stories’ where each narrative encompasses “a beginning, middle, and end…and revolves around a sequence of events or positions in which something is said to happen or from which something is said to follow,” the Chapter sets out to unveil the story as told by companies. Linking back to arguments set out in Chap. 2 and 3, that CWS constitute a form of ‘Market Environmentalism’, Chap. 7 unveils how different market environmentalist strategies embedded in CWS have started to permeate water management and governance. It demonstrates how management and governance of water in specific

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locales have started to conform to market environmentalist ideals as a direct result of companies’ involvement, and their ability to insert their storylines into global discourse. Being particularly inspired by Bakker (2014), the book presents evidence that the integration of companies matters, because it has led to the commercialisation of water management, the valuation of water risk, and the liberalisation of water governance. Chapter 8 then takes a forward-looking perspective. The body of this final chapter is made up of a number of stories displaying the opportunity presented by working with companies, as well as the danger of relying too heavily on these entities to ensure collective water security. Drawing on the lessons learnt from these examples, the chapter ends with some reflections upon how to ensure that the actions companies take in the name of CWS help shape a global water governance agenda that serves the public good rather than simply contributing to private profit. Companies cannot – and should not – be ignored. They constitute a force to be reckoned with. Practitioners and scholars alike have suggested that CWS has ‘redefined’ the water sector (Lall et al. 2015), and that as a result, the water sector ‘paradigm’ is undergoing a shift (CEO Water Mandate et al. 2015). Collectively, Part I, II, and III speak to what it is about the water sector that has changed as a result of corporate involvement, and with what implications.

References Allan, J.  A. (1998). Virtual water: A strategic resource –global solutions to regional deficits. Ground Water, 36(4), 545–546. Allan, J.  A. (2011). Virtual water: Tackling the threat to our planet’s most precious resource. New York: I. B. Tauris. Avant, D.  D., Finnemore, M., & Sell, S.  K. (2010). Who governs the globe? In D.  D. Avant, M. Finnemore, & S. K. Sell (Eds.), Who governs the globe? Cambridge studies in International relations (pp. 1–31). Cambridge: Cambridge University Press. AWS. (2018). About. [Online]. Available at http://a4ws.org/about/. Accessed 2018-10-21. Bakker, K. (2014). The business of water: Market environmentalism in the water sector. Annual Review of Environment and Resources, 39, 469–494. Barnett, M., & Duvall, R. (2005). Power in global governance. In M. Barnett & R. Duvall (Eds.), Power in global governance (pp. 1–32). Cambridge: Cambridge University Press. Bexell, M. (2014). Global governance, legitimacy and (de)legitimation. Globalizations, 11(3), 289–299. Biermann, F., & Pattberg, P. (2008). Global environmental governance: Taking stock, moving forward. Annual Review of Environment and Resources, 33, 277–294. Biermann, F., Pattberg, P., Asselt, H., & Zelli, F. (2009). The fragmentation of global governance architectures: A framework for analysis. Global Environmental Politics, 9(4), 14–40. Blowfield, M. (2008). Poverty’s case for business: The evidence, misconceptions, conceits and deceit surrounding the business case. BDS working paper series no. 5. The Business, Development and Society Network, Copenhagen Business School, Copenhagen. Bodansky, D. (1999). The legitimacy of international governance: A coming challenge for international environmental law? The American Journal of International Law, 93(3), 596–624. Bodin, Ö., Ramirez-Sanchez, S., Ernston, H., & Prell, C. (2011). A social relational approach to natural resource governance. In Ö. Bodin & C. Prell (Eds.), Social networks and natural

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Hajer, M. (2003). Policy without polity? Policy analysis and the institutional void. Policy Sciences, 36, 175–195. Hajer, M., & Versteeg, W. (2005). Performing governance through networks. European Political Sciences, 3, 340–347. Hoekstra, A. Y. (2011). The global dimension of water governance: Why the River Basin approach is no longer sufficient and why cooperative action at global level is needed. Water, 3(1), 21–46. Hoff, H. (2009). Global water resources and their management. Current Opinion in Environment Sustainability, 1(2), 141–147. Jessop, B. (2000). The dynamics of partnership and governance failure. In G. Stoker (Ed.), The new politics of local governance in Britain (pp. 11–32). Basingstoke: Macmillan. Karkkainen, B.  C. (2004). Post-sovereign environmental governance. Global Environmental Politics, 4(1), 72–96. Lall, U., Boccaletti, G., & Lamb, C. (2015). Discussion panel: “The investment perspective.” The new bottom line: Collaborative solutions for growth, FT Water Summit 2015, October 27th, London. [Online]. Available at https://live.ft.com/Events/2015/FT-Water-Summit. Accessed 2016-01-21. Levy, D., & Prakash, A. (2003). Bargains old and new: Multinational corporations in global governance. Business and Politics, 5(2), 131–150. Molle, F. (2008). Nirvana concepts, narratives and policy models: Insights from the water sector. Water Alternatives, 1(1), 131–156. Mollinga, P. P. (2008). Water, politics and development: Framing a political sociology of water resources management. Water Alternatives, 1(1), 7–23. Morgan, A., & Orr, S. (2015). The value of water: A framework for understanding water valuation, risk and stewardship. [Online]. Available at http://commdev.org/wp-content/uploads/2015/05/ The-Value-of-Water-Discussion-Draft-Final-August-2015.pdf. Accessed 2018-11-21. Nestlé. (2014). Nestlé Commitment on Water Stewardship, appendix to the Nestlé policy on environmental sustainability. Vevey: Nestlé S.A. Newborne, P., & Dalton, J. (2016). Water management and stewardship: Taking stock of corporate water behaviour. Gland/London: IUCN/ODI. Osiander, A. (2001). Sovereignty, international relations, and the Westphalian myth. International Organization, 55(2), 251–287. Owens, S. (2015). Knowledge, policy, and expertise: The UK Royal Commission on environmental pollution 1970–2011. Oxford: Oxford University Press. Pahl-Wostl, C., Gupta, J., & Petry, D. (2008). Governance and the global water system: A theoretical exploration. Global Governance, 14(4), 419–435. PepsiCo. (2014). Delivering access to safe water through partnerships. PepsiCo: Purchase. Post, J. E. (2000). Moving from geographic to virtual communities: Global corporate citizenship in a Dot.com world. Business and Society Review, 105(1), 27–46. Rasche, A., & Gilbert, D. U. (2012). Institutionalizing global governance: The role of the United Nations global compact. Business Ethics: A European Review, 21(1), 100–114. Reed, M., & Bruyneel, S. (2010). Rescaling environmental governance, rethinking the state: A three-dimensional review. Progress in Human Geography, 34(5), 646–653. Rhodes, R. A. W. (1996). The new governance: Governing without government. Political Studies, 44, 652–667. Roe, E. (1994). Narrative policy analysis: Theory and practice. Durham: Duke University Press. Rosenau, J. N. (1995). Governance in the twenty-first century. Global Governance, 1(1), 13–43. Rosenau, J. N. (2000, August 1–5). The governance of fragmentation: Neither a World Republic nor a global interstate system. Presentation at Congress of the International Political Science Association, Quebec City. Rosenau, J.  (2003). Distant proximities: Dynamics beyond globalization. Princeton/Oxford: Princeton University Press. Salman, S. M. A. (2003). From Marrakech through the Hague to Kyoto: Has the global debate on water reached a dead end? International Water Resources Association, 28(4), 491–500.

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Part I

Incorporation

Chapter 2

Understanding the Enabling Environment

Maybe I am dreaming, but I think you can see a new form of ‘social capitalism’ emerging. Interview 17, 2015, unpublished

It is impossible to point towards one specific instance in history that marks the birth of CWS. Like any societal development, it has to be comprehended as a product of cumulative events that collectively creates an enabling environment. This chapter puts forth the argument that CWS can be understood as an outcome of two wide trends: (a) the growing discontent with state-mandated water resources management, and (b) the concurrent renegotiation of businesses’ role in society. Embarking on a quest to generate new knowledge, it is easy to feel adrift in a maze of erudition. The purpose of this chapter is to structure pathways through this scholarly labyrinth, and unpack findings and frameworks which will assist in clarifying why and how the role of companies has been redefined in the water sector, and what this means in the context of GWG. The chapter begins by reviewing conventional water management practices, and the criticisms to which they have been subjected. Through these critiques, the rationale emerges for opening a debate on the renegotiation at the global level of the position of businesses, introducing this sector as stakeholders in water governance. Intrinsically linked to this is the co-­propagation of the use of market mechanisms to rectify societal and environmental problems. Consequently, this chapter will also analyse the emergence of market environmentalism, and argue that it is through CWS that this trend has materialised within the water sector. The remainder of the chapter sets up the theoretical framework to theorise corporate participation in global governance, understand how it operates, and explain how new ideas are generated and established in the political context.

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_2

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2.1  Waves of Water Management Practices This first section reviews a number of conventional water management paradigms: command-and-control management, Integrated Water Resources Management (IWRM), and Ecosystem-Based Management (EBM). Each paradigm will be discussed in turn, allowing the identification of its main features. Furthermore, by systematically conducting this review, we can begin to see not only their weaknesses, but also how a rational argument for corporate involvement has grown in these schisms.

2.1.1  Command-and-Control Management Historically, the dominant paradigm for water management has been influenced by a technical tradition of command-and-control, focusing on clearly defined problems, which had technical end-of-pipe solutions (Rockström et al. 2014). The paradigm was based on assumptions of problems displaying ‘stationary’ characteristics with predictable uncertainty, and reversible trajectories of change within natural systems (Schoeman et al. 2014). Its central feature is to control a single key variable – river flow, for example – and reduce its natural variability in order to render water management more predictable (Rockström et  al. 2014). Typically, this approach is characterised by “centralized, sectoral institutions, limited stakeholder involvement and expert-led problem solving focused on technical engineering solutions” (Schoeman et al. 2014: 378), such as building a reservoir. One example of where command-and-control thinking has influenced the water sector is in what Bakker (2014) has termed the ‘state hydraulic paradigm’. This paradigm arose in the late nineteenth century as a reaction to the impacts of urbanisation and industrialisation, amidst calls for state oversight to control issues such as water pollution and water-borne diseases, and access to safe water supplies. The paradigm has been dominated by a growth-oriented mind-set, emphasising the construction of large hydraulic infrastructure to enable domestic water supply, as well as industrial activities. It has also been supply-led, meaning that the paradigm focused on increasing water supply rather than curbing demand (Bakker 2014, 2005). However, there are significant weaknesses embedded in the command-and-­ control approach. In particular, the assumption that problems are “well-bounded, clearly defined, relatively simple, and generally linear with respect to cause and effect” (Holling and Meffe 1996: 329) has been critiqued. Moreover, it has been critiqued on the basis that its centralised, top-down, state-centric management approach excludes local communities and other relevant stakeholders from the decision-­ making process, and cuts across the political structures for ensuring accountability. Aligning with this critique, the ‘state hydraulic paradigm’ is also increasingly contested. In addition, scholars coming from an ecological perspective have highlighted how the supply-side logic has contributed to (rather than solved)

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water issues (Kallis 2010). From a social perspective, others have analysed political protests around the world associated with hydraulic infrastructure such as dams (Dingwerth 2005). Bakker (2014) notes that a unifying theme among those who are critical of the ‘state hydraulic paradigm’ is the argument that environmental considerations are overlooked, so that state management has often been associated with severe environmental degradation. Such criticism has given rise to a number of alternative approaches.

2.1.2  Integrated Water Resources Management Among the various approaches, IWRM is a long-standing frontrunner, and the most conventionally accepted approach. The origin of IWRM, as well as its associated approach of Integrated River Basin Management (IRBM), dates back to the 1930s and the advocacy for more ‘unified’ river basin development, commonly associated with the Tennessee Valley Authority established by F. D. Roosevelt during the New Deal (Molle 2008). However, IWRM did not gain real traction until the 1977 UN Water Conference in Mar del Plata (Schoeman et al. 2014; Biswas 2009), and it would then take an additional 15 years, until the 1992 Dublin Conference, for the concept to become firmly institutionalised through the adoption of the Dublin Principles.1 To this day, the ‘Dublin principles’ still provide the conceptual basis for IWRM, and lie at the centre of its definition: IWRM is a process which promotes the co-ordinated development and management of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems (GPW 2000: 22)

Grigg (2014: 412) argues that the definition of IWRM is purposefully broad because “without its broad scope and high-level aims, how could one offer a single approach to address the wide variety of water-related problems affecting many sectors in many places?” Proponents of IWRM argue that the approach should be perceived as a process, rather than a goal: “It is a means to an end, or rather it is the process of balancing and making trade-offs between different goals in an informed way” (Jonch-Clausen and Fugl 2001: 503). Conceptually, IWRM is a call for cross-­ sectoral integration of water management to manage water more holistically, and a call for wider stakeholder inclusion (Giordano and Shah 2014). IWRM is heavily focused on managing water quantity. To make more water available, it advocates integration of the natural system  – which determines the availability and quality of the resource – and the social system – which shapes the use, treatment, and allocation of the resource (Jonch-Clausen and Fugl 2001). Moreover, it calls for wider stakeholder involvement (Varis et  al. 2014), by ­perceiving “the role of water managers more holistically, including not only the  The Dublin Principles were later also integrated into Agenda 21 of the 1992 Earth Summit.

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traditional ‘water professionals’, but also a wider range of stakeholders from other, water-­related sectors” (Jonch-Clausen and Fugl 2001: 504). IWRM has consequently turned out to be very much aligned with early twenty-first century political trends, shifting towards multi-stakeholder governance. IWRM has also been subject to criticism. Critics such as Giordano and Shah (2014) argue that IWRM has become an end in itself. Others note that the promised integration of stakeholders beyond the conventional water sector has not been realised (Medema et  al. 2008). Many are also critical of the vague scope of IWRM. For example, Biswas (2009: 250) argues that: “it does not provide any real guidance to the water professionals as to how the concept can be used.” The lack of clear guidance is problematic, seeing that IWRM demands coherent management without proper spatial fit; there is often a mismatch between the resource boundaries and the organisation(s) that manage the resource, which hinders effective management (Herrfahrdt-Pähle 2010). Also highlighting the vagueness of IWRM as an approach, Molle (2008: 132) suggests that it is a typical example of a ‘nirvana concept’: “concepts that embody an ideal image of what the world should tend to”. However, such concepts often obscure the political nature of natural resources management, and fail to acknowledge the likely trade-offs between achieving efficiency, equity, and environmental sustainability, but assume that all can be achieved concomitantly (Molle 2009). Moreover, because of their conceptual vagueness, they are easily hijacked by groups seeking to legitimise their own agendas (Molle 2008). Arguing along similar lines, Biswas (2009: 251) suggests that the vagueness of IWRM has caused its broad acceptance “since people can easily continue to do whatever they were doing before, but at the same time claim that they are following the latest paradigm.” However, the most prominent problem with IWRM is that it has, in the midst of a worsening water crisis, so far failed to deliver on its promise of sustainable water management (Medema et al. 2008).

2.1.3  Ecosystem-Based Management EBM has developed alongside IWRM, with similar roots in the recognition that cross-sectoral integration is needed to achieve sustainable resources management. The term ‘EBM’ encapsulates a range of approaches, all of which seek to promote strategies for “the integrated management of land, water and living resources that promotes conservation and sustainable use in an equitable way” (UNEP 2006: 4). An early example of EBM is incorporated in the 1970s Ramsar Convention on Wetlands (1971), where the concept of ‘wise use’ embodies the perspective that conservation is not necessarily at odds with sustainable human use of the same wetlands (Schoeman et al. 2014; Finlayson et al. 2011). However, it took the publication of the 2005 Millennium Ecosystem Assessment before EBM became firmly institutionalised in international policy-making. Since then, it has been applied in a range of contexts including marine, wetland, and terrestrial systems, and climate change adaptation (see, for example, Munang et al. 2013).

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One central concept within EBM is that of ‘environmental flows’.2 In the water context, environmental flows were operationalised in a ‘reductionist’ manner prior to the 1980s, aiming to define minimum or average flows to support key species, or preserve habitats (Pahl-Wostl et al. 2013; Poff and Matthews 2013). Since then, the importance of hydrologic dynamics in maintaining the structure and functions of ecosystems has been recognised through ecological theory, and estimates of environmental flow requirements now vary in time and space (see, for example, Folke 2006; Walker and Salt 2006; Gunderson 2000; Holling 2001; Holling and Meffe 1996). The Building Block Methodology is an example of this latter thinking (King and Louw 1998). As a holistic method, it is designed to construct a flow regime “that addresses the health (structure and functioning) of all components of the riverine ecosystem, rather than focusing on selected species” (King et al. 2008: i). It is important to briefly mention this method here, because it accentuates the complexity embedded in managing environmental flows, and the high transaction costs of managing such complexity. Going forward, it is critical to keep this in mind, as this appreciation for complexity stands in stark contrast to companies’ emphasis on efficiency and rapid decision-making (see Chap. 6). Also integral to ecosystem-based management is the ‘ecosystem services’ framework, which seeks to encapsulate the links and interdependencies between ecosystem health, economic growth, and human prosperity (see, for example, Sattler and Matzdorf 2013; Burkhard et al. 2010; Engel et al. 2008; Wunder et al. 2008). Within this framework, ecosystems are thought of as providing ‘services’ to humankind which, if lost, would substantially affect human activities (Owens 2008). Ecosystem services are classified into four categories: “provisioning, such as the production of food and water; regulating, including the control of climate and disease; supporting, such as photosynthesis, nutrient and water cycling, and crop pollination; and cultural, encompassing spiritual and recreational benefits” (Schoeman et  al. 2014: 381). Proponents of the framework, like Costanza et al. (1997), argue that making explicit the value of ecosystem services – which they estimate to be US$33 trillion per year – will encourage their conservation.3 Drawing on the economic concept of opportunity cost – denoting the value of the forgone alternative – those in favour of EBM suggest that by raising awareness of the trade-offs between different ecosystem components, conservation can be incentivised if the opportunity costs of utilising various ecosystem services are made explicit (see, for example, Engel and Schaefer 2013; Balmford et al. 2002). These arguments form part of a utilitarian ethical framework, in which “the right course of action is the one that optimizes welfare, usually of the human kind, and typically defined in terms of utility or ­preference satisfaction” (Owens 2008: 1). The underlying assumption of EBM is that the case will be made that the benefits of conservation outweigh the costs. 2  Although not explicitly referenced, the idea of environmental flows has, for example, been integrated into the European Water Framework Directive as it requires member states to achieve good ecological status in all waterbodies (Acreman and Ferguson 2010). 3  Kubiszewski et  al. 2017 estimate that between 1997 and 2011, the global value of ecosystem services has decreased by an estimated USD 20 trillion/yr.

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Supporters of EBM therefore argue that the use of the ecosystem service framework allows the value of ecosystem services to be integrated into the market rationale, and encourages the transition to a ‘green economy’. This will, according to proponents, result in a world of win-win scenarios where the agendas for economic growth and ecological preservation align (McCauley 2006). The critique of EBM – and particularly the criticism of the ecosystem services framework – has been fierce (see, for example, Robertson 2012; McCauley 2006; Hargrove 1992). A complete review of this vast body of literature, including environmental ethics, ‘natural capital’, ‘commodification of nature’, and ‘neoliberalising nature’, is beyond the scope of this book. It is necessary, however, to acknowledge two main areas of criticism, grounded in methodological and conceptual scepticism respectively. An extensive methodological debate surrounding the ecosystem services framework is concerned with the methods and estimation tools used to define and quantify ecosystem services. While specific methodologies have been the subject of much discussion, critics often focus on the question of how ‘the value’ of ecosystem services can be meaningfully expressed in monetary terms, given that nature arguably has intrinsic – or at least non-instrumental – value beyond the services it provides to humans (see Hargrove 1992). Even those who advocate such measures have recognised that estimates of value are subject to great uncertainty. For example, Costanza et  al.’s (1997) above-mentioned estimate of US$33 trillion is in fact a rough average; for the entire biosphere, the value is estimated to be in the range of US$16–54 trillion per year, which is a large variation. Robertson (2012: 387) offers a critical appraisal of the process through which ecosystem services are fashioned, valued, and in some cases traded. Through the rise of ecosystem service markets, he argues, we can observe “a transformation of the social world through creation of value-bearing abstractions from physical processes.” To understand this process, we have to recognise Robertson’s (ibid: 387) central point: “The ‘red-legged frog habitat’ service is not out there waiting; rather, it is fundamentally defined as a service in the process of its marketing and sale.” In other words, as quantifiable objects, ‘ecosystem services’ are produced, rather than pre-existing and, according to Robertson, five processes are involved in their production: (1) Valuation (measuring and codifying nature); (2) Classification (the creation of an ordered and hierarchical taxonomy with which to describe nature); (3) Categorisation (use of categories to talk about the value represented by the functions and processes contained within ecosystems); (4) Unbundling (the splitting of complex ecosystems which simplifies them into legally definable and economically tradable property rights); and (5) Stacking (the marketing of separate sticks in the bundle) (ibid: 389–396). Most importantly, as a result of this process, “what is circulating is not wetlands, not trees, not salmon, but value” (ibid: 387). Moving beyond any methodological difficulties, important conceptual criticisms have been aimed at the ecosystem services framework, and in particular at attaching financial values to nature. Key arguments include a longer-standing critique of

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u­ tilitarianism (as the underlying ethical theory), concerns about commodification and what many see as the inappropriate extension of markets, and the particular challenges associated with recognising and expressing (non-anthropocentric) intrinsic value (an overview is provided by Owens and Cowell 2011, esp. chapters 3 and 6; see also Owens 2015). O’Neill (1997), for example, argues that even if a figure for monetary value can be generated, there is no guarantee that it will validate conservation as the ‘right’ way forward; indeed it may well be that exploitation of the resource for other gains is valued more highly. McCauley (2006: 28) makes a similar point, arguing that putting a price on nature will not automatically lead to better conservation outcomes and, further, that any attempt to incentivise conservation through the translation of “the intrinsic worth of nature into the language of economics” is misguided. McCauley bases his argument in part on the relative success of conservation efforts inspired by recognition of nature’s intrinsic value, vis-à-vis the limited realisation of ecosystem-service-based conservation projects, steered by market forces. Questioning the long-term effects of the ecosystem services-based framework, Robertson (2012: 396) suggests that it “moves us towards the monetisation and financialisation of the conditions of life in a way not seen since the commodification of labour, but is perhaps an even more ambitious task, even larger in scope.”

2.2  Rising Tides of Criticism What has emerged is an increasing disapproval of state-led water management practices, coupled with a growing general scepticism about the ability of nation states to deal adequately with global environmental issues. In the wake of these developments, calls for business actors to ‘step up’ and bridge these governance gaps in the water context through CWS have materialised. With reference to the three approaches discussed above, CWS has risen as a critical response primarily to command-­and-control management, and IWRM (more than to EBM). The critique against these approaches can be summarised as follows: (1) complications like the spatial mismatch displayed in IWRM have hindered effective governance; (2) they have so far failed to alleviate the water crisis, and; (3) the approaches have failed to ensure sufficient stakeholder involvement. These points are associated with what is typically identified as the three ‘deficits’ of global environmental politics: the ‘governance deficit’, the ‘implementation deficit’, and the ‘participation deficit’ (Bäckstrand 2006). It is relevant to link the three points of criticism to these ‘deficits’ because private sector participation is often argued to be a means to reduce the ‘deficit.’ Understanding these debates will therefore allow us to expose how the criticism of command-and-control management and IWRM has provided a pathway for CWS to emerge.

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2.2.1  Gap 1: The Governance Deficit Castells (2008) defines ‘the governance gap’ as a growing aperture between the scale where issues arise (global) and the space where issues are managed (the nation-state). Coupled with this is a perceived ‘governance deficit,’ a product of the asserted decline of state power, and the state system’s alleged inability to deal with the vast and complex issues facing the globalised world (Falkner 2003). For example, Hajer and Versteeg (2005: 340) argue: “we have to acknowledge that the state often lacks the power to solve pressing policy problems on its own.” Similarly, Delmas and Young (2009: 3) suggest: “we live in an era in which the demand for governance arising from human-environment interactions…is growing, while confidence in the capacity of government – the conventional mechanism for handling such matters – to address problems of governance is waning.” In the context of our discussion, we can draw clear parallels with the perceived failure of the state-­ mandated command-and-control approach, as well as IWRM, to address the water crisis successfully. To close the gap, and address the issues at hand, we have entered into an era of what Karkkainen (2004) terms ‘post-sovereign governance,’ characterised as non-­ exclusive, non-hierarchical, and post-territorial. The nature of ‘non-exclusivity’ signals a departure from the state-centric understanding that sovereign states have exclusive authority over policy-making. Instead, as Forman and Segaar (2006: 217) argue: “national governments and IGOs [Intergovernmental Organisations] increasingly look to the business community to couple its new global reach with new global responsibilities.” The outcome of such efforts is often some form of Private-Public Partnership (PPP) – or ‘Collective Action’, which is the term used in the context of CWS – where governments and companies, as well as NGOs, work together (Chap. 6). Beyond practicalities, however, there is an on-going debate on whether the inclusion of business to close the ‘governance gap’ has resulted in win-win outcomes or leads to the privatisation and commercialisation of world politics. Sceptics of the involvement of businesses suggest that these partnerships predominantly operate in favour of corporate interests by granting business significant access to defining policy priorities and regulations (Schäferhoff et al. 2009). Brühl and Hofferberth (2013: 351), point in particular towards the dangers of self-­reporting exemplified in, for example, the UN Global Compact4 and its associated body the CEO Water Mandate, which in their view leads to a situation in which “the regulation of private business has changed to new forms of regulation together with or even through private business.” Coming from a similar perspective, Mert (2012: 478) argues that the involvement of business could lead to the privatisation of governance, which would mean that “regulatory approaches based on state-coercion are replaced by market-based and voluntary mechanisms.” Moreover, Hale and 4  The Global Compact is a voluntary partnership initiative between the UN and businesses. A business signs up to align its practices with ten principles in the areas of human rights, labour, the environment, and anti-corruption in order to act ‘as a force for good’. Self-reporting is carried out annually through The Global Reporting Initiative; the leading scheme in the field.

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Mauzerall (2004) argue that businesses can use partnerships to ‘green-wash’ or ‘blue-wash’5 their business, and divert attention from otherwise unsustainable activities. In general, critics are concerned that the involvement of business will place such actors “at the center of this extraordinary and complex metastasis of governance outside the state” (Backer 2011: 755). In contrast, those who are more optimistic suggest that these partnerships occupy a middle ground between public and private authority, and as such they constitute a form of ‘hybrid governance’ (Bäckstrand and Kylsäter 2014; Andonova 2010; Bäckstrand 2006). Thus, proponents argue that they “cannot be interpreted simply as another form of private authority or the “privatization” of the multilateral system” (Andonova 2010: 27), but rather, as argued by Falkner (2003: 84), the “new agenda in global governance is defined by an intricate private-public nexus in which private and public authorities work hand-in-hand to redefine the parameters of global policy-making.” Rather than corporate takeover, followers perceive the development of ‘hybrid governance’ as an on-going renegotiation of public and private relationships. Beyond that ‘the governance gap’ is one of the most commonly evoked arguments when speaking of the need for CWS (see Sect. 2.3), highlighting this debate is important because it directs us to a substantial gap in the literature. The arguments presented in the context of this debate are often ideologically rather than empirically grounded, meaning that, although the debate is fierce, grounded evidence of the effects of private sector involvement is sparse.

2.2.2  Gap 2: The Implementation Deficit The ‘implementation deficit’ is perceived as an outcome of the governance deficit; because of the mismatch between a given issue and the governance mechanism, nation states often suffer a deficit of material capacity to address the issue at hand. Simply put, in terms of the resources required, the water challenge is beyond the capacity of any nation state to solve alone. Brühl and Hofferberth (2013) note that proponents of business involvement portray companies as being able to close this resource gap by providing the necessary resources, in terms of money, personnel, and organisational capacity, thus combining governance goals with “the market’s enthusiasm for efficiency and innovation” (Beisheim 2012: 10). The UN’s shifting attitude towards business partnerships suggests validity of such claims; it was hardly a coincidence that it started promoting partnerships with businesses in 1997, the year it experienced the largest budget deficit in its history (Bull et al. 2004).6  Legitimacy granted by UN endorsement.  The budget deficit was due to the US Congress having failed to approve the US contribution to the UN budget, which accounted for roughly 30% of the UN’s revenue. This resulted in substantial budget cuts for the organisation (Utting 2000). Simultaneously, the world was also experiencing a global aid crisis. Between 1992 and 1997, levels of Official Development Assistance (ODA) 5 6

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The lack of public resources is often used as an argument to promote business involvement. Clearly, governments have been unable to mobilise the necessary financial resources under command-and-control management, and the IWRM paradigm, and the water sector is facing an enormous financial deficit, a problem that is likely to worsen. McKinsey Global Institute (2017) estimates that the water infrastructure investment needed simply to keep up with projected global GDP growth is US $9.1 trillion in 2017–2035. This figure does not account for the additional resources needed to address infrastructure maintenance and renewal, or meet the broader development goals  – such as the SDGs  – of emerging economies. Considering that the total number of people without access to improved drinking water globally is estimated to be 663 million, and 2.4bn people globally have no access to improved sanitation facilities (WHO/UNICEF JMP 2015); the additional resources required to meet these challenges will be vast. Thus, proponents present CWS as a possible mechanism for bridging this resource gap, and ensuring effective implementation.

2.2.3  Gap 3: The Participation Deficit An additional perceived consequence of the governance gap is what has been termed the ‘participation deficit,’ stemming from the disjunction between the need for global governance in supra-territorial spaces, and territorial self-determination (Scholte 2002). This disconnectedness has led to a situation where global governance efforts are perceived to lack stakeholder participation, and by extension legitimacy. Speaking to this deficit, some scholars invoke pragmatic arguments, and hold that stakeholder participation is critical in order to harness knowledge, and ensure quality and durability of decisions (Wesselink et  al. 2011; Reed 2008). Others make normative claims and suggest that participation is critical on the basis of democratic ideals (ibid). Those who invoke normative claims in the context of global governance (see, for example, Bernauer and Gampfer 2013; Dany 2013; Teegen et al. 2004), often turn to NGOs as the type of actor with the potential to close this gap, by ‘giving voice’ to those who would otherwise not be heard. However, since companies constitute some of the largest water users in the world (Hepworth and Orr 2013), their involvement is increasingly advocated on the basis that they, like other types of actors, have a ‘stake’ in water. Encouraging companies to partake in a global private regulation like CWS can, as suggested by Glasbergen (2011: 203), thus be seen as “an expression of a new form of democratic governance.” However, as argued by Reed (2008: 2421), the value of stakeholder participation is “strongly dependant on the quality of the process”, with one of the biggest declined by one-third as a percentage of gross national income of donor countries – from 0.33 to 0.22% – or $61 billion to $48 billion dollars (ibid). However, during this same period, “corporate capitalism was enjoying a heyday” (Utting and Zammit 2009: 44), making partnerships seem beneficial.

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pitfalls being power inequalities, which may lead to the marginalisation of certain stakeholder voices (Reed 2008; Glicken 2000).

2.3  Renegotiating the Business-Society Relationship Seen in the light of the business-society relationship as conventionally perceived, calls for business to partake in activities like water governance represent a remarkable break from tradition. Thus, to appreciate how CWS could arise, we need to situate it within wider discussions revolving around a renegotiated business-society contract. This section will outline the conventional ‘functionalist’ perspective of the business-society relationship, and consider the calls for change, including how these trends have played out in the context of nature-business relationships. Conducting this review will provide a foundation upon which we can build our analysis of how the business-water relationship has been transformed, and by extension consider CWS as ‘rational’ strategy for business to engage in water governance.

2.3.1  Q  uestioning the Conventional Business-Society Relationship Milton Friedman (1970) famously claimed: “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Sohn (1982) argues that this understanding of business is strictly functional. In this functionalist view, a society is seen as rigidly dividing up the various tasks that need to be fulfilled, some being assigned to government, some to non-profit entities, and some to business. Consequently, the role of business in society is to perform well in those tasks that it has been assigned, including making money, creating employment, and operating within legal limits (Rodriguez et  al. 2002; Whetten et al. 2002). In this perspective, the quest to achieve social development  – beyond economic growth  – and manage natural resources for the public good is strictly seen as the function of government (Warhurst 2005). Around the turn of the twenty-first century, this functionalist perspective began to crumble, and a new purpose for business has progressively emerged, puzzling scholars devoted to theorising the business-society relationship (see, for example, Fyke et al. 2016; Siltaoja and Onkila 2013; Schwartz and Carroll 2008; Warhurst 2005). Although discussing different features of the debate, these scholars cohere around a recognition that pressure is now placed on companies to go beyond their narrowly defined commitment of generating economic profit, and instead act as “‘a positive force’ in contributing to worldwide social development goals” (Warhurst 2005: 152). As a result of this process, a new role for business has also started to

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take shape. Brühl and Hofferberth (2013: 353) suggest that companies are “no longer conceptualized only as economic actors, but also as political actors”. As a result, they “play important political and social roles in making and implementing international and global public policies” (Forman and Segaar 2006: 215). Beyond the bid for companies to fill the ‘governance gaps’ discussed in the previous section, two additional factors can be identified as motivating this reconceptualisation. Some point towards changing societal expectations and an increase in stakeholder pressure. For example, Whetten et al. (2002: 402) suggest: “stakeholder and special interest groups are increasingly well organized, and becoming more vocal and encompassing in the demands they make on businesses.” Rodriguez et al. (2002) attribute this change in pressure to the larger globalisation process, which in their view has “transferred power from society to businesses”, leading society to “demand a parallel increase in their social responsibilities.” Others, like Brühl and Hofferberth (2013: 352), look towards more subtle processes: While we agree that the role of corporate actors is changing, we do not consider this as either a functional necessity or a moral imperative. Rather, we understand private business as a product of social interaction and therefore look at how global companies generate new meanings and how they are constructed in the light of social expectations beyond assumingly fixed interests and rationalized modes of action.

Another group of scholars (see Porter and Kramer 2011; Hart 1997), primarily associated with business and management schools, argues that for businesses to expand their role is simply good business strategy. In their view, engaging in activities such as water governance or development projects can lead to improved financial returns, a safeguarded ‘licence to operate,’ and enhanced investor relations. Therefore, they suggest that these undertakings can simultaneously serve both shareholder and stakeholder interests. In essence, the promoters of this perspective attempt to construct a ‘business case’ for engagement, illustrating that action for social or environmental purposes can lead to the protection of the business from external threats (for example, risk management) or that it will generate opportunities (for example, new product development) (Blowfield and Frynas 2005; Utting 2005). For business managers, or government officials who are trying to engage with a company, the idea of being able to construct a compelling business case for action is a seductive idea. As Blowfield (2008: 3) argues: “demonstrating a positive correlation between corporate responsibility and business performance (especially financial performance) is seen as giving social and environmental issues legitimacy in the world of mainstream business.” However, Blowfield (2005a), among others, expresses concern about a scenario where corporate involvement in social and environmental issues is based solely on economic arguments. As Blowfield and Frynas (2005: 512) ask: “if consideration of a social, economic or environmental issue depends on there being a business case for such consideration, what happens to those issues where that case cannot be made?” Unsurprisingly, studies have shown that businesses are likely to ignore issues that fall beyond the realms of their own business interests (Blowfield 2004, 2005b). Blowfield also questions how a ‘business-like’ mind-set affects the way we

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perceive and act upon social and environmental issues. In a cautious note, he suggests that “perhaps the biggest influence business will have on development is…the influence of business thinking and related notions of managerial efficiency on how we view and construct the world” (2005a: 521). There is ample evidence that a business-like mind-set is already having a considerable influence. In development circles, the use of ‘codes of conduct’, ‘monitoring and evaluation tools’, and auditing is already common, emphasising measurement, standardisation, and quantifiability, all aspects that are important to business managers (Blowfield 2005b). Similarly, Fyke et al. (2016: 221) note: “while for-profit businesses have started to emphasize philanthropy, volunteerism, cause-related marketing, and community-­ based problem-solving, not-for-profit organizations have begun to focus on revenue streams, ‘customer service,’ outcome metrics, and bottom-line decision making.” It is clear that we see a changed expectation of the business-society relationship, and that businesses’ responses have evolved in tandem with this change.

2.3.2  S  trategies for Renegotiating the Business-Society Relationship It is possible to identify at least four different strategies reflecting how businesses re-negotiate their relationship with society: Corporate Social Responsibility (CSR), Social Entrepreneurship, Corporate Citizenship, and Creating Shared Value (CSV). Whilst having slightly different emphasis, inherent to all strategies is a blurring of the separation between business and social life (Fyke et al. 2016). They share three central features. Firstly, they recognise businesses as an integral part of – and thus dependent upon – society. Secondly, they perceive companies and markets as powerful mechanisms for rectifying societal problems. Finally, they suggest that profits can be aligned with societal benefits. When moving on in the next section to discussing how businesses have renegotiated their relationship with nature, and with water specifically, these assumptions should be recalled as they play a key role. 2.3.2.1  Corporate Social Responsibility CSR is the strategy most typically drawn upon in renegotiating the relationship between business and society (Blowfield 2005c). Although a relatively well-­ established concept, dating back to the 1930s (Schwartz and Carroll 2008), its meaning has shifted over time. As it stands, CSR “refer[s] to the belief that businesses have a range of responsibilities that extend beyond the shareholders…including obligations to consumers, employees, governments, the environment, and the public, as a whole” (Fyke et al. 2016: 224). The reason why CSR has been successful is because it suggests that engaging in activities that extend beyond the direct shareholder interest will improve a company’s image and reputation, which in turn

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strengthens its legitimacy, and in the long run generates greater shareholder value (Wilks 2013; Palazzo and Scherer 2006; Luetkenhorst 2004). The critique of CSR can be grouped into two factions. The first, which Blowfield and Frynas (2005) term the ‘CSR is bad development school’, is associated with actors operating beyond the business community. Their common focus is the belief that CSR practices fail to address adequately the broader negative impacts of businesses on society, and that business is not doing enough to change. Fyke et al. (2016: 226) argue: CSR has often been viewed in terms of public relations, issues management, and marketing. As such, it is common for CSR practices to be undertaken as an extension of traditional business practices, without substantively changing the internal dynamics or culture of the organization.

The second faction is occupying the other end of the spectrum. Labelled by Blowfield and Frynas (2005) as the ‘CSR is bad capitalism school’, it is closely associated with those pertaining to more traditional Friedmanesque thinking who argue that CSR is inherently misguided since it diverts resources from a corporation’s ultimate goal of profit. Despite these critiques, CSR remains a prominent strategy through which businesses renegotiate their relationship with society. 2.3.2.2  Social Entrepreneurship Social Entrepreneurship emerged in the 1980s, suggesting that the entrepreneurial spirit could be utilised to solve social problems. Fyke et al. (2016: 228) define it as “a new organizational form that transcends traditional corporate forms” with the grand purpose being “to create social value that creates a more just society”. This encapsulates the idea that a beneficial relationship between society and business is one where “business is a process that can be used in the service of purpose-driven endeavors” (ibid: 231). Driven by a problem-solving rather than a charitable mind-­ set, Social Entrepreneurship seeks to fill a gap between non-profit organisations and for-profit corporations (ibid). One of the most prominent examples of a social enterprise is Yunus Social Business, founded and led by Muhammad Yunus, who also founded the Grameen Bank. Like Yunus Social Business, all social enterprises have the creation of social value at the core of their organisational ethos, though it should be acknowledged that they still operate largely under the influence of business thinking, with great emphasis on business continuity. Nevertheless, as argued by Fyke et al. (2016: 230), social entrepreneurship “calls for understanding social problems in new ways  – rather than seeing the marketplace as the creator of social problems, the marketplace is seen as the key to having the kind of large-scale impact that is capable of changing social structures.” Thus, although the idea is still relatively marginal, it serves to renegotiate the boundaries between business and society.

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2.3.2.3  Corporate Citizenship Emerging in the early 2000s, Corporate Citizenship is, as noted by Schwartz and Carroll (2008: 164) a relatively new “kid on the business and society block”. Corporate Citizenship holds that the key feature of the business-society relationship is that companies do not stand outside society, but are dependent on integrating themselves as ‘good citizens’ and maintaining good relationships with relevant stakeholders. Post (2000: 29) defines Corporate Citizenship as: The process of identifying, analyzing, and responding to the company’s social, political, and economic responsibilities as defined through law and public policy, stakeholder expectation, and voluntary acts flowing from corporate values and business strategies. Corporate citizenship involves actual results (what corporations DO) and the processes through which they are achieved (HOW they do it).

The application of the ‘citizenship’ terminology to companies represents, as Moon et al. (2005: 432) argue, “a move to the metaphorical”. Labelled an ‘institutional citizen’, it follows that “the corporation has duties as well as rights and privileges” (Sohn 1982: 142). Although corporations are not legally equated to citizens, the idea of corporate citizenship helps to explain how they negotiate their relationship with society, and the reasoning behind it. Post (2000) argues that profits are no longer created through a ‘portfolio of products’ but rather through a ‘portfolio of relationships’ with business stakeholders. Whereas previously the ‘relationships’ that a company cultivated were limited to shareholders and consumers, a much wider range of stakeholders is now accommodated. Employing Corporate Citizenship as a strategy suggests that maintaining good relationships with stakeholders makes businesses sense. For Blowfield (2005b), Corporate Citizenship is a medium through which values, rights and responsibilities are claimed, enforced, and mediated in interactions between companies and non-business stakeholders. Following from this, Blowfield (ibid: 123) further argues that although Corporate Citizenship is often packaged as ‘risk management’ or as maintaining a ‘licence to operate’; “what underpins both of these concepts is the tension between the values underpinning the behavior of a company and the expectations, norms and desires of others in society.” What Corporate Citizenship essentially suggests is that without the support of stakeholder groups, the financial performance of the business would suffer. 2.3.2.4  Creating Shared Value CSV emerged as an idea in the early twenty-first century, but within a few years, it was established as a new strategy in the field of business-society relations (Aakhus and Bzdak 2012).7 Porter and Kramer (2011: 75), who coined the term, argue that 7  It has to be noted that CSV is not a novel idea; there are earlier concepts that encapsulate the same aspiration, e.g. Elkington’s (1994; 1998) ‘Triple Bottom Line’ or Emerson’s (2000) ‘Blended Finance.’ Similarly to Porter and Kramer, Emerson argues that it is necessary to move beyond the historic definition of investment and return as a purely financial activity, and expand the notion to

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CSV is “a higher form of capitalism”, through which companies can “take the lead in bringing business and society back together” (ibid: 64). Supported by the likes of Hart (1997), Porter and Kramer’s proposition is that it makes business sense to pursue strategies for a more social and environmentally sustainable world. Like Social Entrepreneurship, CSV seeks to bring together social and business value through corporate strategy, ultimately addressing social problems as business opportunities (Crane et al. 2014; Aakhus and Bzdak 2012). Porter and Kramer’s (2011: 66) reasoning is based on a recognition that “the competitiveness of a company and the health of the communities around it are closely intertwined”, and that even a transnational corporation, which is a global business, is deeply embedded in  local communities through its value chains and multiple production sites. Porter and Kramer (ibid: 64) argue that, for too long, companies have taken a narrow approach to value creation, which has led them down a path that prioritises “short-term financial performance…and ignor[es] the broader influences that determine their longer-term success”. This would include environmental degradation. Their suggested solution is grounded in the principle of ‘shared value’, which they define as a business practice that “creat[es] economic value in a way that also creates value for society by addressing its needs and challenges” (ibid: 64). Porter and Kramer propose three ways in which shared value can be created. The first requires a company to reconceive its products and markets through operations expansion by tapping into segments of the market that have previously been underserved, or by redesigning its products. This expands operations, whilst also giving consumers access to products they demand, which had previously been unavailable. The second way is for a company to redesign productivity in the value chain by improving internal operational efficiency, which could reduce resource use. The third method requires the company to build supportive industry clusters at production sites through investments that strengthen local suppliers, local institutions, and local infrastructure in ways that enhance business productivity as well as communities’ wellbeing. Whilst some have supported Porter and Kramer’s basic reasoning, and argued that their central tenet is sound (see, for example, Orr and Sarni 2015), CSV has met extensive criticism. For Crane et al. (2014), the most pressing problem is that the concept suffers from a failure to address sufficiently – or even to acknowledge – any trade-offs between economic and social value creation. Following Porter and Kramer’s argument, CSV always seems to lead to win-win scenarios in which mutual value creation is a certain outcome. Aakhus and Bzdak (2012) also question the novelty of CSV, suggesting that it appears simply to advance the conventional neoliberal argument that ‘what is good for business is good for society’. They further note that to take this assumption as the analytical starting point for mutual value creation has problematic consequences. Similarly to using the ‘business case’ as the include social, as well as financial value. Thus, like Porter and Kramer, Emerson holds that the ultimate aim of any corporate activity is to advance a blended finance proposition “that integrates and affirms the greatest maximization of social and economic value” (Emerson 2000: 26).

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foundation for action, CSV reduces ‘social value’ to things which can be provided by businesses, and largely ignores other goods and services that are beyond what businesses can – or ought – to provide. Moreover, to start from the business perspective “places the company in the center node of any network of stakeholders. Any value for others is essentially spillover from the company’s success” (Aakhus and Bzdak 2012: 240).

2.3.3  S  trategies for Renegotiating the Business-Nature Relationship To analyse how changing expectations of businesses’ role in society have affected the ways in which companies negotiate their relationship with nature, Bakker’s work on ‘Market Environmentalism’ is useful. To appreciate this idea, it is necessary to first take a step back and explore the broader rise of environmentalism and its influence on the perception of risk. Environmentalism is like Falkner (2012: 511) reminds us” a broad church based on a wide range of ethical and political beliefs”. In general terms, environmentalism seeks to rebalance the relationship between the natural environment and human society. Whilst various strands of environmentalism have different emphasis, the ideas converge around an empirical belief that natural ecosystems and species are under mounting threat, and a normative belief that humans have a responsibility to take greater care of the environment. In consequence, it lays the foundation for the norm of environmental responsibility, also referred to as environmental stewardship (ibid). Environmentalism has deep historical roots. The birth of the modern environmentalist movement, however, is usually traced to the 1960s. Whilst awareness of issues like air and water pollution, radioactive fallout, toxic exposures, overpopulation, loss of lands and species, and resource scarcities had already begun to enter public consciousness, many point to the publication of Rachel Carson’s seminal text Silent Spring in 1962 as the pivotal moment for the modern environmentalist movement (Kroll 2001). The book was, as argued by Cronon (2008: ix), “a lightning rod like no other”. Modern environmentalism differs from earlier conservation efforts in three distinct ways (Falkner 2012). Firstly, it transformed environmental issues from a scientific endeavour to a mass public movement. Secondly, it reconceptualised environmental concerns as inherently global issues that requires transboundary cooperation (Blowers 1997). In turn, this challenged the idea of state sovereignty. Whilst sovereignty remains the pillar upon which the constitutional order of international society is organised, “global risks tear down national boundaries and jumble together the native with the foreign. The distant other is becoming the inclusive other not through mobility but through risk” (Beck 2006: 331). This leads Falkner (2012: 517) to suggest: “environmental ideas have begun the slow process of redefining what it means to be a sovereign state in the ecological era”. Finally, modern

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environmentalism expanded the environmental agenda from a narrow movement of preserving wildlife, to encompassing wider concerns for the effects of modern industrialism and planetary survival. This ‘apocalyptic dimension’ attributed to environmental risks seemed to “reflect growing uncertainties and anxieties related to the changing character of late modern society” (Mol and Spaargaren (1993: 431). Combining the effects of these trends, it is clear that the rise of modern environmentalism had more widespread effects, and contributed in a profound way to reconceptualise the idea of risk in society. Various theoretical expositions have emerged, seeking to explore life in an era that is characterised by global risks of high consequence. One of the most well-cited theories is Ulrick Beck’s ‘risk society’. First published in German in 1986 (and translated as Risk Society in 1992), the thesis “addresses the increasing realization of the irrepressible ubiquity of radical uncertainty in the modern world” (Beck 2006: 338). Beck’s theory has two integral dimensions. In the first instance, the theory explores the nature of risk in modern era. For Beck, risk is understood as “a systematic way of dealing with hazards and insecurities induced and introduced by modernization itself” (Beck 1992: 21). Understood in this way, the concept of risk is directly tied to what Beck terms ‘reflexive modernisation’. By this he means that as society has transitioned from an ‘industrial society’ to a ‘risk society’, it is confronted with the self-destructive consequences (Falkner 2012). Global risks, including global ecological concerns, are therefore “not strictly a problem of the world surrounding us – not a so-called ‘environmental problem’ – but rather a deep institutional crisis of the first (national) phase of industrial modernity (‘reflexive modernization’)” (Beck 1996: 12). This leads Beck (1996: 24) to argue that “global threats are the embodiment of the errors of a whole epoch of industrialism”. The second element of his theory surveys the consequences of living in a high-­ risk society. In particular, the theory explores how debates around environmental risks, and risks more broadly “is conducted via scientific evidence and counter-­ evidence in a culture of expertise” (Blowers 1997: 851). Beck (1992: 27) writes: The focus is more and more on hazards which are neither visible nor perceptible to the victims; hazards that in some cases may not even take effect within the lifespans of those affected, but instead during those of their children; hazards in any case that require the ‘sensory organs’ of science –theories, experiments, measuring instruments –in order to become visible or interpretable as hazards at all.

The theory emphasises the role of experts for two reasons. Firstly, because it serves to highlight the relationship between risk, power, and trust. Risk is, as Beck (2006: 333) notes, “a socially constructed phenomenon, in which some people have a greater capacity to define risks than others”. Thus, to hold power and be trusted as an ‘expert’ “means being able to impose risks, influence public discourse about risks, sponsor and conduct research that presents risks in particular ways, and lobby for particular positions on the acceptability of risk” (Tierney 1994: 17). Secondly, linking back to the idea of reflexive modernisation, Beck (2006) argues that society’s basic institutions – including science and expert systems – are undermined by a growing awareness that their actions are counter-productive. In the risk society,

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“scientific expertise is portrayed as exercising control over technologies that cannot ultimately be controlled” (Blowers 1997: 856). The scepticism towards science and technology held within the ‘risk society’ thesis stands in stark contrast to the ideas put forth by an alternate perspective, frequently termed ‘ecological modernisation’. Advocates of this approach see science and technology as integral parts of the solution to survive in an era that is characterised by global environmental risks. And, unlike the ‘risk society’ thesis, which holds the idea of ‘reflexive modernisation’ at its core, ecological modernisation advocates the continuation of the changes it perceives as already occurring in industrial society. As Blowers (1997: 859) argues, it “makes a virtue of the seemingly inevitable and aligns itself with contemporary trends in the economy, society and politics”. To understand the argument set out in this book, it is worth lingering on how environmentalism  – as seen through the lens of ecological modernisation  – has started to conform to mainstream economic discourse. As Falkner (2012) reminds us, new norms like that of ‘environmental stewardship’ have a greater chance of gaining widespread traction if they resonate with existing normative frameworks. The green agenda has therefore adopted a discourse of ‘green growth’ and ‘sustainable development’, which to some extent makes environmental stewardship compatible with the basic tenets of market-based capitalism. For instance, environmentalists are increasingly looking to market-based instruments such as emissions trading and environmental valuation to manage global environmental risks. Nelson (2017) suggests that the 1989 Exxon Valdez oil spill can be seen as a constitutive moment in the neoliberal turn of the environmentalist movement. She argues that the afterlife of the event “permeates a contemporary economy characterized by new metrics to rationalize environmental values, new corporate-NGO partnerships to capitalize on these values, and the increasingly financialized forms of their circulation” (Nelson 2017: 120). At the other end of the spectrum, economists have come to recognise the importance of integrating environmental concerns. For example, the Stern Review (2007: i) famously described climate change as “the greatest and widest-ranging market failure ever seen”. It is also critical to note that the movement of ecological modernisation has also started to influence business practices. Shrivastava (1995) argues that faced with new global environmental risks, companies not only have to optimise production variables (profits, productivity, jobs, and growth), but also risk variables (product harm, pollution, waste, resources management). Whilst there is still tension between environmentalism and market-­ based capitalism, ecological modernisation essentially grounds environmental protection on the advancement and maintenance of a liberal economic order. Returning to where this section started, it is from a tradition of ecological modernisation that Market Environmentalism emerges. Market Environmentalism is “a doctrine premised on the synergies between environmental conservation and protection, economic growth, market economies, and neoliberal governance” (Bakker 2014: 474–5). To utilise these synergies, those who endorse market environmentalism strive to “achieve positive environmental outcomes through the introduction of markets and market-derived institutions and organizations” (ibid). It is possible to also draw parallels between market environmentalism and ecosystem-based

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Table 2.1  Processes of Market Environmentalism Process Privatisation Commercialisation Commodification / Valuation Marketization Liberalisation

Definition Management or ownership of a resource is shifted from a public to a private actor Market models are integrated into resource management organisations Market tools are introduced to manage resource use Markets are created to trade resources Decision-making power is relocated from governments to nongovernmental actors

­ anagement, as both approaches endorse the mutual possibility of conservation and m exploitation through the ecosystem services framework, and use market based methods, such as valuation, as tools for decision-making. Bakker (2014) argues that market environmentalism has emerged as a product of the Washington Consensus,8 which promotes deregulation of markets and financial liberalisation. Its emergence has been further facilitated by the changed expectation of the business-society relationship, which has blurred previously rigid boundaries and enabled a ‘business-like mind-set’ to permeate activities which were previously seen as being beyond the business realm (Blowfield 2005a). In the water context, Bakker notes that market environmentalism has also emerged as a response to developments like the looming water crisis, and the perceived failure of state-­ mandated approaches to deal with this crisis. As displayed in Table 2.1, market environmentalism employs a broad range of processes. As defined by Bakker (2014: 471), these include “the privatization of resource ownership and management, the commercialization of resource management organizations, the environmental valuation and pricing of resources, the marketization of trading and exchange mechanisms, and the liberalization of governance.” These different strategies are not necessarily deployed simultaneously, and not all of them have to be deployed for market environmentalism to be at play. Whereas these processes have been studied in the context of water services provision,9 the findings of this project suggest that, through CWS, some of these processes have also been applied to water resources management (see Chap. 7).10

8  The Washington Consensus refers to a set of broad free market economic ideas (e.g. free trade, floating exchange rates, and unregulated markets), supported by prominent international financial institutions like the International Monetary Fund (IMF), and the World Bank. 9  This denotes the provision of water by utilities, (public or private), communities, or individuals, usually via systems of pumps and pipes. 10  This denotes the activities of planning, developing, distributing, and managing water resources. It thus includes a wider set of activities, and a different set of actors from water services provision.

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2.3.4  S  trategies for Renegotiating the Business-Water Relationship CWS has emerged in the nexus of these developments; it is the combined product of a growing discontent with state-mandated water resources management (particularly command-and-control management, and IWRM), and the concurrent renegotiation of businesses’ role in society. Encapsulating both of these trends, CWS is characterised here as a form of market environmentalism. It promotes business involvement in water management, and highlights the role that businesses can play to contribute to this end (Hepworth 2012). CWS shares the three assumptions associated with the strategies applied for renegotiating the business-society relationship: (1) businesses are intertwined with society; (2) businesses have the capacity to rectify societal problems; (3) stakeholder and shareholder benefits can be created in conjunction. Those who advocate CWS call for the alignment of a company’s social engagement with its bottom line returns, essentially suggesting that water should be recognised as a core business issue which has an impact on business growth. Stewardship activities that companies have undertaken to date include water risk assessments, operational improvements, collective action, political engagements, and knowledge-sharing (Chapagain and Tickner 2012) (see Chaps. 4, 5 and 6). However, practitioners understand stewardship in different ways. Those representing NGOs typically characterise stewardship as ‘IWRM from the private (often corporate) user’s perspective’ (WWI 2014). For example, Morgan and Orr (2015: 19) argue: If IWRM is considered as actions by an authority mandated by the state to manage water resources on behalf of all water users, then water stewardship can be considered as actions by water users themselves to contribute to the management of the shared resource towards public-good outcomes.

Newborne and Dalton (2016) propose that there are three main similarities between CWS and IWRM.  Firstly, both concepts strive to achieve social equity, environmental sustainability, and economic growth. Secondly, both emphasise that the success of the approach rests upon multi-stakeholder action. Finally, each requires a shift in mind-set: stewardship demands that a company goes beyond short-term thinking and accepts that water is a resource that must be shared with other stakeholders, while IWRM requires government institutions to break from ministerial ‘silos’ and collaborate across sectoral agencies. However, IWRM and stewardship also display some important differences. Firstly, IWRM is water professional-driven, whilst CWS is company user-driven. Secondly, whilst IWRM is based on laws, which typically set out binding obligations, CWS is based on an assumption of responsibilities, which leads to voluntary commitments. Finally, IWRM focuses on the catchment level, whereas CWS begins at site-level (the plant/ premises of the actor in question) and moves to catchment-level. Practitioners from the business community tend to treat CWS as a water risk-­ mitigation strategy (CEO Water Mandate et al. 2015; ICMM 2015; Morgan and Orr 2015; Hepworth and Orr 2013; WWF 2011). As will be explored further in Chaps.

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3 and 7, NGOs tap into this understanding and use it as a strategy to incentivise corporate interest in stewardship. This is because, as argued by Orr and Cartwright (2010: 188), “risk is a language that the private sector understands well.”

2.4  Shaping Governance Chapter 1 set out the broad theoretical debates surrounding governance, including the term’s different conceptualisations. This section will dive deeper into the so-­ called ‘post-sovereign world order’ (Karkkainen 2004) by exploring how governance is operationalised. Specifically, it examines how knowledge is produced and perpetuated. Doing so allows not only an exploration of why companies have started to play a key role in GWG, but also an understanding of what that role is, and how businesses could enact influence over political processes within the governance structure.

2.4.1  Enacting Influence The work of Hajer and Versteeg (2005) provides a useful starting point for exploring how governance is operationalised. They argue that the conditions of ‘institutional ambiguity’ (lack of shared decision-making structures) and ‘multi-signification’ (lack of shared worldview) under which governance operates, lead to a situation where participants first and foremost have to negotiate a common language, and a common problem definition. Following from this, Hajer and Versteeg (2005: 342) argue that: “governance networks provide arenas in which actors argue, explain and justify themselves and (re)interpret history, thereby creating frameworks for a continuity of argument and an interpretation of competing identities and loyalties.” As a result, “the very joint experience of collaboration becomes the key reference” (ibid). In their view, therefore, the very process of performance produces ‘solutions’ to the issue discussed, as well as setting up the structures for the network. Hajer and Versteeg are not alone in emphasising the politics of performance and the ‘dramaturgical nature’ of governance. Death (2011: 2) focuses on the specific sites of performance, such as large environmental summits where global environmental issues are deliberated. Here, he suggests, “[e]nvironmental sustainability… must be seen to be done, and summits are one of the primary sites where this performance is played out.” Similarly, Campbell et al. (2014: 6) argue that global political meetings are instances where diverse actors come together to produce governance, leading them to conclude: “meetings are also spectacles, stages on which different actors perform their policy preferences in front of an audience.” Moreover, they propose that focusing on the performance can show how interaction “produces social realties like understandings of particular problems and the power relations brought into being in addressing those problems” (ibid: 7).

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Although important, performativity alone cannot explain why governance is operationalised in particular ways; it is, for example, critical also to recognise the role of power. A multifaceted concept, power is understood here as “the production, in and through social relations, of effects that shape the capacities of actors to determine their own circumstances and fate” (Barnett and Duvall 2005: 3). Despite its importance, power rarely figures in scholarly debates on governance. Reviewing how ‘governance’ is treated – focusing in particular on the discipline of International Relations – Barnett and Duvall (2005) note that many scholars who are drawn to this area of study come from theoretical backgrounds of neoliberal institutionalism,11 liberalism,12 and constructivism.13 For these scholars, the study of governance offers an opportunity to demonstrate the limitations of the long-dominant realist ‘power-­ oriented’ analysis, and instead highlight the relevance of institutional, normative, and ideational variables. However, by positioning their arguments ‘against power’, these scholars have effectively avoided explicit and systematic attention to the role of power in governance, with the result that “much of the scholarship on global governance proceeds as if power either does not exist or is of minor importance” (ibid: 4). An explicit focus on the role of power in governance is important because it facilitates analysis of how global life is organised, structured, and regulated. Moreover, it forefronts questions about how governing arrangements acquire legitimacy, who gets to participate, and whose voice matters. To serve such an analysis, Barnett and Duvall (2005) have constructed a taxonomy of power (compulsory, institutional, structural, and productive) that captures the different forms of power in international politics, and the role that power plays in shaping governance. Compulsory power denotes the relations between actors that allow one to shape the actions of another directly (Barnett and Duvall 2005). Dahl (1957: 202–3), who defines power as “the ability of A to get B to do what B otherwise would not do” encapsulates this conceptualisation of power well. Compulsory power  – often enacted through the possession of superior material resources14 – has a significant role to play in the shaping of governance. Through the deployment of resources, an actor can advance his/her interest in direct opposition to the interests of another actor (Gilpin 2002). As Chap. 7 will demonstrate, this type of power, exerted through material capabilities, has a significant role to play in the shaping of CWS.  Following Keohane (2011), the theory’s principal thesis is that variations in the institutionalisation of world politics exert significant impacts on the behaviour of governments. In particular, patterns of cooperation and disagreement can be understood only in the context of the institutions that help define the meaning and importance of state action. 12  Dating back to thinkers like Adam Smith and Immanuel Kant, liberalism as a theory in international relations rejects anarchy as the ‘natural’ state of the world, and instead focuses on the role of international organisations and nongovernmental actors in shaping state preferences and policy choices (see Snyder 2004). 13  The theory points towards how certain aspects of international relations are historically and socially constructed, rather than inevitable consequences of human nature or other essential characteristics of world politics (see, e.g., Wendt 1992). 14  Compulsory power also includes symbolic and normative resources. 11

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Institutional power encompasses an actor’s control of others in indirect ways (Barnett and Duvall 2005). To borrow Dahl’s terminology, the conceptual focus here is on the institutions that mediate between A and B, as A, “working through the rules and procedures that define those institutions, guides, steers, and constrains the actions (or non-actions) and conditions of existence of others” (Barnett and Duvall 2005: 15). While compulsory power typically rests on the direct deployment of resources, institutional power is channelled through institutional arrangements, such as rules and regulations. Governance is shaped by institutional power – whether enacted in formal or informal agenda setting – as this type of power enables certain actors to influence the agenda in ways that advantage some while disadvantaging others (Pollack 1997). Structural power “concerns the structures – or, more precisely, the constitutive, internal relations of structural positions – that define what kinds of social beings actors are” (Barnett and Duvall 2005: 18). While those who focus on institutional power tend to equate ‘structure’ and ‘institution’ (defining both as sets of rules, procedures, and norms that constrain actions), those who study structural power conceive ‘structure’ as an internal relation. To borrow Dahl’s terminology again: A only exists because of its relative position to B. Scholars here point to, for example, master–slave and capital–labour relations (Isaac 1987; Bhaskar 1979). Scholars adhering to this field argue that global governance is shaped by structural power, and that this power contributes to form global capitalist relationships (Cox 1992; Gill and Law 1989) and particular types of ‘world systems’ (Wallerstein 1998). Productive power is “the socially diffuse production of subjectivity in systems of meaning and signification” (Barnett and Duvall 2005: 3). In other words, productive power points to how the capacities of actors are socially produced, particularly through discursive practices. As with structural power, productive power sees social processes (like governance) as the outcome of social practices, rather than an outcome of actions of specific actors. However, unlike structural power, which focuses on social structures of domination, productive power highlights how wider systems of signification organise social life. Those who analyse governance through the lens of productive power (see, for example, Butler 2010; Foucault 1980) point to how global social life is organised in accordance with particular discourses, and they question how certain ‘problems’ are constructed, what knowledge is authorised in the construction of these problems, and the productive capacity of knowledge itself. Drawing these different conceptualisations together, Barnett and Duvall (2005: 4) note that they all provide distinct – yet sometimes complementary – answers to the question: “in what respects are actors able to determine their own fate, and how is that ability limited or enhanced through social relations with others?” Moreover, in recognising that power has these multiple expressions, we can connect power to other factors that scholars suggest influence governance. A number of scholars highlight the role of (and unequal distribution of) actors’ resources in shaping governance. Some study the role of material resources (see, for example, Börzel and Risse 2005; Jessop 2000) whilst others focus on the role of normative resources like expertise (see, for example, Carrozza 2015; Owens 2015; Grundmann 2009). Connecting these studies to Barnett and Duvall’s categorisation of power, resources

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can, as noted above, be linked to the use of compulsory power. Other scholars focus on the role of knowledge, language, and discourse (see, for example, Sen 1999; Neumann and Welsh 1991) in shaping governance. In the context of Barnett and Duvall’s taxonomy, these studies can essentially be seen as readings of productive power. Understanding such factors as resources, expertise, and knowledge not in isolation but as ‘tools of power’ allows for a more nuanced appreciation of how actors can utilise them to shape governance. Moreover, connecting power  – and enquiries into how it is enacted through resources, expertise, and knowledge – to explorations of how governance comes into existence through performativity, suggests that actors may have different capacities to participate in the ‘politics of performance’. Lack of access to material resources may, for example, prevent certain actors from traveling to participate in summits where global issues are deliberated. Moreover, if actors lack access to certain knowledge or expertise (or if their perspective is dismissed), they may be unable to argue, explain and justify themselves, and may thereby be excluded from participating in “the joint experience,” which Hajer and Versteeg (2005: 342) argue constitutes governance.

2.4.2  Producing Knowledge Although language has been recognised as playing a critical role in the performative process, the question still remains of how ideas are generated and spread. This section provides an overview of how shared knowledge is produced and dispersed in governance networks, to unpack how CWS could emerge as an idea in GWG, and how actors gather and promote it. GWG is, as noted in Chap. 1, a regime encompassing “the development and implementation of norms, principles, rules, incentives, informative tools, and infrastructure to promote a change in the behavior of actors at the global level in the area of water governance” (Pahl-Wostl et al. 2008: 422). Thus, embedded in this regime is a multitude of ideas, which, together with the actors that promote them, collectively make up the structure of the network. Engaging with the debate on policy change, and the introduction of new ideas, provides a good starting point for exploring how a range of actors could assemble around, and begin to promote, the idea of CWS. Sabatier (1987, 1988) presents a conceptual framework centred on the notion of ‘Advocacy Coalitions’ to explain policy change over time. Sabatier (1988: 131) argues that in the analysis of policy change, the most useful unit of analysis is the ‘policy subsystem’: “those actors from a variety of public and private organizations who are actively concerned with a policy problem or issue.” Putting this into the context of this book, the group of actors assembling around the issue of the ‘water crisis’ could be conceived of as a ‘policy subsystem’. Within this subsystem, actors are aggregated into advocacy coalitions: “people from various organizations who share a set of normative and causal beliefs and who often act in concert” (ibid: 133). An example of such an advocacy coalition would be a group of actors who believe that the water

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crisis is a crisis of governance; a direct expression of the perceived failure of statemandated water management. These coalitions adopt policies which they perceive will advance their objectives, for example, better regulatory frameworks, or water pricing schemes. For Sabatier (ibid: 131), policies are conceptualised in the same manner as belief systems: “as sets of value priorities and causal assumptions about how to realize them”. Sabatier and Jenkins-Smith (1994) argue that these belief systems are organised into a tri-partite hierarchical structure: (1) the ‘deep core’, pertaining to basic ontological and normative axioms; (2) the ‘policy core’, representing basic normative commitments and perceptions across the entire subsystem, and; (3) ‘secondary aspects’, comprising instrumental considerations pertinent to implementation of the policy core. Sabatier argues that members of advocacy coalitions will reject information that suggests that their ‘deep core’ is invalid. Instead, they will attempt to put the new information into their existing frame of reference by “interpret[ing] new events in ways that do not disturb their basic axioms of knowledge” (Fischer 2003: 96). In order for the ‘deep core’ to be altered, Sabatier argues that large-scale external shocks are required. This reliance on external factors has led some to argue that the Advocacy Coalition framework alone is insufficient to explain policy change, as it fails to explain why and how changes come about (see, for example, Ainuson 2009). However, following Heclo (1974), Sabatier (1988) also emphasises the process of policy-oriented learning  – the progression of methods and policy objectives as a result of new experiences – in the general process of policy change. By integrating ‘learning’ into the practice, the advocacy coalition framework suggests that significant policy change can and does occur over time. Moreover, the focus on ‘learning’ means that Sabatier does not conceive of policy change as a linear process, but rather acknowledges the feedback between external events and coalition behaviour. An alternative conceptual framework has been proposed by Hajer (1993), outlining the role of ‘Discourse Coalitions’ in policy change, pointing towards narrative storylines rather than cognitive beliefs as the unifying factor (Fischer 2003). The framework originates in the conviction that political problems are socially constructed. This does not suggest that the problems themselves are social constructs, but rather that the same problem can be presented in a range of different ways; the water crisis could, for example, be understood as a ‘crisis of governance,’ a ‘crisis of anthropogenic climate change,’ or a ‘crisis of natural climatic variability.’ Following this, Hajer (1993: 45) defines a discourse coalition as “a group of actors who share a social construct”. Putting this into the context of this discussion, the group of actors who promote CWS broadly assemble around the idea that corporations can – and should – be part of solving the water crisis. This rests upon their baseline assumption that the water crisis is a crisis of governance, partially stemming from insufficient stakeholder involvement. Although this is, at first glance, similar to the advocacy coalition framework, the discourse coalition differs from the advocacy coalition. Fischer (2003: 102) highlights how discourse coalitions, rather than being constructed around preconceived beliefs (like advocacy coalitions), are

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held together by narrative storylines “that interpret events and courses of action in concrete social contexts.” The discourse coalition framework investigates how actors assemble around narratives of policy problems, and the role that “linguistic framing of policy problems can play in sustaining the dominance of existing policy positions” (Scrase and Ockwell 2010: 2225). Grounded in constructivist ontology – and therefore holding that social reality is inherently subjective – this framework is based on the premise that “language does not simply offer a mirror or picture of the world, but instead profoundly shapes our view in the first place” (Fischer 2003: 41). For Hajer (1993: 44), “language is recognized as a medium, a system of signification through which actors not simply describe but create the world.” This leads Stone (2003) to argue that language, and by extension, discourse, is a source of power. These scholars hold that to embed an idea, and establish it as a dominant way to understand the world – in essence to create and maintain discursive order – is the quintessential political quest (Hajer 1993). As these ideas have gained acceptance, a ‘linguistic turn’ has swept across the social sciences (Cienki and Yanow 2013), devoted to exploring the role of language in constituting the world, and the ideas which constitute it. Hajer’s framework displays similarities to Haas’ (1992) study of ‘epistemic communities’, defined as networks of knowledge-based experts. Like Hajer, Haas is interested in how complex problems are articulated, and how ‘knowledge networks’ frame issues for debate. Critically, Haas (1992: 2–3) argues: “control over knowledge and information is an important dimension of power and…the diffusion of new ideas can… prove to be an important determinant of international policy coordination.” Schmidt (2008, 2010) reviews a range of analytical propositions associated with scholars – including Hajer and Haas – for whom ideas and discourse matter in the policy context and puts forth a framework she calls ‘Discursive Institutionalism’. Through this framework, she calls attention to how various scholars gather around the conviction that discourse (albeit understood in a range of ways) plays a role in policy-making, and analyses the processes by which ideas are conveyed and exchanged through discourse. An additional significant feature of discursive institutionalism is its understanding of what comprises an ‘institution’. Schmidt (2010: 14) argues that institutions are not “structures external to agents that constitute rules about acting in the world… serv[ing] mainly as constraints”, but, rather, they are “internal to sentient agents, serving both as structures (of thinking and acting) that constrain action and as constructs (of thinking and acting) created and changed by those actors”. Conceptualising institutions in this manner allows us to revisit our understanding of GWG, and define it not only as an intangible ‘Mobius web’ or ‘network,’ but also as an institution. Recognised as such, GWG is both a constraining structure setting the bounds for ‘the rules of the game’, and also a product of actions, (un)consciously created by the actors involved in GWG. Once actors have gathered as discourse coalitions around a perceived policy problem, the question that remains is how the coalition disseminates its shared idea to a wider audience. In the context of policy analysis, a number of scholars have turned towards concepts like ‘framing,’ ‘storylines,’ and ‘narratives’ as explanatory devices. In brief, these concepts seek to encapsulate the process whereby an idea is

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Fig. 2.1  The CWS storyline

not only understood and interpreted by a specific coalition, but also how that idea is translated and communicated within wider networks, grounded in social interaction. For Fischer (2003), the fundamental linguistic mechanism for creating and maintaining discursive order is the ‘storyline’. The conceptualisation of policies as ‘stories’ or ‘storylines’ is a unifying theme amongst scholars who engage with the role of language in policy analysis. For example, Dryzek (2013: 17) suggests that “discourses enable stories to be told,” while Molle (2008: 136) proposes that a policy narrative is a “story that gives an interpretation of some physical/social phenomena”. Roe (1994: 36) correspondingly suggests that policy narratives are set up as classic ‘stories,’ where each narrative encompasses: “a beginning, middle, and end…and revolves around a sequence of events or positions in which something is said to happen or from which something is said to follow.” Thus, a storyline is composed of the elements of a typical story: a problem, a cause for the problem, a villain responsible for the problem, and a hero who will come to the rescue. Grounding these ideas in this research, a storyline can be identified for CWS (Fig. 2.1). The conceptualisation of social constructs as stories is helpful because, as an analytical device, it not only allows analysis of how an issue is initially interpreted, but also an examination of how a coalition suggests that the issue should be addressed. In this way, storylines work as mediums for disseminating ideas, because a coalition of actors use them as devices to impose their ideas on others (Hajer 1993). Roe (1994: 37), for example, argues that these storylines “have the objective of getting their hearers to assume or do something”. Similarly, Laws and Rein (2003: 173) note that they also “provide a guide for doing and acting”. In short, they are about ‘world making’ (Goodman 1978). These perspectives also allow us to start unveiling the relationship between discourse and social practice, and the processes whereby specific discourses can become ‘hegemonic’ (Fischer 2003). This leads Hajer (1993: 45) to argue that the study of discourse – and the study of storylines – “opens new possibilities to study the political process as mobilization of bias”. For Hajer (1993: 46), a discourse coalition has succeeded in establishing discursive order if the storyline has achieved ‘discourse structuration’, which occurs when “a discourse starts to dominate the way a society conceptualizes the world” and ‘discourse institutionalisation’, which is the result of the storyline “solidify[ing] into an institution, sometimes as organizational practices, sometimes as traditional ways of reasoning.” Connecting this with Schmidt’s (2008) understanding of institutions, which allowed us to perceive GWG as one such structure, it suggests that actors promoting CWS have at least partially ‘succeeded’ when their perspective impacts GWG’s organisational practices and the ‘rules of the game’ it promotes.

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Chapter 3

The Rise of Corporate Water Stewardship

Governments and civil society alike recognise that they can’t tackle the water challenges alone. And I think that they are increasingly aware of the good things that the private sector can do…As they get more aware of this, the willingness to open up and see companies as part of the solution is increasing…The appetite for collaboration is increasing. And I think the appetite is increasing in the right way. Not just seeing companies as a ‘cash-cow’, but as partners in implementation. Interview 37, 2016, unpublished Companies are not going to get persuaded by anything other than real demonstrable risk…Companies will not change their behaviour until there is a real business case. You are not going to persuade them. And you can’t criticise them for that. They are in the business to make money, they are not in the business to fix water. Interview 5, 2015, unpublished.

Chapter 2 advanced the argument that CWS – defined as “actions by water users themselves to contribute to the management of the shared resource towards public-­ good outcomes” (Morgan and Orr 2015: 19) – emerged as a product of a growing discontent with state-mandated water resources management and the concurrent renegotiation of businesses’ role in society. However, this tells only half the story of CWS. Although it suggests how a need for stewardship could become manifest, it lacks an exploration of why and how the actors now involved in CWS responded to the opportunity. This chapter takes up this challenge. It reviews the incentives for engagement for companies and NGOs, the two most prominent sectors in the stewardship space. The chapter will begin by examining how businesses conceptualise the water issue, what motivates them to engage, and the events that lead them to become involved in CWS. It moves on to assess the water crisis from the NGO perspective and the events that led these actors to endorse CWS. The chapter then examines the various ways in which NGOs have promoted

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CWS.  Finally, the discussion turns to how CWS has been, using Hajer’s (1993) term, ‘discursively institutionalised’ through the establishment of a number of new organisations devoted to fostering and disseminating stewardship. Exploring these issues will not only contribute to an understanding of how and why CWS emerged, but will also illuminate the complexities around the CWS storyline, visualised in Fig. 2.1. It was previously argued that the group of actors promoting CWS broadly assembled around the idea that corporations can – and should – be part of solving the water crisis. However, as this discussion will illustrate, the actors involved comprehend ‘the water crisis’ in fundamentally different ways. For companies, the water crisis manifests itself as a financial risk. For NGOs, the water crisis is principally an environmental and social issue. Despite these different starting points, both sets of actors suggest that CWS holds the promise of addressing a shared problem. Being aware of these different starting points will be critical for later discussions (Chap. 7), since it will allow us to investigate whose problem conceptualisation and solution has been successful in ‘creating and maintaining discursive order’ (Hajer 1993) in the case of CWS.

3.1  Drivers of Business Engagement CWS is typically presented as an opportunity for companies to respond to water risk: the potential of mitigating a water-related challenge (CEO Water Mandate 2014a). However, there are other drivers at play that must also be considered when analysing why businesses engage. Discussed in turn, these include the understanding of water engagement as a business opportunity, the expanding scope of what constitutes ‘water engagement’, and a rising pressure from consumers and investors to act.

3.1.1  Water as a Business Risk Companies have, until recently, operated under the assumption that water of suitable quantity and quality is abundant. However, as water challenges become more common, this belief is tested. As a result, particularly for companies which rely on water to produce their goods and services, water has been reconceptualised from an environmental or social issue to a business risk. Parallels to this reframing can be drawn with the work of Hajer (1993, 2003), and his argument that the same problem can be understood in multiple ways, producing different ‘storylines’ where problem definitions and solutions may greatly diverge (Chap. 2). The World Economic Forum (WEF) has “played a big role in elevating the conversation around risk” (Interview 43, 2016, unpublished). In 2007, WEF turned its attention to water, intending to change the political economy of the water agenda from “an MDG [Millennium Development Goal]-related ‘access’ issue to an issue

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of ‘access in the context of wider resource security and economic growth’” (2030 WRG 2012: 18). This focus is still its priority today as the organisation seeks “to show how water is an integral piece to economic growth and development” (Interview 37, 2016, unpublished). Each year, WEF publishes a Global Risk Report, outlining the most pressing issues currently facing the world. In 2015 the report ranked the water crisis as the leading global risk in terms of impact (WEF 2015), sending tremors throughout the global business community. This understanding of water as a risk is what primarily drives companies’ engagement: “Risk. Ultimately, [any company’s involvement] is in light of self-interest to be honest. At the end of the day, we’re a company and we need water to survive. That’s the crux of it…[Thus,] we look at it…from a water risk perspective more than anything else” (Interview 24, 2016, unpublished). Any corporate engagement is therefore “ultimately about demonstrating the connections to the core business, and demonstrat[ing] the value added, or the risk that is related to the challenge of water” (Interview 42, 2016). It has become common practice in CWS circles to distinguish between three types of risk that water may pose to a business: physical, reputational or regulatory. When reflecting upon these, the critical issue is that all three could potentially lead to increased costs, or loss of revenue, and as such, they pose a financial risk to the business (CEO Water Mandate 2010). Physical risk encompasses situations where there is too little water (scarcity), too much water (flooding), or water of unsuitable quality (pollution) (Orr and Cartwright 2010; Pegram et  al. 2009). It comprises the direct risks that face any company’s operation  – including value chains  – because of changes in the flow, quality, or availability of water (Morgan and Orr 2015; Hepworth and Orr 2013). The mining sector is one example of a sector that experiences physical water risks, as “investments are being stalled in many countries today because of lack of water” (Interview 10, 2015, unpublished). An example is the suspension of the Conga Mine in Peru. Peru is one of the world’s mining hotspots, and the mining industry contributes significantly to the national economy. In 2015, the industry in Peru accounted for $US 16.8bn in export revenue  – 61% of foreign trade (Walton 2016). On 30 November 2011, Newmont Mining suspended the development of the Conga mine. With an estimated $US 4.8bn capital cost, Conga represented the largest mining investment in Peru’s history (ibid). Although the suspension was partially a response to deteriorating market conditions, it was primarily due to conflicts with local farmers over water, since the project included the draining of four natural lakes in the area where the mine was to be developed. In 2016, Newmont officially announced in a US financial filing that it was abandoning the project (Newmont 2016). At the time, Newmont and its project partners – Compania de Minas Buenaventura, and the International Finance Corporation (IFC) – had already spent $US 1.7bn in capital investments. Regulatory risk refers to a government’s management of water resources, and the risk of regulatory regimes changing unpredictably or incoherently, or being inconsistently applied due to political expedience, incompetence, or corruption (Pegram et al. 2009). Businesses need a stable regulatory environment to make predictions that can underpin sound business decisions, and a changing regulatory environment,

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particularly when unexpected, poses a threat to business continuity Orr and Cartwright (2010: 185) argue that regulatory risk arises particularly when there is a change in regulations that “increases the costs of operating a business, reduces the attractiveness of investment and/or changes the competitive landscape”. In extreme cases, the regulatory change could lead to a revoked legal licence to operate. Thus, Hepworth and Orr (2013: 226) note that even the fear of regulatory risk drives companies to “understand and influence policies and regulations that apply to their operations”. Reputational risk denotes the potential loss of customers and brand value as a result of real, or perceived, negative impacts on communities and ecosystems as a consequence of a company’s water use (Hepworth and Orr 2013; Orr and Cartwright 2010). Reputational risk is intimately tied to a company’s ‘social licence’ to operate, defined by Prno and Slocombe (2012) as the broad acceptance granted by society to business to conduct its activities. It is particularly important to note that a perceived negative impact of these activities could have just as detrimental an effect as a real impact. The most prominent example of the links between reputational water risk and business continuity is the challenge that Coca-Cola faced in Kerala, India in 2003. Among other issues, serious concerns were voiced by the local community that the Coca-Cola bottling plant was over-extracting groundwater, and in effect depleting the local aquifer (Hills and Welford 2005; Coca-Cola 2004). After years of protests, the plant was closed (Chilkoti 2014). Coca-Cola has continuously disputed the allegations by referring to an independent study commissioned by the High Court of Kerala, which concluded that the water shortages in the area were primarily caused by reduced rainfall, and not by the Coca-Cola operations. Even so, the plant remained shut as protests continued and rippled around the world, severely harming the Coca-Cola brand. What is noteworthy in this case is that it not only kickstarted the ideas around CWS, but starkly illustrated the social and political dimensions of water, and showed how the ‘social licence’ to operate in a community is as vital to a company as the legal permit: The case of Coke and Kerala, that was a big kick-start for the water stewardship movement… Coke realis[ed] the risk outside of its fencelines in terms of how they use water, and how other people got access to water, and that led them to realise that how other people got access to water was fundamentally driven by politics (Interview 31, 2016, unpublished).

The impact that the events in Kerala had on Coca-Cola’s understanding of water as an issue crucial to its business is clearly illustrated in its direct response. In 2004 – as one of the first companies to introduce such an initiative – it launched the Coca-­Cola Global Water Initiative, a predecessor to its water stewardship programme, which “aimed not only at ensuring our own responsible use of water, but also at contributing to sustainable water resource management in local communities” (Coca-Cola 2004: 7). As part of the initiative, it conducted a detailed analysis of the potential water risks facing the business in more than 840 locations worldwide (ibid).

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3.1.2  Water as a Business Opportunity Water not only poses a risk for businesses, it also offers an opportunity. For some companies, the link between water engagement and business opportunity is straightforward (see Chap. 5) but even in cases where the link is less direct, there is evidence that engagement in water is more than risk mitigation. Engaging in water can present a value proposition, since it is also about securing new markets and being able to expand into areas that are water stressed. Many companies see the emerging economies as their most important future markets. However, in India, China, parts of Africa, and the Middle East, which companies target as key growth markets, water resources are severely polluted, and increasingly stressed due to climate change and competing water demands (Sarni 2013; Barton 2010). As companies move into these areas, their exposure to risk is increasing, which incentivises a change in their approach to water in order to create new business opportunities. Here, the UK based brewing company Diageo can provide an example. Speaking at the 2015 FT Water Summit in London, the company’s Head of Water explained how Diageo’s business had changed: “I think ten years ago, perhaps only 10% of our profit came from emerging markets [but] a very strategic decision was made…to invest in emerging markets, and now it’s up to perhaps 40%” (Brown and Alexander 2015). As further explained by a corporate representative: [CWS] is about long-term sustainability and the growth of our business in some of these key markets. Africa is an incredibly important market, and we’ve got a lot of water stress there. Same with India. We just spent 2 billion dollars on a business in India so we have to make it work…Our growth in emerging markets has meant that…our relative exposure to water stress has gone up significantly in the last 5–8 years. And with that, it has become a gradual increase in focus on water management and the need to improve water stewardship in our business” (Interview 21, 2015, unpublished).

Therefore, a driving factor motivating corporates to get involved in CWS “is to maintain and generate new business” (Interview 34, 2016, unpublished). Speaking candidly, some people in the water sector therefore argue: “Essentially, CWS always gets framed as a solution to a global [water] crisis. Whereas if there was a bit more honesty, it is about developing markets and ensuring business continuity” (Interview 31, 2016, unpublished).

3.1.3  Expanding the Scope of Water Engagement To understand why companies have taken an interest in water, it is also necessary to contextualise the water issue in the wider setting of other environmental and social discussions. Three debates stand out as having been of particular importance for incentivising and endorsing broader business engagement with water issues. The first is around climate change. These discussions have been on-going for decades,

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but around the 2009 COP15 in Copenhagen, the links between water and climate began to be recognised. Although water was not a part of the official Copenhagen Accord, the conference saw “a lot of conversations behind the scenes about water and water risks, and how water and climate were really inseparable” (Interview 43, 2016, unpublished). Examining the way in which water has been perceived by the international community, “one thing that has changed…is the increasing realisation of the links between climate change and water” (Interview 10, 2015, unpublished). It is acknowledged that the effects of climate change are often expressed through the hydrological cycle in the form of floods, storms, or droughts, and consequently that “water is the primary medium through which climate change influences Earth’s ecosystem” (UN Water 2010: 1). This has not only caught the interest of states, but also the attention of businesses since “climate change is impacting water availability, it is impacting water stress, and that in turn is having a significant impact on crops, and on food, and on farming. And that’s fundamental if you’re in the food and drinks industry” (Interview 32, 2016, unpublished). Recognising the links between water and climate change is thus of critical concern for companies in certain sectors. When asked how their CWS approach was likely to evolve, a representative from a company in the food sector said: “it is going to be around how [water] tie[s] into climate-smart agriculture…You can’t deliver that without an integrated approach to water management” (Interview 42, 2016, unpublished). Therefore, as the links between water and climate change are being established, companies are seen to be taking an integrated approach, as they are “identifying water as a medium through which climate change adaptation will be required” (Interview 41, 2016, unpublished). The second debate that served to bring more businesses into water discussions was ‘the Nexus’. In brief, the Nexus is a framework for considering the interconnected natural resource management challenge of providing food, energy and water under a changing climate (2030 WRG 2012). The Nexus started to gain traction in international discussions through the activities of the WEF Global Agenda Council on Water Security, and the publication of the WEF (2011) landmark book on the Water-Food-Energy-Nexus. The concept gained real momentum when the German Federal Government in collaboration with WEF, WWF and the International Food Policy Research Institute (IFPRI) hosted the 2011 Bonn Conference. This event sought to contribute to the run-up to the UN Conference on Sustainable Development (UNCSD, or Rio + 20) in 2012. To understand the emergence of CWS, grasping the impact of the wider systemic thinking that the Nexus requires is key. Before the Nexus was conceptualised, few companies beyond the beverage sector – who could see a clear correlation between their water consumption and their operations – were engaging in CWS.  However, as the links between water, energy, and food were made explicit, it opened up the space for a range of new companies: [The Nexus] put the water challenge in a bigger context, and I think brought more companies into the realisation that they have either an opportunity, or serious risks in that space. They started to see that water had clear intersections with food and energy. And all of a sudden, water became much more of an issue for companies beyond the beverage sector, beyond ‘the usual suspects’ (Interview 43, 2016, unpublished).

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Nexus thinking was thus a powerful conceptual tool that enabled “a lot of people in agriculture, or in energy, to say to say that ‘we’re actually water decision-makers’” (Interview 6, 2015, unpublished). One example that illustrates the impact of Nexus thinking is the water management strategy for onshore oil and gas activities, which was released in 2013 by IPIECA, the global oil and gas industry association for environmental and social issues. Developed as a direct response to the call during the 2012 World Water Forum in Marseilles to “Harmonize Water and Energy” (IPIECA 2013), the framework clearly exemplifies how connections made through the Nexus have caused new types of business to enter into water related discussions. The third debate is that around the formation of the SDGs. However, unlike the debates above, which served to expand the scope of ‘water engagement,’ this one has stretched the roles and responsibilities that businesses are perceived to hold. On 25 September 2015, the United Nations General Assembly formally adopted the 2030 Agenda for Sustainable Development, along with a set of 17 goals and 169 associated targets. The Agenda came into force in January 2016. In comparison to the MDGs, which preceded the SDGs, the adoption of the SDGs demonstrated a shift in attitudes towards working with business, already apparent in the consultation process that designed and shaped the SDGs. Whereas the MDGs were – according to former Deputy Secretary-General of the UN, and former administrator of UNDP Mark Malloch-Brown – drawn up by a small group in the basement of the UN office in New York (Tran 2012), the SDGs, in contrast, were formed through the largest consultation programme in UN history. This included consultations with companies. A participant noted: “We made the mistake in the MDGs of not really bringing in the private sector at all. This time, we recognise that they are major investors, and that they are a major creator of jobs. It makes sense to engage with them” (Interview 49, 2016, unpublished). The work to develop the SDGs formally started in 2012 through the outcome of Rio + 20. Through the adoption of The Future We Want (Res. A/RES/66/288, Pg. 248), an Open Working Group (OWG) was formed, tasked to draft a proposal for the SDGs. The OWG held eight sessions in 2013, focusing on various thematic and cross-cutting issues that could be included as SDGs. For each of the sessions, so-­ called Major Groups and stakeholders – of which Business and Industry was one – were consulted, and were encouraged to prepare papers or briefs for consideration by the OWG. To support the OWG’s work, several work streams were run in parallel to develop the knowledge base on associated issues such as development financing, and technology development and transfer (UN 2018). For example, one such work stream was The Secretary-General’s High-Level Panel of Eminent Persons on the Post-2015 Development Agenda, which has included representatives from civil society, academia, government, and business. Unlike the MDGs, the SDGs include a dedicated water goal: Goal 6, which seeks to ‘ensure availability and sustainable management of water and sanitation for all’. And, through the extensive consultation process, the private sector has been an integral part of the discussions from the start, and has played a role in shaping the goals, including Goal 6. Here, we can see how the perceived role and responsibilities of

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companies have changed. A corporate representative stated that, together with other companies, they played an advisory role. He explained that, led by Peter Brabeck-­ Letmathe, former CEO and sitting Chairman of the Board of Directors of Nestlé S.A. – a person who is often referred to as having played a central role in raising awareness of water in the business community (Kent 2014)  – the company “sat down as a water-working group a couple of years ago and said: ‘what would we want these to be?’” (Interview 9, 2015, unpublished). Since the SDGs were adopted, various companies have formally integrated the goals into their strategies, as they see “very good alignment [with the SDGs]. For example, take wastewater, water pollution, [or] water quality” (ibid). As a result, for many companies, the SDGs provide “a very important framework on which to ‘hang’ their strategies” (Interview 21, 2015, unpublished). In the context of the SDGs, business is therefore no longer perceived solely as a source of finance. Instead: Its role…lies in core operations and the wide impact of business, and relates directly to UN values, poverty eradication and the spectrum of issue areas covered by the proposed SDGs. This dynamic role as a driver of sustainable economic growth brings with it opportunities in value creation as well as important responsibilities for business as a driver of sustainable economic growth (UNIDO and UNGC 2014: 4).

3.1.4  External Pressures Corporate engagement in water issues can also be seen as a result of a growing pressure to act from a range of groups. In particular, consumer pressure on business to be a ‘force for good’ is increasing. The former CEO of Coca-Cola, Neville Isdell (2010: 7), notes: “consumers…expect businesses to be part of the solutions to… issues [like climate change, energy efficiency, and water use].” As a result, “you see more and more that [responsible engagement] is something that consumers…[are] looking for [when making purchasing decisions]” (Interview 50, 2016, unpublished). Thus, as suggested by the CEO Water Mandate (2014b: 4), “corporate management of water risk is also being spurred into action by growing expectations of corporate sustainability among consumers, civil society, and communities.” It is possible that the growing expectation from consumers has in part been a response to a number of cases where businesses in general have, for various reasons, failed to comply with regulations. A number of high-profile cases towards the end of the twentieth century, including the Bhopal gas disaster (1984), the Chernobyl nuclear accident (1986), the Exxon Valdez oil spill (1989), and debates around sweatshop exposures in Asia (1990s) all contributed to raising awareness of environmental and social problems instigated by companies. Such events “caused a growing erosion of trust in business” (UNGC 2015: 36), which, by 2009, had reached record low levels (Edelman 2009). It is interesting to note that this happened just before companies started to promote CWS, suggesting that CWS has been used not only as a water risk mitigation strategy, but also as a tactic to improve reputation, and regain trust.

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Many companies recognise that being known for good water management is an important part of building a successful brand that influences consumers’ purchase decisions. Research has shown that managing a good reputation could have tangible financial returns (Isdell 2010), meaning that a company can do well, by (at least appearing to be doing) good. Having a brand associated with sustainability may also serve as a distinguishing feature between one company and its competitors. The notion of ‘leadership’ has become central as a result. For example, a business representative noted: “[the company] has a vision of being the world’s most sustainable retailer…And I think the same thing can be said of the other companies that are getting involved with water stewardship. They tend to be leaders in the sustainability field. They go, and others eventually follow” (Interview 26, 2016, unpublished). Companies’ own communication materials on water confirm that it is important not only to be involved, but also to be in the lead. So, for example, PepsiCo (2012: 65) uses phrases such as “our continued leadership in water stewardship”, while Coca-­ Cola (2012: 4) defines itself as “a global water stewardship leader.” In the food sector, Nestlé (2014: 10) announces that it is “a global leader” and Olam (2015: 49) proclaims that it seeks to take “a leadership role at an industry level”. Statements from the extractive industries reveal similar sentiments. Anglo American (2009: 3) “strive[s] to be a leading custodian of water” and Barrick Gold (2007: 32) undertakes water activities in order “to establish Barrick as an industry leader in water conservation practices”. In the textile industry, Levi Strauss (2013: 4) declares itself “a global apparel leader” in water sustainability, and H&M (2008: 5) announces that they “want to be at the forefront compared to our competitors when it comes to sustainability”. The emphasis that these companies place on establishing themselves as leaders in this space confirms the importance which they attach to sustainability work in fostering brand value. For H&M (2008: 5), being at the forefront is directly linked to their brand: “[w]e want our customers to know that shopping at H&M means shopping from a company that is more sustainable than most competitors in the market.” Moreover, often associated with the word ‘responsibility’, the notion of leadership is used as a justification for being involved in the water space. Nestlé (2014: 10), for example, argues that being a global leader “brings not only a duty to operate responsibly, but also an opportunity to create long-term positive value for society.” Comparably, Coca-Cola (2012: 4) links its leadership position in CWS to “a vital responsibility we have embraced around the world” and Levi Strauss (2013: 9) argues: “we have consistently found that when we lead, others follow. And with leadership comes great responsibility.” In addition to consumers, there are signs that investors are putting pressure on companies to think more actively about how to manage and mitigate water risk. For example, managers of Norway’s $1 trillion oil fund, the world’s biggest sovereign wealth fund, have started to urge companies to improve their reporting on water-­ related risks so the fund can mitigate negative effects on its long-term returns (Clark 2014). Investors are interested because:

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3  The Rise of Corporate Water Stewardship The share price of companies is based on the forecast that they are setting for themselves in terms of their growth and development as companies. If that is under threat [as a result of water risks], investors are very keen to understand why and how, and what the companies are doing to mitigate that issue, and ensure resilience” (Interview 13, 2015, unpublished).

Investors are thus seeking to understand how water challenges will affect a company’s ability to generate returns (CEO Water Mandate 2014c). CDP has been a key player in terms of pressing companies to disclose more information about their experience of water risk, and their mitigating strategy. As of 2017, CDP hosts the most comprehensive collection of voluntarily reported environmental data worldwide, having a network of investors and purchasers – including Norway’s oil fund – representing over $100 trillion (CDP 2018). In 2008, CDP  – which up until that point had focused exclusively on carbon disclosure – launched a water disclosure pilot (CDP 2009), following which the CDP Water division was formed in 2009. CDP Water asks companies to disclose their environmental performance, specifically focusing on water, as its name suggests. It then analyses the data and highlights critical risks, opportunities, and impacts. Investors, as well as businesses and policy makers, then use this information to make investment decisions. By 2017, CDP Water had 2025 publicly listed companies providing information (CDP 2017). Investors are becoming aware of the water issue, leading to that “there is a lot more [interest] coming up from bigger investment houses; Morgan and Stanley, and Goldman and Sachs, for example, they’re putting out articles in regard to water” (Interview 24, 2016, unpublished). Companies are aware of this rising pressure. As informant noted: “Investor pressure, that is growing. It is moving quickly now, it really is. We’re always in conversations with investment groups” (Interview 33, 2016, unpublished).

3.2  Drivers of NGO Engagement The NGOs that have been most active in promoting stewardship are WWF, IUCN, and WaterAid. This section outlines how these NGOs frame ‘the water crisis’ and discusses events and factors that have led these organisations to collaborate with companies and promote CWS as a strategy for addressing water issues.

3.2.1  Water as an Environmental and Social Risk WWF (2018) aims to “protect freshwater ecosystems and improve water access, efficiency, and allocation for people and the environment.” Similarly, IUCN (2018a, 2018b) strives to address “the challenges in equitably managing the freshwater available”, and “to halt biodiversity loss and manage the impacts of climate change”.

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Keeping environmental protection at the core of their organisational mission, it is rational that these NGOs frame the water crisis as an environmental risk. Discussing water issues, WWF (2018) emphasises the worldwide loss of wetlands, unsustainable river dredging, and destruction of aquatic ecosystems. Correspondingly, IUCN (2015) highlights the unsustainable levels of freshwater withdrawals, cumulative freshwater pollution, and the overexploitation of aquatic species. In contrast, WaterAid (2018) aims to “transform the lives of the poorest and most marginalised people by improving access to clean water, sanitation and hygiene [WASH]”. Thus, “although WaterAid got ‘water’ in the title, it is a social NGO” (Interview 46, 2016, unpublished). Having this ‘social mission’ leads WaterAid to frame the water crisis as primarily a risk to human livelihoods. When discussing water issues, the organisation focuses on the 663 million people who still do not have access to safe1 drinking water (WHO/UNICEF JMP 2015), and the 2.3bn people who lack access to adequate2 sanitation (ibid). Specifically, WaterAid raises concerns over how inadequate access to water and sanitation impacts on human health. For example, every year, around 315,000 children under five die from diarrhoeal diseases caused by dirty water and poor sanitation. This amounts to almost 900 children per day, or one child every 2 min (WaterAid 2018). WWF, IUCN, and WaterAid unite in their frustration over the inadequate measures taken by governments to address these issues. Consequently, they turn to companies for help. In the words of one NGO representative: “Integrated Water Resources Management reforms [have been] stagnating for decades. [At the same time]…you’ve got this private sector interest in water because it affects their bottom line. It seems to me like there is a really good conversation to be had [with companies] about kicking governance off again” (Interview 12, 2015, unpublished). NGOs like WWF and ICUN, which focus on environmental aspects of the water crisis consequently turn to companies “to kick-start often failing Integrated Water Resources Management processes” (Interview 31, 2016, unpublished). Likewise, to address the social dimensions of the water crisis, WaterAid explores “how they can work with the private sector more ‘smartly.’ Not just focusing on fundraising, but on how they can work together to tackle [WASH] challenges” (Interview 46, 2016, unpublished). However, the extensive challenges ahead, and the lack of initiative demonstrated by the public sector to address these issues, do not alone explain why NGOs have turned to companies for assistance and why they promote CWS.

1  As defined by SDG target 6.1,‘safe’ drinking water is free from pathogens and elevated levels of toxic chemicals at all times (WHO/UNICEF JMP 2018a). 2  As defined by the SDG Target 6.2, ‘adequate’ implies a system which hygienically separates excreta from human contact as well as safe reuse/treatment of excreta in situ, or safe transport and treatment off-site (WHO/UNICEF JMP 2018b).

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3.2.2  Insufficient Finance The 2008 economic crash significantly constrained NGOs’ access to financial resources, and their capacity to implement programmes. Although the crash did not hit NGOs directly in the same way as governments or companies, it did have an indirect effect on their activities, because they often work as local implementing partners on publicly funded programmes. For example, WWF is a key implementing partner in the International Water Stewardship Programme (IWaSP),3 funded by DFID, and GIZ.  In addition to DFID and GIZ, the primary donors active in the water sector are the Swiss Agency for Development and Cooperation (SDC) and the Swedish International Development Cooperation Agency (SIDA) (Sojamo 2015). Examination of Official Development Assistance (ODA) statistics from these four donors suggests that the financial crisis did not affect ODA flows; in absolute numbers ODA has risen steadily even after the financial crisis. For example, ODA from Sweden rose from SEK 29.2 m (£2.6bn) in 2007 to SEK 54.0 m (£4.8bn) in 2015 (SIDA 2018). Similarly, ODA from Switzerland rose from CFH 2021  m (£1.6bn) in 2007 to CFH 3404 m (£2.6bn) in 2015 (SDC 2018). However, what can be seen is a redistribution of priorities for how the money available ought to be spent. This is due to a number of new challenges faced by the world emerging from the financial crash of 2008. And although many of these challenges are not directly related to the financial crisis, they have nonetheless put increased pressure on public resources at a time when they are already constrained. For example, Sweden, the world’s largest donor when expressing ODA as % of GNI4 (OECD 2016), announced in 2015 that, although the development agency’s budget was to be unchanged, 30% of the ODA funds were to be redirected to cover the cost for receiving refugees in Sweden (SIDA 2016). This meant budget cuts in programmes like ‘support for sustainable economic development’ (−14.0%), and ‘support for sustainable social development’ (−21.6%) (ibid), both of which could affect water projects. The constraints placed on public funds – and the subsequent cuts in programme support – forced NGOs to look for alternative funding sources. Companies became prime candidates. While CWS had started to emerge as an idea prior to 2008 – primarily through ‘water footprinting’ (see Sect. 3.3) – it is noteworthy that the concept saw a substantial ‘upswing’ around 2009, as it became much more widely promoted by NGOs. Although not the only reason, the financial crisis had a role to play in this development. There are indications that the financial crisis caused companies to change their approach to water engagement as well. Whereas corporate involvement and investment pre-2008 tended to be channelled through NGOs for philanthropic purposes, post-2008, there has been a clear trend towards a more systematic approach, where 3  The six-year programme (2013–2018) facilitates partnerships between the public sector, the private sector and civil society. It addresses shared water risks on a catchment scale, whilst improving stakeholders’ use and management of water and building their capacity to develop their own solutions (IWaSP 2018). 4  The official United Nations target is to keep ODA at or above 0.7% of GNI.

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a direct bottom-line return of the investment had to be demonstrated. For example, one informant suggested: “After 2008, I surmise that it became harder just to invest in programmes…that did not have a bottom line value or quantifiable value” (Interview 43, 2016, unpublished). As a result, there is a greater need “to align [projects] with the business…and…to show an impact that relates to business” (Interview 46, 2016, unpublished).

3.2.3  Insufficient Power The aim of most NGOs is to influence change in practice – whether with regard to human access to water, or preventing biodiversity loss  – and, in most cases, this means advocating a change in government policy or legislation. However, NGO’s political influence is often inadequate for achieving such objectives, particularly when compared to the political power of many companies. One representative noted: “as an environmental NGO – even as a very large environmental NGO – we still lack political influence compared to companies.” He went on to suggest that companies “can reach parts of government that environmental NGOs can’t reach” (Interview 45, 2016, unpublished). Another representative had similar experiences, and explained: “we’ve definitely found that when we do something jointly with Coca-Cola…it is much easier to secure senior politicians or ministers to come along to things because they recognise that it is not just a ‘green’ NGO issue” (Interview 23, 2015, unpublished). Looking at WWF and Coca-Cola as an example, the organisations work together in many locations around the world, and it is evident that across different locales, the collaboration with Coca-Cola opens doors for WWF: [Companies] bring convening power. Someone at WWF said it really well. He said that they had been working on Lake Victoria for a long time and they couldn’t get the local governor to realise how important the lake was… And then Coke was in town. And he said, why don’t we go together and talk to the governor? So, they phoned the governor up and said that they wanted to jointly come up. The governor gave them an audience within 3–4 hours, because it was Coke and WWF coming together (Interview 5, 2015, unpublished).

Unlike NGOs, companies have the power not only to engage with governments, but also to engage with ‘the right people’ within those institutions. Having had a conversation with a Minister of Environment in a West African country, one participant recalled his perspective: “to make any change, [you have to] talk to the people who sit at the top end of the table. That’s the Minister of Finance, Minister of Economic Planning, the Vice President…The private sector has a means to engage in that, and take the issues to the top end of the table” (Interview 49, 2016, unpublished). NGOs’ relative lack of access stems from that they advocate what is perceived as ‘green NGO issues.’ In comparison, companies hold financial leverage because the issues that they bring tend to relate to economic growth, exports, and jobs. Thus, for NGOs, collaborating with companies provides an opportunity to open new pathways to conversations with governments, and to ‘reframe’ the issues that they work for into terms that could incentivise governments to act. This point

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was highlighted by a representative from an NGO who argued: “[companies] bring an urgency to the issue that we can’t bring. I mean, I can’t motivate governments because of fish. It’s very hard, right? But I can motivate them if I say: ‘hey, all these companies are going to pull out [of the country] because there is no water’” (Interview 12, 2015, unpublished). Thus, one of the key reasons for NGOs to engage with companies is to expand their political leverage and because they “see that there is an opportunity to use the…financial leverage of companies to basically make the [water management] system work better” (Interview 31, 2016, unpublished).

3.3  The Evolution of CWS: The Role of NGOs Although CWS has become an integral part of many companies’ strategies and activities, the evolution of CWS “as a concept has largely been driven by NGOs, rather than by the companies. There is a certain amount of opportunism [amongst NGOs]…They see that there is an opportunity, with the risks that the companies face…to kick-start greater global awareness on water issues” (Interview 31, 2016, unpublished). Here, we look more closely at the evolution of CWS as a concept, as developed and promoted by NGOs.

3.3.1  The Water Footprint The development of the concept of the ‘water footprint’ was a first, but crucial, stage in developing CWS. Its contribution has been threefold. Firstly, it served as a risk identification tool, generating awareness of where water risks could be located. Secondly, it was a useful tool for illustrating that these risks could be ‘hidden’ beyond production sites in companies’ value chains. Finally, it allowed companies to quantify their water use, which “is really useful for a sustainability manager, because all of a sudden, they can put numbers on things…[and] get action within the business and say that this is a bottom line issue” (Interview 31, 2016, unpublished). The water footprint has its roots in Tony Allan’s seminal work on virtual water (see Allan 1998, 2011; Allan et al. 2003), a term initially applied to conceptualise the amount of water used during the production of agricultural goods, thus becoming embodied in the product. Following from this, Allan argued that water-scarce nations should import food products that are water intensive in their production as a means to alleviate national water scarcity. Others have taken up this thinking, and suggested that to trade virtual water could improve global water use efficiency, and ease environmental constraints by utilising the best suited production sites (Yang et  al. 2006; Hoekstra and Hung 2005; Zimmer and Renault 2003). By achieving higher efficiency, and reducing the amount of water needed for production, it is

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s­ uggested that water can be ‘saved’ on a global scale5 (Seekell 2011; Yang et al. 2006). Although a compelling argument, additional pressures nevertheless prevent this from happening: for example, the need for dry developing countries to earn foreign exchange through exports.6 For companies, the idea of virtual water became relevant when it was translated into the water footprint. Coined in the early 2000s, the water footprint is associated with the work of Hoekstra at UNESCO-IHE. In simple terms, the water footprint of a particular good can be defined as its cumulative virtual water content (Hoekstra 2003). In 2005, WWF picked up the idea with the purpose of “prompt[ing] a new kind of discussion with companies and governments  – one that raised essential questions about vulnerability to water risk” (WWF 2014: 62). WWF pioneered their water footprint work through a collaborative study with SAB Miller, published in 2009. Thinking back to this exercise, an informant who was part of it noted: “I think it was a really good awareness driving tool” (Interview 24, 2016, unpublished). The study calculated the water footprints of SAB Miller’s beer value chain in South Africa and the Czech Republic, and illustrated that, although the footprints were very similar in terms of percentage split between different users in the value chains, the footprint per litre of beer in terms of actual water quantity was more than three times higher in South Africa than in the Czech Republic. The different footprints were a result of different levels of evapotranspiration, and a larger volume of agricultural raw materials imported and used by SAB Miller’s South African business, coming from countries where crop water consumption was higher (WWF 2014). To make the Water Footprint useful for the business community, however, it is important to contextualise the water use. In other words, to look at “what proportion that water use represents of the total resource in that area, and whether this proportion of water use presents risks to the environment, to communities, or to business, now or in the future” (ibid: 01). Thus, whilst it was an excellent starting point, there was a growing realisation that solely estimating footprints was not enough.

3.3.2  Shared Risk Around 2009, CWS took a great leap forward in its conceptual development as WWF, amongst others, started promoting the concept of ‘shared risk.’ The concept’s primary purpose is to bring various actors together, as it denotes how governments, companies, and communities each experience risks as a result of inadequate water management and governance. The idea is that collaborative action to mitigate  See Chap. 7 for a critical discussion on ‘savings’ and ‘efficiency’.  In fact, water often seems to flow in the opposite direction to that which the logic of water savings through ‘virtual water’ trade would suggest. For example, China has a virtual flow of water from its dry north to its wetter south as a result of growing wheat, much of which is then consumed in the wetter south. And to offset the decline in water resources in the north that results from this, they have a south-north transfer of physical water (Guan and Hubacek 2007). 5 6

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these ‘shared risks’ is required (Baleta and Winter 2017; CEO Water Mandate 2010; Orr et al. 2009). The concept has been a very powerful tool, serving as a ‘unifying idea’: “it is a concept that people understand in the business sector and increasingly, it is something that draws in different people with different perspectives. People talk about risks to communities, risk to business, risk to ecosystems” (Interview 45, 2016, unpublished). The idea has encouraged companies to engage in ‘Collective Action’ with NGOs, governments or other companies (Chap. 6) (CEO Water Mandate and WWF 2014). Preluding a discussion that will be covered in more detail in Chap. 6, an informant from an NGO identified the links between shared risk and collective action: I think [collective action] is inevitable…Because you can be the most efficient in a watershed, but it doesn’t matter if there is no sewage treatment upstream…So I think, a bit like democracy, it is the kind of least worst option. We’ve got to come together. It is much more difficult to do things in partnerships, but I don’t think there are really any alternatives because it is that shared water risk (Interview 46, 2016, unpublished).

When bringing actors together over a notion of ‘shared risk,’ the focus of stewardship naturally expanded, since the attention turned to ‘risks’ as experienced by a wider range of stakeholders. Hepworth and Orr (2013: 227) argue that the concept enabled “a giant leap in shifting attention away from only [companies] internal efficiencies, to explore and act on water issues ‘outside the fenceline’.” As explained by Hepworth (2012: 544), the term ‘fenceline’ is a phrase used by those engaged in CWS to “denote the metaphorical and literal borders between activities or issues which concern internal business operations (within the fenceline) and the external environment, basin or political context within which a business operates (beyond the fenceline).” The need for engaging beyond the fenceline stems predominantly from the recognition that the water risks faced by a company are primarily external, and efforts to improve operational efficiency within production sites will not be enough to mitigate these risks. As a result, similar to those who advocate Integrated Water Resources Management, the ‘shared risk’ approach suggests that it is crucial to adopt a broader watershed approach (Cramwinckel and Lindström 2013; Orr and Pegram 2014). However, criticism against the concept is emerging, and many of its former advocates have turned to alternative terminology. One criticism concerns doubt about whether the concept is practically applicable and can actually drive change on the ground. Hepworth (CEO Water Mandate 2013: 14) has argued that while “the concept of shared risk was sound…implementation poses practical concerns and challenges”. A representative from an international organisation articulated a second concern: Shared risk is a nomenclature that we don’t use anymore because at the end of the day, the way that acute water problems manifest themselves in terms of risk for different stakeholders is different, and therefore, I don’t think we really do have shared risk. We share water challenges, and they manifest in risk differently across the stakeholders (Interview 28, 2016, unpublished).

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Evaluating the development of the concept, it is possible to see how the two forms of criticism have generated two parallel streams of concept evolution. The first reconceptualises ‘shared risk’ as ‘shared challenges’. Starting from the recognition that not all stakeholders experience risks equally, those who promote ‘shared challenges’ also recognise that the willingness, resources, or approach to deal with them might vary radically. Promoters note that these are deeply political issues, which are avoided when speaking only of ‘shared risks.’ The second stream is a shift from ‘shared risk’ to ‘shared value at risk.’

3.3.3  Shared Value at Risk Around 2014, the CWS concept moved forward again as WWF, amongst others, started to promote a rhetorical alteration of the concept of ‘shared risk’ to one of ‘shared value at risk’. Most companies live by the mantra that they ‘can only manage what they measure’. Thus, to attract more companies to engage in CWS, the shared risk concept was reframed by introducing monetary valuation: If we go to one of our plant managers and say: ‘You’re in a water stressed area’, they say: ‘So what? How is that impacting me?’ Unless we can give him a language or figure that he understands…in this case, we say: ‘the severity is this amount of dollars, but what that dollar means is loss of production volume.’ Unless we tell him: ‘you’re likely to lose 20% of your production volume’, he is going to say: ‘why should I care?’ (Interview 24, 2016, unpublished).

There are also, however, different interpretations of the meaning of ‘value at risk’. There is a more generic meaning where the ‘value’ refers to a business operation that is at risk due to water scarcity, for example. A different understanding is to approach the concept as a specific finance-based quantitative methodology. This methodology, sometimes expressed as VaR – Value at Risk – seeks to estimate the likelihood of financial loss over a particular period of time (Morgan and Orr 2015). However, although some companies “try to as much as possible to put a dollar value on water [risk] exposure” (Interview 24, 2016, unpublished), some water risks are easier to quantify than others. Estimating exposure to physical water risk is relatively straightforward since “any company can be positioned on a matrix of risk exposure at watershed level” (Interview 30, 2016, unpublished). To quantify risks, most companies follow the following procedure: We look at the risk, and then we look at the likelihood of that risk to occur…We then take that likelihood and look at the severity side and say: if this risk does occur, what is the likely impact on our plant? … So, we’re looking at what the balance is, and where that is going to hit. And that way, we work our way out to a dollar figure. We plot out how likely it is that [the risk] is going to happen, and then if it does happen, [we estimate] how it is going to impact us financially. (Interview 24, 2016, unpublished).

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However, other types of risks – particularly reputational risk – are much harder to quantify: Reputational risk, we wouldn’t put a dollar value on at all. I don’t think it’s possible to be honest. So, for reputational risk we do a qualitative measurement. We look at a number of things. First of all, we look at if there is water stress in the area, and then we look at the extent of the community growth. We look at issues like access to WASH. We also look at media coverage, so if the media is vocal about the issue, if it is something that has been spoken about a lot. And then we pull these things together. If you live in a water stressed area, where water is being discussed extensively in the media, and the community doesn’t have good access to WASH, you could see that the likelihood of something happening in that area is quite big. We then add our own plant to it and see how big of a water user our facility is in the region. If we are a big water consumer in the scenario I just described, then you can imagine that… the potential for reputational issues is very high…If you’re a very small water user, it could be very different, but, then again, not always. It sometimes could be based on how visible you are in the community. You could be a very small water user, but… if you’re very visible in the community as a water user, you might attract social conflict or reputation damage compared to a large water user that is relatively unknown, or out of communities’ line of site (ibid).

As these quotes from the corporate representative demonstrate, connecting value to risks has been a successful tool for NGOs to use because it contextualises water risk in a language that companies can relate to, and incentivises their engagement.

3.4  Discourse Institutionalisation of CWS The case has been presented here that the actors involved in CWS constitute a ‘Discourse Coalition’ (Chap. 2) because they assemble around a common idea: that corporations can – and should – be part of solving the water crisis. And although this chapter has demonstrated that individual actors’ understandings of what the ‘water crisis’ is differ radically (implications of this are further discussed in Chap. 7), they are united around a shared storyline of ‘CWS’ (Fig. 2.1). As Hajer (1993: 46) argues, a discourse coalition has succeeded in establishing discursive order if the storyline achieves ‘discourse institutionalisation,’ which is the result of the storyline “solidif[ing] into an institution, sometimes as organizational practices, sometimes as traditional ways of reasoning.” Since CWS started to emerge, a range of industry associations, public-private coalitions, and sector-­ specific roundtables have appeared in conjunction, solidifying the storyline (see, for example, Box 3.1). Their stated purpose is primarily to advance best stewardship practice by establishing collaborations, enabling benchmarking, and encouraging knowledge exchange amongst its members (Table 3.1). The formation of these institutions is important. As noted above, their formation is an indication that CWS has achieved what Hajer (1993) referred to as ‘discourse institutionalisation’, since each institution serves as a platform where the actors involved can develop, solidify, and disseminate the idea of CWS. Here, it is valuable also to link back to Schmidt’s (2010) argument that institutions are not only external

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Box 3.1 Institutionalising CWS – The Case of the CEO Water Mandate In 1999, Kofi Annan, former Secretary General of the UN, stood up at the WEF’s annual meeting and made a speech that would change the global development landscape: This year, I want to challenge you to join me in taking our relationship to a still higher level. I propose that you, the business leaders gathered in Davos, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market (UN 1999).

The speech marked the birth of the United Nations Global Compact, which was formally launched in 2000. As of 2018, the Compact has 9500+ signatories, operating in over 160 countries, making it the largest corporate initiative worldwide (UNGC 2018a). Its mission is to advance 10 universal sustainability principles (pertaining to human rights, labour, and the environment), and support wider UN Goals, such as the SDGs (UNGC 2018b). Since its inception, and particularly under the leadership of UN Secretary-General Ban Ki-moon, the Compact has spawned a number of issue platforms, including the CEO Water Mandate (UNGC 2015). Formed in 2007 through collaborative efforts between the Compact, the Government of Sweden, and a group of large companies such as Coca-Cola, the Mandate seeks to address the global water crisis by mobilising businesses to engage in CWS (CEO Water Mandate 2007). The Mandate also serves as a formal channel for UN-business relations regarding water issues, a knowledge sharing platform for businesses to exchange experiences, and a platform to advance agendas through guidelines and studies (CEO Water Mandate 2018). The formation of the Mandate marks an important milestone, since it was the first global platform devoted to advancing CWS.

Table 3.1  Organisations, partnerships and industry associations of CWS Organisation CEO Water Mandate

World Business Council for Sustainable Development (WBCSD)

Members The Pacific Institute; endorsing companies; UN agencies, and NGO partners

Purpose To mobilise business leaders to advance water stewardship by offering a platform to share best and emerging practices and to forge multi-­ stakeholder partnerships to address challenges related to water scarcity, water quality, water governance, and access to water and sanitation. Leadership and Working To provide a platform for member companies to make positive progress on sustainable water Group companies; business councils; UN, management, influence regulatory frameworks governing water management and allocation, NGO and research and enhance recognition of global businesses as institute partners effective water management solution providers. (continued)

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Table 3.1 (continued) Organisation World Economic Forum (WEF) Water Initiative

2030 Water Resources Group (2030 WRG)

Members WEF constituent companies; governmental organisations, development and multilateral agencies Multilateral agencies, companies, civil society organisations/NGOs

International Water Stewardship Programme (IWaSP)

GIZ, DFID, national ministries, companies, NGOs

Alliance for Water Stewardship (AWS)

Companies, NGOs, public sector agencies, and academic institutes

European Water Stewardship (EWS)

CDP Water Programme

Companies, consulting and certification companies, NGOs, research institutes CDP; investors, consulting companies

Water Footprint Network (WFN)

Research institutes, NGOs, companies

Beverage Industry Environmental Roundtable (BIER)

Beverage companies

Sustainable Agriculture Initiative Platform (SAI)

Food, beverage and agribusiness companies

Purpose To support the High-Level Panel (HLP) on Water which was formed in 2016 by leveraging the Forum’s platforms and networks. Specifically, the Forum will help to engage leading actors across sectors, build momentum, and trigger practical public-private action. To provide a platform that brings together public, private, and civil society stakeholders to have open discussions about water management, and together develop concrete proposals that can help improve the management of water resources in the country. To work alongside public bodies, enterprises, and civil society, the IWaSP identifies measures aimed at reducing shared water risks. The programme initiates and sets up partnerships between different types of stakeholders. AWS is a multi-stakeholder organisation dedicated to enhancing water stewardship capacity, and guiding, incentivising, and differentiating responsible water use through, for example, a standard and verification system. EWS functions as the exclusive representative of AWS, responsible for Water Stewardship in Europe, and aligning it with the European Water Framework. CDP’s water program motivates companies to disclose and reduce their environmental impacts by using the power of investors and customers. To provide science-based, practical solutions, and strategic insights that empower companies, governments, individuals, and small-scale producers to transform the way we use and share freshwater To influence global standards on environmental sustainability aspects most relevant to the sector, affect change both up and down the value chain, and share best practices that raise the bar for environmental performance of the industry. To facilitate sharing, at precompetitive level, of knowledge and best practices to support the development and implementation of sustainable agriculture practices involving stakeholders throughout the food value chain. (continued)

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Table 3.1 (continued) Organisation International Council on Mining and Metals (ICMM) Bonsucro

Better Cotton Initiative (BCI)

Members Mining and Metals companies, mining associations, commodity associations Companies, and other organisations working with sugarcane Companies, and other organisations working with cotton

Purpose To strengthen the social and environmental performance of the mining and metals industry and build recognition of its contribution to local communities and society at large. To ensure that responsible sugarcane production creates lasting value for the people, communities, businesses, economies, and eco-systems in all cane-growing origins. To make global cotton production better for the people who produce it, better for the environment it grows in, and better for the sector’s future. BCI aims to transform cotton production worldwide by developing Better Cotton as a sustainable mainstream commodity.

to agents serving as constraining mechanisms, but are also internal structures, created and changed by those actors. This means that these institutions will not remain static, but their aims and objectives will change in accordance with how the actors involved allow the idea of CWS to evolve. Moreover, these institutions further the idea of CWS by providing the actors with legitimate platforms through which to disseminate their ideas (Chap. 7). Furthermore, they are part of the GWG network, allowing them to influence the norms and incentives that develop. Recalling that Pahl-Wostl et al. (2008: 422) define GWG as “the development and implementation of norms, principles, rules, incentives, informative tools, and infrastructure to promote a change in the behavior of actors at the global level in the area of water governance,” these institutions are part of the ‘infrastructure’ that can promote change. What this ‘change’ is, and how CWS affects GWG, will be discussed in Chap. 7.

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SDC. (2018). Statistical tables. [online] Available at https://www.eda.admin.ch/deza/en/home/ activities-projects/figures-statistics/statistische-tabellen.html. Accessed 18 Oct 2018. Seekell, D.  A. (2011). Does the global trade of virtual water reduce inequality in freshwater resource allocation? Society and Natural Resources, 24, 1205–1211. SIDA. (2016). Deductions for in-country refugee costs lead to redistribution of Swedish foreign aid. [online] Available at http://www.sida.se/English/press/current-topics-archive/2016/deductions-for-in-country-refugee-costs-lead-to-redistribution-of-swedish-foreign-aid/. Accessed 18 Oct 2018. SIDA. (2018). Sveriges bistånd till Världen via alla organisationer inom alla sektorer. [online] Available at http://openaid.se. Accessed 18 Oct 2018. Sojamo, S. (2015). Unlocking the “Prisoner’s Dilemma” of corporate water stewardship in South Africa – Exploring corporate power and legitimacy of engagement in water management and governance. Sustainability, 7(6), 6893–6918. Tran, M. (2012). Mark Malloch-Brown: Developing the MDGs was a bit like nuclear fusion. The Guardian [online]. Available at https://www.theguardian.com/global-development/2012/ nov/16/mark-malloch-brown-mdgs-nuclear. Accessed 16 Sept 2016. UN. (1999). Address of secretary-general Kofi Annan to the world economic forum in Davos, Switzerland, February 1, 1999. Press Release SG/SM/6881. [online] Available at http://www. un.org/press/en/1999/19990201.sgsm6881.html. Accessed 18 Oct 2018. UN. (2018). Sustainable development knowledge platform. [online] Available at https://sustainabledevelopment.un.org/index.html. Accessed 18 Oct 2018. UNGC. (2015). Impact: Transforming business, changing the world. New York: DNV GLAS. UNGC. (2018a). What is UN global compact? [online] Available at https://www.unglobalcompact. org/what-is-gc. Accessed 18 Oct 2018. UNGC. (2018b). About the UN global compact. [online] Available at https://www.unglobalcompact.org/about. Accessed 18 Oct 2018. UNIDO & UNGC. (2014). Engaging with the private sector in the post-2015 agenda. Consolidated report on 2014 consultations. UN-Water. (2010). Climate change adaptation: The pivotal role of water. Geneva: UN-Water. Walton, B.. (2016). Conga Mine in Peru halted by water concerns, civic opposition. Circle of blue [online] Available at http://www.circleofblue.org/2016/south-america/conga-mine-peruhalted-water-concerns-civic-opposition/. Accessed 12 Sept 2016. WaterAid. (2018). Why WaterAid? [online] Available at https://www.wateraid.org/uk/why-wateraid. Accessed 18 Oct 2018. WEF. (2011). Water security: The water-food-energy-climate nexus. Island Press [eBook]. WEF. (2015). Global risks 2015. Geneva: World Economic Forum. WHO/UNICEF JMP. (2015). Key facts from JMP 2015 report. [online] Available at http://www. who.int/water_sanitation_health/publications/JMP-2015-keyfacts-en-rev.pdf?ua=1. Accessed 18 Oct 2018. WHO/UNICEF JMP. (2018a). Drinking water. [online] Available at https://washdata.org/monitoring/drinking-water. Accessed 18 Oct 2018. WHO/UNICEF JMP. (2018b). Sanitation. [online] Available at https://washdata.org/monitoring/ sanitation. Accessed 18 Oct 2018. WWF. (2014). The imported risk: Germany’s water risks in times of globalisation. Berlin: WWF Germany. WWF. (2018). Freshwater. [online] Available at http://wwf.panda.org/what_we_do/how_we_ work/our_global_goals/water/index.cfm. Accessed 3 July 2017. Yang, H., Wang, L., Abbaspour, K. C., & Zehnder, A. J. B. (2006). Virtual water trade: an assessment of water use efficiency in the international food trade. Hydrology and Earth System Sciences, 10(3), 443–454. Zimmer, D., & Renault, D. (2003). Virtual water in food production and global trade: Review of methodological issues and preliminary results. In A. Y. Hoekstra (Ed.), Virtual water trade: Proceedings of the international expert meeting on virtual water trade (Value of water research report series no. 12) (pp. 93–109). Delft: UNESCO-IHE.

Part II

Involvement

Chapter 4

Companies and Water Resources Management

We are now at this ‘tipping-point-moment’ where…if we don’t invest in water…everything we stand for as a company is at risk. Interview 43, 2016, unpublished

Part I set out why companies are interested in engaging in CWS. The following two chapters examines how companies transform this incentive into practice. This first chapter examines how companies implement CWS in the context of water resources management, whilst Chap. 5 turns its focus to provision of WASH. Water resources management denotes a wide set of activities including planning, developing, distributing, and managing water resources. The aim of this chapter is to provide a general overview of the stewardship activities companies undertake in this context, and examine critically how Food and Beverage, Textile and Apparel, and Mining and Metals companies approach CWS. Each sector’s water use, water risk, and subsequent CWS response will be analysed. Comparing and contrasting the different sectors’ engagement with CWS, the findings will serve to provide a more nuanced answer to how and why companies implement particular strategies.

4.1  Guiding Stewardship Activities CWS can be broadly categorised as a progression of corporate activities: from internal measures to catchment-wide collective action initiatives (Fig. 4.1). To help companies engage productively in CWS, several organisations provide guidance, such as the WWF, the World Business Council for Sustainable Development (WBCSD), and the Alliance for Water Stewardship (AWS). Most companies that work actively to address water issues turn to one – or several – of these organisations for guidance.

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_4

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Fig. 4.1  Corporate water stewardship activities

While their guidance is generally rather similar, and corresponds roughly to the activities as set out in Fig. 4.1, there are also some significant differences between the approaches of the various organisations. Most notably, the organisations differ in how they advise companies to implement stewardship. WWF conceptualise stewardship as a ‘journey’ where steps follow on from one another: “a progression of increased improvement of water use and a reduction in the water-related impacts of internal and value chain operations” (WWF 2013: 1). In contrast, the WBCSD do not see these activities as a natural progression. Instead, they see that different activities are suitable for different contexts. For AWS, CWS is an iterative process. Rather than a number of steps that follows from one another, or a set of activities, AWS “encourage continuous improvement…[through] adaptive, iterative and non-sequential use of the steps and criteria” (AWS 2014: 8). The three organisations also differ in the importance they place on companies’ engagement in ‘external’ activities. For WWF, such activities are critical. In their view, “this is where a company shifts from management to stewardship” (WWF 2013: 16), holding that if a company adopts only ‘internal’ actions, this is not CWS. Following from this, WWF also emphasise the importance for companies of engaging with policy-makers. This is rational, recalling that WWF use CWS as a way to leverage political influence (Sect. 3.2.3). For the WBCSD, collective action (referred to as ‘Cooperation’) is only a goal under certain conditions (Kölbel et al. 2016: 4, unpublished). For AWS, an organisation set up specifically to score companies performance at site-level, the primary focus is on ‘internal’ actions (AWS 2018). Nevertheless, AWS recognises that if the company is unable to address the risk alone, it is also necessary to work beyond the site, and engage with other stakeholders.

4.2  The Food and Beverage Sector Companies within the food and beverage industry were among the earliest adopters of CWS; indeed, they have “traditionally been at the face of this, because [their water use] is more easily visible [in comparison to other sectors]” (Interview 37, 2016, unpublished). Food and beverage companies rely on agricultural products as their primary input and they have relatively similar value chains; consequently, they

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Fig. 4.2  Food and beverage value chain

face similar water challenges, which is why discussion of these sectors is grouped together. Coca-Cola, PepsiCo, SAB Miller, Diageo, and Nestlé are used as examples here.

4.2.1  Water Use A standard value chain for a food or beverage company is illustrated in Fig. 4.2. Moving from left to right, it identifies key activities undertaken at each step. For food and beverage companies, the most water intensive activity is the production of agricultural inputs.1 For example, Coca-Cola estimates that 99% of the water it uses goes into the production of agricultural raw materials and packaging, while only 1% of the water is bottled in the beverage itself (Elmore 2015; Coca-­ Cola and TNC 2010). SAB Miller (2013) similarly calculates that 85% of its water usage lies in its agricultural value chain. However, not all agriculture is water intensive. Some crops do not require irrigation, but are grown through rainfed cultivation. Therefore: [Your engagement as a company in CWS] depends on what crops you’re procuring. Some crops are rainfed, some are irrigated, some are water intensive, some are not water intensive. A mix of geographical footprint and commodity footprint will determine whether or not…you’re going to prioritise [CWS] (Interview 21, 2015, unpublished).

For brewing companies like SAB Miller and Diageo, the most important crops include barley, hops, maize, and wheat, and depending on where these crops are grown, their irrigation demand could be high (SAB Miller 2013). For soft-drink manufacturers like Coca-Cola and PepsiCo, the most important agricultural ingredient is sugar, extracted from sugar cane and sugar beet. This puts high pressure on water use since sugarcane is a particularly water intensive crop, with approximately 90% of global sugarcane production being irrigated (WWF 2014).

1  Globally, it is estimated that 70% of all water use, including both surface and groundwater, is for agriculture. However, in developing countries, the proportion may be up to 90% (WBCSD 2009). Agriculture is also the main cause of water pollution in many countries due, for example, to discharge of fertilisers (WWF 2014).

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4.2.2  Water Risk Because food and beverage companies rely on crops, which in turn depend on a reliable supply of water to be grown, the companies are exposed to physical water risks if the crops are grown in areas where good quality water is scarce. Scarcity could affect the ability to irrigate crops, which in turn could impact the availability of necessary ingredients, as well as raw material prices. Having production facilities in water scarce areas also carries a regulatory risk, particularly if there is competition between water users, since the companies risk having their water user rights withdrawn (WWF 2014). Many food and beverage companies also have a high reputational risk because of their consumer-facing nature. However, some companies are more vulnerable than others. For some, like Coca-Cola, PepsiCo, and Nestlé, the value of the brand lies with the parent company, despite them producing a wide range of products (for example, Coca-Cola, Pepsi, and Nescafe). Others – like SAB Miller and Diageo – are more known by the individual brands they embody (for example, Guinness and Peroni). This results in very different exposure to reputational risk on a global scale, with the former group being much more vulnerable than the latter since the brand value is centralised (Sojamo and Larson 2012).

4.2.3  Stewardship Actions For many of the food and beverage companies examined, CWS engagement “starts with having a very good knowledge of the risks and impact of our water management and building knowledge through assessments and hydrological reports” (Interview 47, 2016, unpublished). Some companies have developed very advanced methodologies to gather information. Coca-Cola (Box 4.1), for example, has developed a system of ‘Source Vulnerability Assessments’ (SVA) that every single one of its plants has to undertake: It is about looking at the local water source…and where it comes from. It is looking at who we rely on to ensure its safety and security. It is looking a bit further upstream to see where the potential contaminants are. And then as a result of our local SVAs, we work together with local stakeholders to develop what is known as Source Water Protection Plans, which outline the actions we need to take to protect the water (Interview 32, 2016, unpublished).

SAB Miller have adopted Coca-Cola’s methodology, but taken it a step further. Conducting similar reviews, they take the result of the SVA and “feed it into a water risk toolkit…[that] sorts the data from the SVA and categorises [the company’s] water risks” (Interview 24, 2016, unpublished).

4.2 The Food and Beverage Sector

Box 4.1 Coca-Cola and corporate water stewardship Coca-Cola is produced and distributed through a complex system involving many individual businesses. Since its foundation in 1886, the company manufactures the concentrated syrup from raw materials like sugar, corn, and coffee. It is then distributed and sold to over 250 bottling partners and over 900 bottling plants worldwide (Coca-Cola 2018a). The bottlers mix the syrup with carbonated water to manufacture the final branded beverage. They then package, market, and distribute it to more than 24 million retailers (Coca-Cola 2018b) who sell the final beverage to consumers. Although a global company “all of the products around the world are made locally, consumed locally, often using local products. So although it is a big global brand, actually, genuinely, it is a very local business” (Interview 32, 2016, unpublished). This structure means that the company depends on communities where the bottlers are located to provide the resources necessary for beverage production. Above all else, Coca-Cola relies on these communities to provide freshwater. This structure also means that the company does not operate through a system of export, but manufactured beverages are sold locally. As explained by the former director of Coca-Cola’s Global Water Stewardship programme: “we’re not making a product in one country and shipping it great distances across…the world. There are minor exceptions, but if you look at particularly the developing world, it is very local production and local distribution” (Koch 2015). This means that in addition to the local community providing resources to produce the beverage, they also provide the company’s consumer base. The company’s nature means that it has three drivers to engage in CWS.  Firstly, as the world’s largest beverage company, selling 1.9 billion ‘servings’ to consumers in more than 200 countries each day (Coca-Cola 2018c), its water requirement is vast. In 2012, the company’s water use across its system was equivalent to the estimated annual needs of over 2bn people (Elmore 2015). Secondly, because of its embeddedness in local contexts using local resources, it has a vested interest in local water resources. This dependence means that when local water resources become scarce, it directly affects the business, and its water engagement is accordingly often a direct response to mitigating a risk. Thirdly, the value of Coca-Cola (a producer of low-value consumer goods) lies not in its products, but in its brand; the company is consequently highly exposed to reputational risk. In 2015, the brand ‘Coca-Cola’ was ranked as the world’s third most valuable brand, valued to $78.4bn (Coca-­ Cola 2018b). And, as expressed by the former CEO of The Coca-Cola Company, Neville Isdell: “While the formula was under lock and key, what it stood for was locked into the minds of consumers. The brand was bigger than the company” (Isdell and Beasley 2011: 93). Consequently, to uphold the value of the company, Coca-Cola must (at least appear to) do good in the world.

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When acting upon the information gathered, many companies still focus on taking action within their own production sites. In particular, they emphasise improving internal water use efficiency, measured in terms of ‘water use ratios’ – enabling them to speak of ‘efficiency savings’ in terms of litres of water used per litre of product. The companies that engage in CWS have achieved notable improvements in their water-use efficiency. Nestlé (2015: 144) reports: “Today, we withdraw 40% less water per tonne of product at our factories than we did 10 years ago.” Similarly, Coca-Cola reports that its water efficiency has improved for 13 consecutive years. However, as will be discussed in Chap. 7, it is unclear if these actions have resulted in absolute water-use reductions. All companies included in this study do, however, engage beyond their own sites in collective action initiatives. As noted by a corporate representative, they do so because “there is no reason why we should continue to invest resources into minimising the water use at the factory, if outside, our neighbours are just sucking up water like crazy from the same aquifer” (Interview 47, 2016, unpublished). Most companies undertake collective action primarily in areas that affect their suppliers. For example, Coca-Cola Enterprises work with WWF-UK to develop a catchment plan for the River Nar in East Anglia. Although the company do not extract water from this river directly, it is critical for the growth of sugar beet in East Anglia (upon which Coca-Cola Enterprises depend), and therefore, to engage in this project to restore river flow “makes complete business sense” (Interview 32, 2016, unpublished). Much of the production of global agricultural commodities is, however, beyond the control of individual companies. Thus, an important form of collective action for these companies is to engage in sector-wide initiatives that seek to influence supply chains. One example is the Sustainable Agriculture Initiative (SAI), created by Nestlé and others, which works towards expanding sustainable agricultural practices worldwide to ensure “a constant, increasing and safe supply of agricultural raw materials” (SAI 2018). Another is BonSucro, which seeks to make global sugarcane production more sustainable. For a company to engage in these initiatives is rational because: We can influence our suppliers bilaterally, but it is almost always done in concert with multilateral efforts. Let’s take sugarcane as an example. Everyone buys from the same sugarcane supplier. You really have to change the global industry to change what you end up buying (Interview 9, 2015, unpublished).

Although it is questionable whether it constitutes CWS – based on the discussion in Chap. 2, it might more accurately be defined as Corporate Social Responsibility – many food and beverage companies also have large ‘consumer engagement’ elements in their CWS approach. This is a result of the high reputational risk that most of these companies face, and the consequent vulnerability of their brands. One such engagement is what Coca-Cola and PepsiCo call ‘replenishment:’ “to safely return to communities and nature an amount of water equal to what we use in our finished

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beverages” (Coca Cola 2018d).2 Coca-Cola and PepsiCo portray such initiatives as part of their work to improve their system’s overall water-use efficiency rather than ‘brand building’, but others are more sceptical: “[t]he beverage guys still play around with things like ‘replenishment’ – things that are marketing schemes that have nothing to do with anything!” (Interview 12, 2015, unpublished). The food and beverage companies examined for this study are also active in political engagement, trying to influence governance at the highest level. A number of the companies are members of the 2030 Water Resources Group (WRG), which they use as their “main thrust” to influence governance (Interview 9, 2015, unpublished). The 2030 WRG will be discussed further in Chapters 6 and 7, but in essence, its aim is to bring transformative change to water resources planning by convening national multi-stakeholder platforms and facilitating discussion amongst key stakeholders. In addition to influencing policy through such groups, individual companies see a more pressing need to engage with governments; as one corporate representative put it: “given that the level of water stress that we have in our business is increasing, we need to do more on that” (Interview 21, 2015, unpublished). Particularly noteworthy is that many companies seek to raise the water issue “not only in normal government departments of water or environment, but also to the Ministry of Finance, or Treasury, or Tax, or Prime Ministry’s office…raising a different kind of agenda” (Ibid). This is significant because ‘the agenda’ that companies help to set in this way serves to reframe the water issue from an environmental or social risk (as it has traditionally been understood), to an economic risk. Also noteworthy is that NGOs encourage this type of corporate engagement, which they perceive be a channel through which they can reach decision-makers that they might not otherwise engage with (see Sect. 3.2.3).

4.3  The Textile and Apparel Sector Closely following the food and beverage sector in terms of engaging in CWS initiatives is the textile and apparel sector. This sector experiences similar challenges to those faced by the food and beverage sector since it also relies on agricultural inputs. However, further down the value chain, the sectors diverge significantly, and the textile and apparel sector experiences a number of unique water challenges. In the following discussion, H&M and Levi Strauss are used as examples.

2  This is done, for example, through Coca-Cola’s Replenish Africa Initiative (RAIN). See Sect. 5.4.2 for more details.

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Fig. 4.3  Textile and apparel value chain

4.3.1  Water Use The value chain of garment production is complex, encompassing numerous tiers of suppliers. Although some companies may have simple value chains where one single factory covers the entire manufacturing process, for larger companies – particularly the large brands – this is rare. More commonly, the manufacturing is set up as a ‘buyer-driven value chain,’ where “large retailers, marketers and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in developing countries” (Gereffi and Memedovic 2003: 3). Thus, clothing companies are often in direct contact only with their first and second tier suppliers, leaving the rest of the value chain relatively anonymous. Both H&M and Levi Strauss fit into this buyer-driven model, which means that they “design and/or market—but do not make—the branded products they order. They are ‘manufacturers without factories’, with the physical production of goods separated from the design and marketing” (ibid). A standard value chain for a clothing company is illustrated in Fig. 4.3. Water demand is at its highest at the fibre production stage; H&M (2014) estimates that 87% of its water footprint originates here.3 Most water is used to produce natural fibres (for example, cotton, wool, and silk), and although the production of synthetic fibres (for example, polyester, acrylic, and nylon) could offer a less water intensive alternative, these fibres are associated with other environmental risks, like the release of plastic microfibers (Hartline et al. 2016). However, with cotton being the highest user of pesticides globally, it should be noted that its production is also associated with high pollution risks (WWF 2018a). Much water is also used for fibre processing. Encompassing what the industry refers to as the ‘wet processes,’ activities like dyeing, washing, and printing all require large quantities of water (H&M 2008). A significant amount of water is also embedded in product use. H&M (2015a) estimates that the washing of its products constitutes about 8% of the company’s water footprint, whereas Levi Strauss (2011) estimates the figure to be 45%.4 3  On average, it takes about 2700 litres of water to grow the cotton required to make one t-shirt (BCI 2013). 4  Levi Strauss (2015; 2013) reached this number by conducting a ‘Life Cycle analysis’ of a pair of jeans. The study showed that an average pair of jeans consumes roughly 3500 litres of water (of which 1600 litres is used for washing), and that is after only 2 years of use, washing the jeans one time per week. However, this figure should be treated with scepticism. It is unlikely that most

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4.3.2  Water Risk Despite synthetics becoming more common, cotton is still the most widely used fibre in textile production (WWF 2015). Because it is often grown in semi-arid zones,5 the crop is heavily reliant on irrigation (Morrison et al. 2009; Chapagain et al. 2005; Cherrett et al. 2005), which leaves textile companies vulnerable to physical water risk. However, although this segment of the value chain is where textile companies are most exposed to physical risk, it is also the segment where they have the least control. Recalling that textile production operates as a ‘buyer-driven value chain’: “there [are often] at least 15 levels minimum between [the company] and the farmer” (Interview 50, 2016, unpublished). Physical water risk is also present at the fibre processing stage, since the suppliers undertaking the wet processes often are located in water stressed areas in China, Bangladesh, and India. H&M (2015b: 1) estimates that “about two thirds of the 500+ supplier factories that make clothes for H&M, using wet processes, are located in areas experiencing significant water scarcity. And the water scarcity is projected to increase.” However, although measures to mitigate water risks are encouraged, the companies’ capacity to address the issue is limited since they do not undertake these processes themselves, and may not even have direct business relationships with the mills and dye houses involved (H&M 2015a). A key water risk that companies seek to address through supplier engagement is water pollution. WWF (2014: 20) notes, “[t]he textile industry is second only to agriculture as the world’s biggest water polluter. Each year, mills discharge millions of litres of wastewater containing toxic chemicals, such as formaldehyde, chlorine, and heavy metals, like lead and mercury.” Officially, using H&M (2012) as an example, suppliers dealing with wet processes have been legally required since 2006 to treat their wastewater to meet the quality levels defined by the Business for Social Responsibility Water Group, or relevant local laws, depending on which are stricter. Nevertheless, large quantities of pollutants from the textile industry are still released. The industry’s intensive water use, and its close association with water quality problems, means that textile companies face reputational risks. However, this risk is arguably less than the risk facing many other sectors. Firstly, it is smaller because the average consumer does not link water consumption to textiles as directly as they might with other products; consequently, consumer pressure is less forceful. Secondly, despite the sector’s close association with water pollution, the parent company brand name is rarely directly associated with these activities. Thus, it is possible for many companies to argue that they were not directly responsible, or that they were not aware of the pollution happening. Thirdly, in comparison to, for example, the mining sector (see Sect. 4.4), the process of obtaining a licence to operate is very different. Although this is generally a legal licence, many companies people wash their jeans with this frequency and thus, the measure may be artificially magnifying the proportion of water used by consumers (thus reducing the proportion used by the company). 5  The majority of the world’s cotton is produced in India, China, USA, Pakistan, Brazil, and Uzbekistan (WWF 2015).

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have discovered that they also need a social licence from the community, and this is largely dependent on reputation. However, reputation matters at different stages: [A] mining company that has had to fight for the licence to operate in an area, of course they already have…people that are good at building engagement, whether it is good or bad engagement, but at least that’s what they do. Textile companies don’t have that because they don’t need to work on that level. They are more like: here is a supplier, here is a product, I can buy [the product], I buy it. The licence to operate in an area comes much later when you become large enough that somebody starts targeting you and questioning what you’re doing. H&M now represents 1% of the Bangladeshi GNP.  Then you start asking about licence to operate. Should you really be there? Are you doing enough in that country?” (Interview 50, 2016, unpublished).

The apparel industry faces significant water risks. However, because of the buyer-­driven value chain model, much of the risk is beyond the company’s direct control. Nevertheless, these companies do engage in CWS.

4.3.3  Stewardship Actions CWS engagement for apparel and textile companies again begins with knowledge gathering. For H&M, it was initiated around 2007–2008 when it carried out a risk assessment using the WBCSD water risk-mapping tool: H&M mapped all its ‘wet’ suppliers. All the water users in the supply chain. All the dye houses the company had direct business relations with, all washing units, all printing units. H&M mapped that…[and saw]: here are hundreds of factories located in all these places, which are showing red on these maps, identifying that water scarcity is a problem (Interview 50, 2016, unpublished).

When acting upon the information gathered, however, the clothing sector’s approach differs from that of the food and beverage sector. Because such a substantial proportion of the water risk is located in its value chains, it emphasises supplier engagement, rather than ‘internal action’. One particularly important issue for clothing companies to address together with their suppliers is water pollution. For example, working to improve its suppliers’ management of chemicals since 2008, H&M (2015a: 9) proclaims: “[w]e have started to integrate the fabric and yarn mills that are involved in making about 50% of our products into our supplier audit system, aiming for 60% by 2016.” A representative from the sector highlighted how the focus on value chains makes the textile industry distinct from others: When I was sitting in the CEO Water mandate meetings, I used to say that we need to look at water from a supply chain issue, not only an operational issue. I would say that beverage companies, mining companies, they have more operational control over their water users. And much of the thinking, much of the discussion at the CEO Water mandate came from that, or circled around that. So the thinking that you could do water stewardship actions from your own operations, that you could work with communities where you were one of the larger stakeholders yourself. And then go from there. But there were few examples of how you work with say 300 suppliers to help them get collectively engaged wherever they were located (Interview 50, 2016, unpublished).

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Box 4.2 H&M and corporate water stewardship H&M opened its first store in Sweden in 1947, and since then, it has moved into 64 markets. The H&M Group includes eight brands (H&M, COS, Arket, Monki, & Other Stories, Weekday, Cheap Monday, and Afound). Together, the group has about 4800 stores, of which 4353 sell the H&M brand (H&M 2018). Having worked with H&M around sustainable sourcing of raw materials, particularly around the BCI, WWF approached H&M around 2010 with the concept of water stewardship, and the possibility of H&M developing a strategy around WWF’s approach. Thus: WWF was given the task of presenting what they thought H&M could do. They did a full assessment of everything the company was doing related to water and then tried to prioritise and present a strategy. And… that was a water stewardship strategy. And the company decided to go with that (Interview 50, 2016, unpublished).

Examining how H&M has approached CWS is fascinating since it clearly illustrates the influential role that organisations like WWF have in driving CWS, and how they influence businesses to change behaviour in relation to water. Particularly, WWF is interested in cooperating with companies like H&M that have enough leverage to shift an entire sector: [We ask ourselves:] who are the key companies in the key sectors that can help us shape things? So that’s why we work with H&M, because they’re big. And we’ve seen in the last 3 years when we’ve been working with them, how much pull they have in bringing the rest of the market with them on water (Interview 12, 2015, unpublished). However, this is not a one-way street. Collaboration with WWF is also beneficial for H&M since it gives their actions credibility: [WWF] is a strong brand name in terms of communicating something…And also, working with an NGO and saying that this is not something that we came up with together with a consultancy, but this is an independent NGO. A trusted NGO that says: ‘what H&M is doing here is good’. That was important (Interview 50, 2016, unpublished)

Partly in response to the challenge of wider engagement, clothing companies also address water risks through collective action, either through bilateral partnerships (see Box 4.2), or through sector-wide initiatives. One such initiative is the Sweden Textile Water Initiative (STWI), which brings together large Swedish textile-using companies (including H&M), to reduce the environmental impact of supplier factories in Bangladesh, China, Ethiopia, India and Turkey, and improve their resource efficiency (STWI 2018).6 Another initiative is the Better Cotton Initiative  Between 2014 to 2017, the initiative worked with 277 suppliers.

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(BCI), in which organisations like WWF and H&M work to transform cotton production worldwide, and make sustainable cotton a mainstream commodity (BCI 2018). Explaining the importance of BCI and its relevance to H&M, an informant explained: The BCI is a very important initiative for H&M to secure that cotton is grown in a good way for the future. You need to get river basin collective action into that programme in order to grow it from a ‘we’re going to help farmers use less water’ to ‘we’re going to help this whole area manage its water resources’... The issue is so far away from the company so it can’t go there and do something [by itself] (Interview 50, 2016, unpublished).

Clothing companies also have a large ‘consumer engagement’ element to their CWS approach. As noted, a large proportion of textile companies’ water footprint has its origin in consumers washing the garments, which leads H&M (2015a: 10) to state that “[w]e need to inspire our customers to be more conscious in the way they care for their clothes, for example as regards washing.” Clothing companies do this through campaigns and outreach programmes, or through more personal efforts, as when Chip Bergh (CEO of Levi Strauss) sought to set an example by sharing the fact that he had not washed his jeans for more than a year (Levi Strauss 2014).

4.4  The Metals and Mining Sector Water is emerging as a leading sustainability issue for the metals and mining industry; the sector has moved swiftly into water discussions in the last few years, becoming a prominent industry engaging in CWS. The sector operates in a very different manner in comparison to the industries discussed above, and yet, as noted by Anglo American (2010: 5): “[w]ater is emerging as a major issue, and the competition for this scarce resource increases the onus on all of us in the mining industry to proactively look at solutions that enhance water availability.” Anglo American, Barrick Gold, BHP Billiton, and Rio Tinto are used as examples in the following discussion.

4.4.1  Water Use Metals and Mining is one of the most water intensive sectors (CDP 2013). As highlighted by Rio Tinto (2015a: 13) “We need water at each stage of the business – from exploration through to closure.” In contrast to the textile sector, which is characterised by a buyer-driven value chain, the mining sector is a good example of a producer-driven value chain, where much of the decision-making power is situated centrally rather than dispersed through the supply chain. In this model, it is

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typical for capital-intensive industries, such as extractive industries like mining and large manufacturers, to play the central role in coordinating production networks (Gereffi and Memedovic 2003). Exercising their control at the point of production, these manufacturers “are the key economic agents both in terms of their earnings and their ability to exert control over backward linkages with raw material and component suppliers, and forward linkages into distribution and retailing” (ibid: 3). A standard value chain for the metals and mining industry is illustrated in Fig. 4.4. Unlike the sectors discussed above, the mining industry faces a set of very different challenges that are primarily at the operational level. Risks are more centralised than in many other sectors, leading to a different understanding and treatment of water risk. For example, Rio Tinto (2015b: W1.3b) announces that it does not request its suppliers to report on their water use, risks, or management because it was “judged to be unimportant…[because] there is limited water-related risk associated with Rio Tinto’s supply chain.” Before a mining operation can commence, the company has to explore the potential site, and estimate the operation’s feasibility. Most companies undertake both greenfield exploration (to find entirely new resources) and brownfield explorations (to find additional resources near an existing site). After a mining site has been located, it can take years before mining can commence, because in addition to having to negotiate a licence to operate (legal and social), planning could be prolonged depending on “the complexities of the ore body, the physical environment of the site, its location relative to power and energy supplies and the route to market” (ibid). Even though water use is modest at this stage, it is important to mention due to the large financial investments required; for example, in 2015, Anglo American (2018) spent $154 million on exploration work. Once mining starts, water demand rises significantly. In addition to being needed for various mining-related processes, water is also required for facilities, towns, and camps that arise alongside the mining operation (Rio Tinto 2018). Because mining often takes place in remote locations with no previous access to water and sanitation services, it is not unusual for the company to install this as part of its operations, and take on the responsibility to provide water and sanitation (Interview 29, 2016, unpublished). The most water intensive part of the mining value chain, however, is the processing stage where the raw material is transformed and refined into the final product. This involves waste rock removal to enable the recovery of the valuable minerals and metals from the ore. A variety of processes – often water intensive – depending on the type of ore are then applied to concentrate the final product. For example, coal is extracted using gravity, and copper is separated from the ore using

Fig. 4.4  Metals and mining value chain

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a flotation process (Anglo American 2018). The product is then sold to the market, commonly to other industries that use the mineral or metal to produce consumer products.

4.4.2  Water Risk The industry relies on water access: “no water, no mining”  (Interview 33, 2016, unpublished). However, changing water availability and quality is increasingly a challenge for the industry (Deloitte 2015; CDP 2013). A study carried out by Moody’s (2013) estimates7 that 70% of the mines of the ‘Big Six’ global diversified mining companies8 are located in countries where water stress is considered a high (56%) or moderate (14%) risk. Furthermore, 66% of their development projects are located in water-stressed countries. However, given the nature of mining, it can be hard to avoid operating in these ‘high-risk’ areas. WWF (2014: 27) writes: “[m] ining…operations cannot be relocated since they are dependent on the specific location of the ore…which makes the sector susceptible to changing local water availability and quality.” Unlike other industries that could – at least in theory – source their raw materials elsewhere if water becomes scarce,9 a mining company’s activities are fixed. The effects of water challenges are already noticeable. In 2013, 64% of the mining companies disclosing to CDP – including Anglo American, BHP Billiton and Rio Tinto – reported that they had experienced detrimental water-related business impacts (CDP 2013), primarily expressed in radically higher costs. Water has become “a ‘value at risk’ issue” (Interview 33, 2016, unpublished). These rising costs stem from increasing capital expenditure (for example, the need to invest in desalinisation plants), and from rising operating expenditure (for example, rising energy cost of operating desalinisation facilities) (Moody’s 2013). Discussing this trend, an informant noted: “in 2009, the cost of water infrastructure as part of the total mine cost was about 10%. Today, it’s 30%. It’s a huge increase in capital expenditure” (Interview 13, 2015, unpublished). Confirming this, a representative from the sector stated: “capital expenditure associated with water is…rising... So that’s billions of dollars” (Interview 33, 2016, unpublished). According to Global Water Intelligence, mining companies spent $12bn globally on water infrastructure in 2013, which represents a 56% increase on the $7.7bn the industry spent in 2011, and a 275% increase on the $3.2bn spent in 2009. The comparable net increase in 7  Using UN Aquastat, which is the UN’s global water information system and Maplecroft, which is a UK- based, independent research organisation. 8  BHP Billiton, Rio Tinto, Anglo American, Vale S.A., Xstrata plc, and Glencore International AG combined produce over 50% of the world’s output across major metals (Moody’s 2013). 9  It should be emphasised that many food and beverage companies spend decades building relationships with their suppliers, and thus investing heavily in those relationships; so although they could move in theory, they are unlikely to do so in practice.

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global mining output was between 20% and 52% for the same period (Moody’s 2013). The mining sector is also susceptible to regulatory risk, especially in the form of stricter environmental regulations, or a sudden withdrawal of water rights or allocations that might drastically increase costs. In some cases, for example when Chile’s Supreme Court ruled that the water management system of Barrick Gold’s Pascua-­ Lama mine was insufficient, changed regulations can result in mine suspension. However, in most instances, it results in higher operating expenditure. Anglo-­ American gives an example of how changed water regulation in South Africa is anticipated, and is likely to affect their business: The regulatory environment for water is developing in South Africa and poses potential risks to Anglo American. Three important draft regulations include: 1. The draft regulations requiring the lining of pollution control infrastructure and mine residue dumps has a potential cost impact on the business. 2. New draft legislation incorporating water liability in closure costs may result in significant increases in closure liabilities as water was previously not requested/required to be included by the Department of Mineral Resources (DMR) in the closure provision submitted to the regulator. 3. The Waste Discharge Charge System (WDCS) will require polluters to internalise costs associated with waste and encourage the reduction in waste. There is a risk of a change in discharge regulations. Failure to comply will result in fines (Anglo-American 2016: W3.2c).

None of these new regulatory requirements are particularly remarkable, especially if coming from a UK context (Anglo American has its headquarters in London). Yet, the company foresees that the new regulations are likely to affect the cost of its South African operations. This is noteworthy, since it indicates that Anglo American is not undertaking these measures at present, despite claiming to work to “minimise harm to the environment” (Anglo American 2015: 9). As Anglo American (2016: W3.2c) goes on to explain, its planned response to mitigate the risk is to engage actively with public policy makers, either directly or through the Chamber of Mining because “in this way Anglo American ensures that issues that might arise due to this new regulatory environment are addressed.” It is unclear how exactly the issues are to be ‘addressed.’ Although stricter regulations could present a regulatory risk to mining companies in the form of higher operating costs, this example is, above all else, illustrative of how some mining companies have ‘privileged positions’ with some governments, which have allowed them to avoid regulations in the past (see, for example, Perreault 2013). This privileged position stems from mining companies’ major economic importance for the national revenue, meaning that these industries are “often considered strategic national industries with privileged access to government” (WWF 2014: 28). Drawing on the experience of mediating between various companies and governments, a representative from an NGO discussed the implications of such access: How do you ensure that you’re not just cooking up a deal between two parties over water use? This happens all the time…mining companies…have been doing this for a very long time. You know, they have huge sway over water use and they have huge sway over political processes (Interview 12, 2015, unpublished).

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Mining companies are embedded in local communities, often representing their largest water users. Rio Tinto (2015c: 6) acknowledges: “while the minerals and metals industry is a small user of water on a global and national scale, it can be the largest user at a local level.” Because of their close community relations, they (claim to) require a ‘social’ – in addition to a legal – licence to operate, leading them to being particularly vulnerable to reputational risk if they mismanage, or are perceived to mismanage, their operations. ICMM (2012: 5) highlights: “if a mine is regarded by other users as an excessive water consumer or as detrimentally affecting water quality, there can be conflict or discontent.” And, as highlighted by the same organisation: “[w]ater, in particular, is the single most dominant contributor to operation–community conflict in the world” (2014: 13). This being said, because of mining companies’ importance to national income, it is unlikely that they would be shut down, even if community conflicts arise (some, however, argue otherwise: see Box 4.3). There are ample reasons for such conflict. In addition to being an extensive water user, mining is very invasive; operations can transform the landscape for decades, particularly if the mine is open cast. And, if mismanaged, an operation can release a large volume of toxic material into the environment including arsenic or mercury (Barrick Gold 2013). Even when companies adhere to regulations, weak legislation allows many mines to harm the environment severely. One such example is the infamous Ok Tedi mine in Papua New Guinea, where the largest shareholder until 2002 was BHP Billiton (BHP Billiton 2002).10 The mine discharges 80,000 tonnes of waste rock and 120,000 tonnes of tailings untreated into the local river system daily, which has detrimental effects on the natural environment and on local livelihoods (WWF 2018b). Nevertheless, because of the mine’s prominent place in the national economy – in 2001, Ok Tedi accounted for 18% of the national exports by value – the incentive to put stronger legislation in place is weak (ibid).

4.4.3  Stewardship Actions A mining company rarely needs to start its CWS engagement with knowledge awareness exercises, since the water use of its operations will already be known. Instead, because of its water-intensive operations, it is likely to focus on internal supply-side measures, and on achieving the highest water efficiency. In its water management strategy, Anglo American (2015: 62), for example, emphasises “driving operational excellence [and] investing in technology.” Similarly, BHP Billiton (2015: 40) focuses on “increased water efficiency to reduce total water consumption; utilisation of lower-quality water sources; expanding water supply options to reduce the reliance on single sources (for example, through the development of

 The exit arrangements included the transfer of BHP Billiton’s shares in Ok Tedi Mine Limited to PNG Sustainable Development Program Limited (PNGSDP) (BHP Billiton 2015).

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desalination) [and] operational water balances.” Explaining the rationale, an informant explained: If you’re at a mining company your [aim is] to get enough water in order to continue mining… So that raises the question: They need more water, how can they get more water? And they go through an engineering route to try and find more water, whether that’s recycling water, or desalinating water (Interview 31, 2016, unpublished).

However, such solutions often mean drastically rising capital and operational expenditure, since the construction and maintenance of, for example, desalinisation facilities are costly, especially in terms of energy charges. According to Moody’s (2013), acquiring water through desalinisation can cost up to ten times more than sourcing water locally, and such measures could therefore alter the economic viability of a mine. Anglo American (2014) has invested over $100 m to construct a desalination plant for the Mantoverde copper plant in Chile, forcing it to integrate “water value into business decisions” (Anglo American 2011: 2). Like the other industries discussed above, mining companies engage in sector-­ wide initiatives. The most prominent group is the International Council on Mining and Metals (ICMM). Working with the 23 leading metals and mining companies, ICMM seeks to define and further good practice on issues of societal importance in the broad area of environmental stewardship and social and economic progress. What makes it a powerful platform is that it is CEO-led: “it effectively report through the 23 CEOs of these leading companies in metals and mining…when 30–40% of the industry leaders sit around a table talking about water, it is pretty powerful” (Interview 33, 2016, unpublished). Whilst initial work focused extensively on improving water management within companies’ operations, the organisation has since 2014 focused on producing guidelines (published 2015) on how the mining industry should engage in catchment-based approaches through collective action. Thus, ICMM is an important organisation for setting standards and guiding industry behaviour. Moreover, it functions as a channel for other stakeholders to communicate with ‘The Mining Industry’ as a whole (see Chap. 7): “ICMM was invited to the UN Water conference in Spain in Zaragoza to be ‘a business voice’ in terms of action on water stewardship” (ibid). The need to obtain a ‘social licence to operate’, and uphold good reputation, is (supposedly) of particular importance to this sector due to their embeddedness in  local communities, and the associated reputational risks. Mining companies therefore often approach CWS with a much greater emphasis on community engagement than other sectors. BHP Billiton (2007: i) acknowledges: “[f]or society to grant us our ‘licence to operate’, we must demonstrate to our host communities and governments that we can, and will, protect the value of their environmental and social resources.” Because of this, BHP Billiton (2015: 44) “strives to be a valued partner in the communities in which we operate and, through all our interactions, seek to foster meaningful, long-term relationships that respect local cultures and create lasting benefits.” Following from this aspiration, the company has set a clear aim to include “community engagement and development initiatives” (2015: 40) as

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a specific part of its water management strategy (see Box 4.3). In 2015, US$225 m was committed to community programmes (2015: 45). The need to engage with communities also stems from the extensive capital expenditure that is required before a mining operation can commence, and any revenue sought. Once a mine is in operation, the company often faces considerably higher financial risks because the operation is concentrated in one location, is unable to move, and has substantial capital investment fixed in that locale. Thus, when a mining operation is stalled due to water risks, the financial repercussions are often larger than for other industries whose operations – and consequently also risks – are more dispersed. Talking about the sizable risk that water poses to the industry, an informant said: “We’ve got these projects around the world – billions of dollars’ worth of projects – that are stranded, mining projects that are on hold because… water has stopped them. If water can stop a multi-billion dollar mining project, it matters” (Interview 33, 2016, unpublished).

Box 4.3 BHP Billiton and corporate water stewardship With over 65,000 employees and contractors, BHP Billiton is among the largest mining groups worldwide; a leading producer of iron ore, metallurgical coal, copper and uranium (BHP Billiton 2018). One example of community engagement undertaken by BHP Billiton is during the development of the IndoMet Coal (IMC) Project, located in Kalimantan, Indonesia. In Indonesia, BHP Billiton collaborates with a Forum on Corporate Responsibility that provides advice on the social and environmental aspects of the IMC project. Before mining commenced, representatives from the forum spent time in the communities surrounding the site, and listened to the concerns raised. As a result of these conversations, it was concluded that in order for the project to provide benefits to the communities, and be a long-term success, it was necessary to continue to work closely with the local government, as well as the local communities (BHP Billiton 2015). A participant explained the underlying reason why these conversations are crucial: Put that [engagement] under the heading ‘A social licence to operate’… How do you quantify an investment in a community? If you’re investing in schools, and you went back to your shareholders in the old days, [and] if they were strictly [interested in the financial] bottom line, they would say: ‘why are we investing in schools? We’re not in the school business, we’re in the gold business!’ Now, the people in the field can say: ‘we get X number of workers from these schools, we build strong communities, those communities are supportive. And those communities have to be supportive otherwise our mine doesn’t operate. Otherwise, we’re shut down.’ So, that social licence to operate has become a really big concern and interest in the last 5–10 years when communities can, and will shut down bad actors. So, that is another quantifiable risk flat out: ‘If we don’t invest in the communities…that community will shut us down (Interview 43, 2016, unpublished).

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4.5  Explaining Divergence Companies from all sectors engage in CWS because of “clear self-interest” (Interview 49, 2016, unpublished). Despite this common stimulus, the previous sections amply illustrated that ‘business’ is not a homogeneous entity, acting in a uniform manner. The question remains why such divergence in behaviour is displayed within, as well as across sectors.

4.5.1  Differences Across Sectors In the early days of CWS, “Food and Beverage [companies] were the leaders. But now all the other sectors are waking up to this challenge. Only, they’re not necessarily acting in the same way (Interview 45, 2016, unpublished). Two factors are of particular importance in determining the manner in which a company approaches CWS. One is a company’s ability to mitigate the water risk unilaterally, which in turn depends on where a company’s water risk is located. If the predominant water risk is found at the factory or plant level (in other words, within the company’s direct sphere of control), the company is likely to respond through technological solutions. Mining companies respond in this manner, since they experience a significant share of their water risk (particularly physical risk) at their production sites because of their substantial water use. Assuming it is economically viable, their risk response is typically investments in new, or improved, technology. Beverage companies (to a higher degree than food companies) also face significant risk at their bottling plants, because they are often a visible part of the community where they operate. This leads them to take action at site level, and focus on improving efficiency, as well as consumer outreach programmes to strengthen their brand. Companies that find their greatest water risks ‘beyond the fenceline’ (in other words, beyond the company’s direct sphere of control) are likely to respond through bilateral and multilateral action. Those that depend on agricultural commodities (which are subject to physical water risk) as inputs in their production process are likely to respond in this way. This explains, for example, why food, beverage, and clothing companies engage in initiatives like BonSucro or the Better Cotton Initiative, as these groups seek to change the production of commodities (sugar and cotton) across the entire industry. Moreover, those – like clothing companies – that experience significant water risk in their value chain, but have limited control over the production of their goods, also tend to engage in sector-wide initiatives. Similar to BonSucro or the Better Cotton Initiative, the Swedish Textile Water Initiative seeks to change practices across the whole industry rather than at individual production sites, which explains why companies like H&M are interested in partaking in them. The other determinant of a company’s approach to CWS is the nature of its water use. Companies from certain sectors – particularly food and beverage companies –

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‘consume’ water; that is, water is extracted from its source without being returned after its use (CEO Water Mandate 2014). Water consumption occurs either directly through the incorporation of water into products (for beverages), or indirectly as it is being ‘lost’ through evaporation when used for irrigation. Using water in this way leads these companies to emphasise improvements in ‘water-use-ratios’ since that will (at least in theory), reduce water demand. Other sectors – particularly clothing and mining companies – mainly ‘withdraw’ water; that is, they extract water, use it, and then return it (ibid). Explaining the nature of the textile sector’s water use, an informant noted: Textile companies… they [withdraw] water for a fairly short period of time. And then it is returned back to whatever source. But very often, if you look at a global scale, it is returned in a very polluted way… [In a textile industry it] is…possible to not consume any water at all, you can have 100% recycling of your water… It is not that difficult. It is a technological question if you’re ready to invest (Interview 50, 2016, unpublished).

This serves to explain why textile companies  – as well as mining companies, which also mainly withdraw water – emphasise technological solutions since these could improve wastewater treatment and water reuse.

4.5.2  Differences Within Sectors Just as there are differences in behaviour across sectors, companies within the same sector display divergent behaviours: “you will find companies who are leading the pack” (Interview 48, 2016, unpublished). The question is what distinguishes ‘the leaders’ from ‘the laggards’. To understand why certain companies ‘lead the pack’, it is necessary to examine closely the various pressure points to which a company is exposed, and which then influence its behaviour. Approaching this question by examining groups external or internal to companies, which hold the capacity to influence their behaviour, Newborne and Dalton (2016) highlight Regulators/Governments, Consumers, Investors, Brokers (often NGOs), and groups within the Company itself. The capability of these groups to alter the behaviour of particular companies has been confirmed by this research (see Chap. 3). However, in addition to the pressure executed by these groups, this research has identified a number of other factors that serve to explain why certain companies lead and others follow (or stay passive). In particular, these factors help explain why it is predominantly the multinational corporations within each sector that engage. The level of impact a company has on water resources is a critical determinant of the extent to which it will engage, with larger impact implying bigger responsibility to act. As a corporate representative noted: “We’re probably in the leading group, [but] we’re not at the very forefront of [CWS]. But we don’t particularly want to be…because relative to our [water] impact, it’d be disproportionate” (Interview 21,

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2015, unpublished). Following from this, it is logical that MNCs take CWS more seriously than smaller companies, since their impact is often greater. Another important factor is to what extent a company is exposed to investor pressure. Those companies that are publicly listed – like the companies included in this study – are typically more vulnerable to such pressure because they are obliged to disclose any information that could affect stock prices.11 Disclosing their vulnerabilities could trigger investors to put pressure on the company to change practices, or sell their shares (leading to a drop in stock prices, and a drop in the company value). The fact that listed companies essentially face “global risk exposure” (Interview 6, 2015, unpublished) led one informant to argue that listed companies are more likely to ‘act responsibly’ by, for example, engaging in CWS because of shareholder pressure, than its non-listed counterparts (Interview 29, 2016, unpublished). An additional factor that contributes to the multinationals engaging to a greater extent than others is the superior amount of resources and knowledge they hold. A participant suggested: “[Smaller companies] struggle with capacity. They struggle with knowledge. They struggle with having data…So there is an information issue there, there is a capacity issue” (Interview 14, 2015, unpublished). Similarly, another informant spoke about how smaller companies’ lack of resources (financial or staff capacity) might prevent them from attending meetings where CWS is discussed and advanced (Interview 10, 2015, unpublished). The importance of being able to participate in these meetings should not be underestimated, because, through their superior resources, the multinationals have the capacity to set the tone and direction of the discussion in a way that smaller companies simply cannot. Effectively, they can shape the formation and development of the discursive space of CWS: “To paraphrase a saying: ‘History is made by those who turn up’ and that is certainly the case in the water sphere. Those companies that are engaging are setting the trends, setting the pace, they’ll help to set the rules of the game” (Interview 14, 2015, unpublished).

References Anglo American. (2010). Delivering real benefits: Sustainable development report 2010. London: Anglo American plc. Anglo American. (2011). Group water policy. London: Anglo American plc. Anglo American. (2014). Erasing the pressure on local water supply: Mantoverde. [online] Available at http://www.angloamerican.com/media/our-stories/easing-the-pressure-on-localwater-supply. Accessed 23 Oct 2018.

 A public company is a company owned by the public, traded on a stock exchange. A public company is typically required to file earnings reports, which are made available to shareholders and the public. In contrast, a private company is privately held. This means that they are not required to disclose their financial information to anyone since they do not trade on a stock exchange.

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Anglo American. (2015). Driving change, defining our future: Sustainable development report 2015. London: Anglo American plc. Anglo American. (2016). CDP water 2015 information request. [online] Available at https://www. angloamerican.com/~/media/Files/A/Anglo-American-PLCV2/documents/approach-and-policies/sustainability/performance/Anglo-American-water-response-2015.pdf. Accessed 26 Feb 2019. Anglo American. (2018). What we do. [online] Available at http://www.angloamerican.com/aboutus/what-we-do. Accessed 21 Oct 2018. AWS. (2014). The AWS international water stewardship standard version 1.0 April 8th, 2014. Edinburgh: AWS. AWS. (2018). About. [online] Available at http://a4ws.org/about/. Accessed 21 Oct 2018. Barrick Gold. (2013). Barrick responsibility report 2013: Responsible mining. Toronto: Barrick Gold Corporation. BCI. (2013). Cotton’s water footprint: How one t-shirt makes a huge impact on the environment. [online] Available at http://bettercotton.org/about-bci/cottons-water-footprint-how-one-t-shirtmakes-a-huge-impact-on-the-environment/. Accessed 21 Oct 2018. BCI. (2018). About BCI. [online] Available at http://bettercotton.org/about-bci/. Accessed 21 Oct 2018. BHP Billiton. (2002). BHP Billiton Withdraws from Ok Tedi Copper Mine and Establishes Development Fund for Benefit of Papua New Guinea People. [online] Available at https://www. bhp.com/media-and-insights/news-releases/2002/02/bhp-billiton-withdraws-from-ok-tedicopper-mine-and-establishes-development-fund-for-benefit-of-papua-new-guinea. Accessed 23 Oct 2018. BHP Billiton. (2007). BHP Billiton sustainability report 2007. Melbourne: BHP Billiton. BHP Billiton. (2015). Taking the long view: Sustainability report 2015. Melbourne: BHP Billiton. BHP Billiton. (2018). Our company. [online] Available at http://www.bhpbilliton.com/aboutus/ ourcompany. Accessed 23 Oct 2018. CDP. (2013). Metals & Mining: A sector under water pressure: Analysis for institutional investors of critical issues facing the industry. London: CDP. CEO Water Mandate. (2014). Driving harmonization of water-related terminology (Discussion Paper). Oakland: Pacific Institute. Chapagain, A. K., Hoekstra, A. Y., Savenije, H. H. G., & Gautam, R. (2005). The water footprint of cotton consumption. Delft: UNESCO-IHE. Cherrett, N., Barrett, J., Clemett, A., Chadwick, M., & Chadwick, M. J. (2005). Ecological footprint and water analysis of cotton, hemp and polyester. Stockholm: SEI. Coca-Cola Company. (2018a). The Coca-Cola system. [online] Available at http://www.coca-colacompany.com/our-company/the-coca-cola-system. Accessed 21 Oct 2018. Coca-Cola Company. (2018b). Coca-Cola at a glance. [online] Available at http://www.coca-colacompany.com/our-company/infographic-coca-cola-at-a-glance. Accessed 21 Oct 2018. Coca-Cola Company. (2018c). Brands. [online] Available at http://www.coca-colacompany.com/ brands/the-coca-cola-company. Accessed 21 Oct 2018. Coca-Cola Company. (2018d). Collaborating to replenish the water we use. [online] Available at http://www.coca-colacompany.com/stories/collaborating-to-replenish-the-water-we-use. Accessed 21 Oct 2018. Coca-Cola Company & TNC. (2010). Product water footprint assessments: Practical application in corporate water stewardship. [online] Available at http://waterfootprint.org/media/ downloads/CocaCola-TNC-2010-ProductWaterFootprintAssessments_1.pdf. Accessed 18 Nov 2017. Deloitte. (2015). Tracking the trends 2016: The top 10 issues mining companies will face in the coming year. [online] Available at https://www2.deloitte.com/content/dam/Deloitte/za/ Documents/energy-resources/ZA_Deloitte_Tracking_The_Trends_2016.pdf. Accessed 23 Oct 2018. Elmore, B.  J. (2015). Citizen Coke: The making of Coca-Cola capitalism. London/New York: W. W. Norton & Company.

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Gereffi, G., & Memedovic, O. (2003). The global apparel value chain: What prospects for upgrading by developing countries. Vienna: UNIDO. H&M. (2008). Sustainability report 2008. Stockholm: H&M. H&M. (2012). Conscious actions, sustainability report 2012. Stockholm: H&M. H&M. (2014). Conscious actions, sustainability report 2014. Stockholm: H&M. H&M. (2015a). Conscious actions, sustainability report 2015. Stockholm: H&M. H&M. (2015b). Responsible water use for sustainable fashion. Stockholm: H&M. H&M. (2018). Store count per brand. [online] Available at http://about.hm.com/en/about-us/markets-and-expansion/store-count-per-brand.html. Accessed 21 Oct 2018. Hartline, N.  L., Bruce, N.  J., Karba, S.  N., Ruff, E.  O., Sonar, S.  U., & Holden, P.  A. (2016). Microfiber masses recovered from conventional machine washing of new or aged garments. Environmental Science & Technology, 50(21), 11532–11538. ICMM. (2012). Water management in mining: A selection of case studies. London: ICMM. ICMM. (2014). Engaging with society. London: ICMM. Isdell, N., & Beasley, D. (2011). Inside Coca-Cola: A CEO’s life story of building the world’s most popular brand. New York: St Martin’s Press. Koch, G. (2015). Collective action on the Yangtze: Is China’s silent spring enabling water security? The new bottom line: Collaborative solutions for growth, FT Water Summit 2015, October 27th, London. [online] Available at https://live.ft.com/Events/2015/FT-Water-Summit. Accessed 21 Oct 2018. Kölbel, J., Fedotova, T., & Billstrand, J. (2016). Realizing water stewardship: A simple framework for a complex journey. WBCSD Water [Unpublished manuscript]. Levi Strauss. (2011). CEO water mandate communication on progress 2011. San Francisco: Levi Strauss & Co. Levi Strauss. (2014). CEO water mandate communication on progress 2014. San Francisco: Levi Strauss & Co. Levi Strauss. (2015). The Life Cycle of a Jean: Understanding the environmental impact if a pair of Levi’s® 501® jeans. San Francisco: Levi Strauss & Co. Moody’s Investors Service. (2013). Water scarcity to raise capex and operating costs, heighten operational risks. [online] Available at http://op.bna.com.s3.amazonaws.com/env.nsf/ r%3FOpen%3Davio-94wss7. Accessed 07 Dec 2018. Morrison, J., Morikawa, M., Murphy, M., & Schulte, P. (2009). Water scarcity and climate change: Growing risks for businesses & investors. Boston: Ceres. Nestlé. (2015). Nestlé in society: Creating Shared Value and meeting our commitments 2015. Vevey: Nestlé S.A. Newborne, P., & Dalton, J. (2016). Water management and stewardship: Taking stock of corporate water behaviour. Gland/London: IUCN/ODI. Perreault, T. (2013). Dispossession by accumulation? Mining, water and the nature of enclosure on the bolivian altiplano. Antipode, 45(5), 1050–1069. Rio Tinto. (2015a). Sustainable development 2015: Working for mutual benefit. London: Rio Tinto. Rio Tinto. (2015b). CDP Water 2015 information request. [online] Available at https://www.cdp. net/sites/2015/29/15829/Water%202015/Pages/DisclosureView.aspx. Accessed 18 Nov 2016. Rio Tinto. (2015c). Rio Tinto and water. London: Rio Tinto. Rio Tinto. (2018) Environment. [online] Available at http://www.riotinto.com/ourcommitment/ environment-24290.aspx. Accessed 21 Oct 2018. SAB Miller. (2013). South African Breweries: Water stewardship in the hops industry. A shared water risk assessment by the Water Futures Partnership. London: SABMiller plc. SAI. (2018). Who we are. [online] Available through http://www.saiplatform.org/about-us/whowe-are. Accessed 21 Oct 2018. Sojamo, S., & Larson, E. A. (2012). Investigating food and agribusiness corporations as global water security, management and governance agents: The case of Nestlé, Bunge and Cargill. Water Alternatives, 5(3), 619–635. STWI. (2018). About. [online] Available at http://stwi.se/about/. Accessed 21 Oct 2018.

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WBCSD. (2009). Facts and trends: Water version 2. Conches-Geneva: WBCSD. WWF. (2013). Water Stewardship: Perspectives on business risks and responses to water challenges. Gland: WWF-International. WWF. (2014). The imported risk: Germany’s water risks in times of globalisation. Berlin: WWF Germany. WWF. (2015). From risk to resilience. Does your business know its water risk? Surrey: WWF UK. WWF. (2018a). Sustainable agriculture: Cotton. [online] Available at https://www.worldwildlife. org/industries/cotton. Accessed 21 Oct 2018. WWF. (2018b). Ok Tedi, Papua New Guinea: Belching out copper, gold and waste. [online] Available at http://wwf.panda.org/what_we_do/where_we_work/new_guinea_forests/problems_forests_new_guinea/mining_new_guinea/ok_tedi_forest_new_guinea/. Accessed 23 Oct 2018.

Chapter 5

Companies and Water Sanitation and Hygiene

I think WASH has become much more sophisticated; it has become much more than just drilling a well. It has become…a systems approach: let’s grow the communities, let’s build healthy communities, because from a corporate perspective, they’re workers, they’re consumers. Interview 43, 2016, unpublished.

Companies are increasingly waking up to the challenge of ensuring adequate WASH to people. This chapter will explore corporate engagement in this space, and unpack the business motivations for addressing inadequate WASH in factories and communities where they are located. It has to be acknowledged that even though interest is growing, “corporate action on sanitation remains nascent. Though many companies are taking action, few are aware of the topic, and even fewer know why and how they should take action” (CEO Water Mandate 2014a: 22). But, as this chapter will demonstrate, there are signs that WASH interventions could closely align with strategic business interests. With this in mind, this field deserves critical interrogation, because it represents an additional component of corporate interest in global water issues. The aim of this chapter is threefold. It first revisits the ‘business-society relationship’ (see Sect. 2.3), and assesses how a redefined role for companies as ‘development agents’ has allowed them to take action on issues like WASH. It then analyses the rationale for integrating WASH into the CWS agenda and assesses how various companies take action. Finally, it questions the assumption that companies’ engagements in WASH lead to win-win outcomes for business and society.

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_5

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5.1  The Emergence of ‘Development Agents’ Milton Friedman (1970) argued that ‘the business of business is business.’ However, this ‘functionalist perspective’ – that the primary roles of business in society are to perform well in specific tasks like devising products, making money, and creating employment (see Sect. 2.3.1) – is being contested. Instead, companies are increasingly expected to go beyond these tasks, and also to act as “‘a positive force’ in contributing to worldwide social development goals” (Warhurst 2005: 152). This chapter analyses how this ‘redefined’ role for business has permeated the human development project by studying measures taken to integrate companies into the challenge of achieving universal access to WASH. Before exploring how ‘the business case’ has been made for WASH, it is essential to consider the wider development context, and how societal trends have altered companies’ role within it.

5.1.1  L  inking ‘Insufficient Development’ to ‘Insufficient Economic Growth’ Improving access to WASH is a crucial precondition for achieving development, both in its own right and because WASH underpins most other development objectives. Those within the water sector typically perceive water and sanitation to be at the very core of sustainable development, “critical for thriving people, planet and prosperity” (UN-Water 2018). For example, UN-Water (2016), outlining the connections between the different SDGs, argues that there are strong synergies between realising the targets on universal access to WASH (targets 6.1, 6.2) and reducing multidimensional poverty (Goal 1), reaching zero hunger (Goal 2), and achieving universal access to health (Goal 3) and education services (Goal 4). Additionally, the brief suggests that there are strong connections between realising WASH targets and ensuring decent work (Goal 8), and achieving gender equality (Goals 5 and 10). In essence, the water sector as a whole argues that without addressing the inadequate provision of WASH, there can be no progress on the human development project. However, although the quest to address WASH has been advanced for decades, the approach taken has changed over time. During the latter half of the twentieth century, international financial institutions like the International Monetary Fund and the World Bank advocated ideas like deregulation, financial liberalisation, and privatisation, and this heavily influenced mainstream development discourse.1 However, through the formation of the MDGs, the early 2000s marked a shift away from the free market perspective, and instead put poverty reduction itself at the forefront of development. Rather than holding 1  Among other things, this led to the privatisation of water services in some developing countries, which in many instances had detrimental effects on human livelihoods (see, for example, Grusky 2001; Goldman 2007).

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‘economic growth’ as the key objective – with the implied assumption that higher growth would automatically resolve many of the development issues  – the focus turned to addressing the social issues directly. As a result, policies to address poverty, including promoting good governance, capacity building, and social vitality, were stressed (Banks and Hulme 2014). At various events building towards the formulation of the SDGs, however, it became evident that the focus on economic growth as the primary mechanism to address poverty had returned. For example, the Fourth High Level Forum on Aid Effectiveness held in Busan, South Korea in 2011, convened by the OECD’s Development Assistance Committee (DAC), took a critical stance against achieving development through social policies. The conference thus dismissed the perspective emerging from the MGDs, which suggested that structural causes were the sources of inequality; instead there was a general consensus that “by foregrounding poverty reduction per se [as done during the MDGs] the mainstream community had taken its eye off the ball” (Mawdsley et al. 2014: 30). As a result, there was a renewed emphasis on, and privileging of, growth rather than poverty reduction, marking a return of the conviction that growth precedes development rather than the other way around (Banks et al. 2016). This growth-oriented perspective also permeated the consultative process for the SDGs. For example, a joint report produced by the UN Global Compact and the WBCSD (2013: 4) held that: “development objectives cannot be achieved without economic growth.” The Sustainable Development Solutions Network (2014: 10) similarly emphasised growth that should “benefit all citizens,” and the High-Level Panel (HLP) of Eminent Persons (HLP 2013) argued that growth must underpin sustainable development. As suggested by Pingeot (2014: 21), many of the reports that were informing the formulation of the SDGs presented “growth as the main solution for poverty eradication and a sine qua non condition to the realization of sustainable development.” The framing of growth rather than good governance, capacity development, and income distribution as the remedy for poverty establishes a very different solution set with which to address development. If social issues are the root causes of poverty, governments and civil society are framed as the central development actors because the solutions that follow from such a ‘problem framing’ include, for example, income redistribution through taxation and capacity building. In contrast, drawing direct parallels between poverty and insufficient growth places companies in a prominent position to be part of the solution because one of their key roles is to generate growth. Dolan and Roll (2013: 129) argue that, when poverty is linked directly to market failure, its logical solution is “the advancing of enterprise and market integration.” In essence, when putting the focus on growth and the advancement of enterprise as the primary mechanisms through which to address poverty, companies  – alongside governments and NGOs  – become framed as principal development actors, and market engagement becomes commensurate with development imperatives.

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5.1.2  Reconceptualising Companies as ‘Development Agents’ Companies’ traditional roles (creating wealth, offering employment opportunities, and providing goods and services) can all contribute to poverty reduction. Blowfield and Dolan (2014: 22) thus characterise this role as a ‘development tool’: “widely engaged in economic activity in developing countries but assuming little responsibility for the impact of that activity.” However, to meet the requirement of being a principal development actor, the roles of companies have had to be reframed in parallel with the wider development project, and as a result, companies are increasingly positioning themselves as ‘development agents’: “organisation[s] that consciously [seek] to deliver outcomes that contribute to international development goals” (ibid: 23). As suggested by the former Sustainable Development Director for SABMiller: “we’re happy that we…live in an era where the private sector is seen… as integral to achieving development, rather than sitting alongside it” (Swaithes 2015). ‘Development tools’ and ‘development agents’ are fundamentally distinct. In Blowfield’s (2012: 416) characterisation: [A]s a development tool, business might create jobs, but business as development agent takes responsibility for the number of jobs it creates, their location, and the quality. The development tool might make products available in poor countries, but the development agent makes products suited to the needs of and accessible to poor segments of the population. And whereas the business-as-usual approach to development emerges from managerial calculations related to costs, returns and competition, business as a development agent is also motivated by stakeholder concerns, pressures and demands.

Companies have often been seen as a source of development problems, particularly in developing countries where weak legislation and poor law enforcement have resulted in human rights and labour law violations. For example, Nestlé have been found to use children under the age of 15 to work on their cocoa farms on the Ivory Coast (Clarke 2015). Comparably, in 2010, 21 H&M workers died in a fire in Bangladesh as a direct result of poor fire safety standards (Hickman 2010). In such cases, the companies’ response has typically been to improve their codes of conduct (for example, Nestlé revived its efforts to implement the Harkin-Engel Protocol signed in 2001, aimed at ending the worst forms of child labour in the production of cocoa, and H&M signed the ‘Accord on Fire and Building Safety’ in 2013 following the Bangladesh fire), and to ‘police’ their own behaviour. To understand why a company would be compelled to act as a development agent, it is necessary to recognise that companies are also ‘victims’ of poverty (Blowfield and Dolan 2014; CEO Water Mandate 2014a; Blowfield 2012). For example, a point that was stressed by several company representatives (see Sect. 5.2) is that businesses that are located in underdeveloped areas often struggle to find high-skilled workers (because a low proportion of the population is educated), or a consumer base (because of poverty). Companies that recognise that insufficient development hampers their activities are likely – as demonstrated later in this chapter – to take on the role of enabler for development (Blowfield 2012). Defining themselves as ‘victims’ is, however, not

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enough. Blowfield (2012) identifies three circumstances associated with businesses stepping up to the role of development agent, arguing that at least one of these circumstances must be present. Firstly, companies are more likely to act proactively when poverty is associated with an identifiable risk, including risks to companies’ reputation, or when the availability of materials for production is at stake. Secondly, they are more likely to act when engaging with poor communities constitutes a favourable financial investment. Finally, companies are more likely to step up when poverty is associated with inefficiencies in production. We will return to these circumstances – risk, opportunity, and inefficiency – in Sect. 5.2. In order to keep intact the renewed narrative of ‘business as a primary agent of economic growth,’ which will – from this perspective – serve to reduce poverty, the new development frame has also produced innovative methodologies for generating growth. Exploring potential for ‘win-win’ scenarios, there has been unprecedented focus on exploring ways to advance development and business outcomes so that they are mutually reinforcing. Whilst Sect. 5.7 will question the feasibility of this premise, the next section will explore some of the market-based mechanisms that have been developed to serve this end.

5.1.3  T  ransforming ‘Development’ into ‘Business Opportunities’ In addition to a revived commitment to various forms of Public-Private Partnerships (PPPs), which was explicitly made in Busan (Banks et al. 2016), the renewed focus on growth as a pathway to development has unleashed a plethora of market-led approaches. These operate under labels such as ‘Creative Capitalism’ (Kinsley 2008), ‘Inclusive Business’ (IFC 2014), and ‘Bottom Billion Capitalism’ (Blowfield and Dolan 2014). Under these labels, models such as microfinance, philanthrocapitalism,2 Fairtrade, ‘Markets for Poor’ (M4P),3 and ‘Bottom of the Pyramid’ (BoP) schemes (see below) have thrived, each underpinned by a firm conviction that when companies engage in development, the poor, as well as the company, benefit. Although these initiatives share a vision “to ameliorate poverty through market engagement” (Blowfield and Dolan 2014: 28), they embody different objectives, histories, and actors. Microcredit provides loans to borrowers who lack collateral in order to fix ‘imperfect’ markets; Fairtrade seeks to reconfigure supply chains to correct ‘unfair’ markets; and BoP schemes create ‘new’ markets in 2  This concept denotes the phenomenon where wealthy business people like Mark Zuckerberg (Facebook) and Bill Gates (Microsoft) set up their own philanthropic organisations in order to pursue their own causes. 3  The central idea here is that the poor are dependent on market systems for their livelihoods. But, due to a wide range of reasons (e.g. unstable regulatory environments, high corruption levels, or lack of infrastructure), many markets that are important to the poor do not function well, restricting choices and opportunities. Therefore, the idea is that by making those market systems work more effectively, the poor will improve their livelihoods and poverty will consequently be reduced.

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areas that have not been reached by the capitalist system. Although all of these models are still based on principles like competition and efficiency, they also embody values of inclusion, and a desire to extend opportunities for financial capital to those previously excluded. The BoP model (Prahalad and Hammond 2002; Prahalad and Hart 2002) is one of the key schemes used in WASH, as confirmed by the analysis of Unilever’s activities in India (Sect. 5.5). It embodies a belief in mutual value creation, reflecting a position that a business venture can generate profit for shareholders, whilst also generating social returns to the community in which it operates (London et  al. 2010). The term itself denotes the proportion of the global population living below a certain level of income, traditionally seen as recipients of development rather than as consumers. The exact number of citizens in ‘the BoP’ is debated, but the number often cited is in the order of four billion people, who collectively hold considerable purchasing power (see, for example, Arnold and Valentin 2013). UNDP (2008) estimates that the combined income of the BoP is about $5 trillion, similar to the gross national income of Japan. This is a crude comparison, since the people comprising ‘the BoP’ are widely dispersed; to treat the BoP as one homogeneous entity is thus a considerable simplification. Taken holistically, the BoP is nevertheless thought to signify a significant ‘untapped market.’ As Unilever’s activities confirm, the aim of BoP ventures is to target that socio-­ economic segment traditionally underserved by the capitalist market (Blowfield 2012). In addition to contributing to poverty alleviation, proponents argue that BoP schemes are a necessary evolution of business ventures as developed markets reach saturation (WBCSD 2004). Prahalad and Hammond (2002: 57) suggest: “It is simply good business strategy to be involved in large, untapped markets that offer new customers.” Many companies have adopted this thinking, and designed strategies to reach these consumers. For example, Nestlé (2006: 4) states that it wants to “evolve [its] business models so [it] can… reach more people at the ‘base of the pyramid’. Similarly, the former Director of Sustainable Development at PepsiCo has argued: “…the biggest thing coming down the horizon is leveraging the base of the pyramid population. Those…four billion people…if we could transform them, not into the beneficiaries of philanthropy, but into real legitimate consumers, I think that would be a win for companies and…a win for those consumers because the more they can be legitimized…[and be] lifted out of poverty, and…develop socio-economically, the more they can become customers, and thriving communities” (Kalmijn 2010).

Despite often being presented as unproblematic ventures, the role that BoP schemes can play in poverty reduction requires critical interrogation. These schemes will be investigated further in Sect. 5.5. Next, we turn to WASH, and investigate why these particular issues have become of interest to companies.

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5.2  Making the ‘Business Case’ for WASH The business case for engaging in WASH is multi-faceted, but the most commonly stated motives are: (1) ensuring the wellbeing of the workforce; (2) enhancing reputation and consumer relationship building, and; (3) improving the wider socio-­ economic status of the community where the business operates. The impacts of inadequate WASH and business activities (Fig. 5.1) creates a context where companies can identify themselves as a being ‘victims’ of poverty, and take on the role of development agents. WaterAid has played a critical role in developing corporate interest in WASH, because they “think there is a rationale for [companies] to engage from a ‘core’ business perspective” (Interview 46, 2016, unpublished). As noted in Sect. 3.2.1, WaterAid understands ‘the water crisis’ primarily as a human crisis, with widespread negative development consequences. Rationalising collaboration with companies in a similar way as WWF, and IUCN, WaterAid argues that it is a way to mobilise resources for the work that they seek to do, by reaching a different type of audience. Speaking of the organisation’s collaboration with Unilever, an informant noted: They’ve elevated the issue, because…[having] their CEO talking about these issues in places where NGOs aren’t present is really powerful. They also have a leveraging and convening power, beyond WaterAid’s reach. So being able to work with them, when they’ve been having conversations at a higher level, and making sure that WaterAid’s messages are in there has been useful for the organisation (ibid).

Fig. 5.1  Intersection between WASH and business viability. (CEO Water Mandate 2014a: 11)

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Despite the links between WASH and business viability, the uptake amongst companies to address WASH issues has been slow. Several factors contribute to this. In the broadest terms, there is still significant taboo surrounding WASH, preventing intervention. It is, as argued by the former UN Deputy Secretary-General Jan Eliasson, “a problem that people do not like to talk about” (UN News Centre 2013). More specifically, WASH is not yet associated with the same level of business risk: “WASH is not ‘biting’ in the same way as, for example, having to shut down your factory because you haven’t got enough water” (Interview 46, 2016, unpublished). For many companies, WASH issues are also not visible to senior managers, creating a barrier to interventions: “you have a lot of companies that are sitting in headquarters in a country where the issues aren’t ‘real’ for them” (ibid). Furthermore, although some suggest that it is easy “to package and sell [WASH]” (Interview 49, 2016, unpublished), pointing to the significant returns that could be generated (Sect. 5.3), the broad consensus is that companies meet these interventions with scepticism because they are hard to quantify. Essentially, “the hard numbers behind [WASH] are less strong [than for CWS]” (Interview 37, 2016, unpublished). For WASH interventions, it is necessary “to create awareness inside the company that this is not just nice to have, this is essential for the operations. And that is a difficult story to tell” (Interview 48, 2016, unpublished). Despite these restraining factors, companies engage in WASH when possible interventions correspond to the ‘development agent’ criteria set out by Blowfield (2012): alleviate a risk, utilise an opportunity, or reduce an inefficiency. These criteria align with the reasons most often cited whilst conducting research for this project: (1) ensure the wellbeing of the workforce; (2) enhance reputation and consumer relationship building, and; (3) improve the wider socio-economic status of surrounding communities. Table 5.1 links the various motivations for company interventions identified by this research project to the criteria suggested by Blowfield, and combines them with the societal drivers and resulting business risks displayed in Fig. 5.1. Table 5.1 provides the framework for the subsequent sections.

5.3  WASH in the Workplace Corporate intervention to provide WASH in the workplace is primarily a response to production inefficiencies. Nestlé (2016: 31), for example, suggests: “Applying WASH practices can positively impact productivity by improving the health and wellness of our employees and communities, and reducing lost working days.” Having access to WASH matters because “if you have [access to clean] water and wash your hands, you are healthier. Healthy workers [means] less absenteeism. So less turn-over of staff because they’re not leaving, they’re not sick, they’re not caring for sick relatives, [and as a result] there is improved productivity” (Interview 46, 2016, unpublished). Although evidence is scarce, there are studies that show positive correlations between intervention and return on investments. A study conducted by UN-Water (2008) concluded that providing a household with improved WASH

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Table 5.1  Classification of Corporate Interventions in WASH Business motivation for WASH Ensure wellbeing of workforce

Criteria to act as a ‘development agent’ Reduce inefficiency (in production)

Societal driver Human health problems

Improve status of communities 1: Provision of potable water

Alleviate risk (in communities); utilise opportunity (amongst customers) Utilise opportunity (expand consumer base)

Lack of education; economic stagnation Economic stagnation

Alleviate risk (in communities); utilise opportunity (amongst customers)

Human health problem; water pollution

Improve status of communities 2: Provision of hygiene and sanitation products Enhance reputation

Resulting business risk Loss of employee productivity; reduced employee skills ‘Stunted’ consumer spending

‘Stunted’ consumer spending

Reputational risk, reduced sales

services generates an additional 1000 h a year to work, study, and care for children. Another study (Hutton and Haller 2004) established that every US$1 invested in WASH could have a return of US$3–34, depending on the region and technology involved. When Levi Strauss estimated the return on investment for the 6 months long Her project – a factory-based women’s health initiative – it saw a 55% fall in factory absenteeism, and a drop from 50% to 12% in staff turnover rate (WaterAid et al. 2016). Providing adequate WASH services to all employees in core operations is by convention now seen as the bare minimum requirement for any business respecting the Human Right to water, and should be the first business priority in terms of water interventions (CEO Water Mandate 2014a). Although the obligation to respect, protect, and fulfil all human rights ultimately lies with states, there is an increased recognition that businesses have an impact on human rights too (UNGC 2015). Expectations that companies will identify and address such impacts have therefore risen (CEO Water Mandate 2015). As suggested by a representative from an NGO: “they’re increasingly being pushed on the human right to water. Companies are beginning to think about what that means to them, and what role they have to play and, how they can support that” (Interview 23, 2015, unpublished). There is consequently a pressure on companies at least to respect human rights, meaning an obligation to avoid infringing on the human rights of others, and to address any adverse human rights impacts with which they are involved. Put simply, companies have a responsibility to do no harm (UNHRC 2008, A/HRC/8/5). Although the process of reaching this point is the outcome of decades of small steps, there are three milestones that demand special attention. Firstly, in the formation of the UN Global Compact, the initial two founding principles call upon businesses to respect and support human rights, and avoid complicity in human rights abuse (UNGC 2018). The Compact signalled the beginning

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of a new phase in UN engagement with the private sector and altered the UN-Business relationship from “a largely confrontational/reactive attitude toward a more collaborative/proactive one” (Rasche et al. 2012: 14). Through the Compact, the UN has shifted its approach to dealing with the impacts of large companies from one based on inter-state negotiations focusing on regulatory activities, to a multi-sector voluntary approach, incorporating states as well as businesses in the discussions (UNGC 2010; Coleman 2003). Signalling a wider trend, this is one expression of the transition from traditional inter-state policy-making to a more inclusive governance approach (Rasche et al. 2012). Secondly, the Ruggie Framework Protect, Respect, and Remedy: A Framework for Business and Human Rights concluded that companies have a responsibility to “respect” human rights (UNHRC 2008 A/HRC/8/5). Finally, the UN Human Rights Council formally adopted the principles outlined in the Ruggie Framework in 2011 through the resolution Human rights and transnational corporations and other business enterprises (UNHRC 2011 A/HRC/RES/17/4). Naturally, this applies to all issues encompassed under the Human Rights framework, but looking specifically at water, it can be seen that these advances have led to increased expectations that companies will work to align their water management practices with their responsibility to respect human rights (CEO Water Mandate 2015). In 2013, the WBCSD and a number of companies (for example, Nestlé and Unilever) launched a Pledge to all the WBCSD members called ‘WASH in the Workplace’. The Pledge is a direct response by the business community to the integration of water into the Human Rights framework, as well as the SDG agenda. As the name suggests, the Pledge urges the WBCSD members to commit to ensure appropriate access to WASH for all employees in all premises under company control (WBCSD 2018). At the time of writing, however, it is only signed by about 40 of the 200 WBCSD member companies (ibid). To support the Pledge, the same group involved in its launch initiated ‘WASH4Work’ in 2016, with the aim of developing tools and resources to support the mobilisation of action, and to urge governments and NGOs to support engagement (Water Action Hub 2018). Although providing WASH in the workplace is an important step in ensuring the health of a company’s employees, many workers live in communities where clean water and access to adequate sanitation are not available. Investing in WASH solely within the operations may therefore not be enough to ensure wellbeing. Moreover, for companies in certain industries, implementing ‘WASH in the Workplace’ is challenging. For agri-businesses, for example, there is a real issue around how to implement such a Pledge when ‘the workplace’ is a vast farm. As candidly noted by a representative from the agricultural sector: “How do you provide WASH in a 25,000-hectare plantation? You can’t have toilet blocks every 500 m. The cost would be prohibitive” (Interview 42, 2016, unpublished). Consequently, some companies pursue alternative strategies, such as the ones discussed in the following sections.

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5.4  Community Engagement 1: Access to Water Intervention to provide access to clean water in the communities where the company operates is motivated by a need to alleviate risk (physical as well as reputational), and by a desire to utilise an opportunity to increase consumer spending. Coca-Cola (2018), for example, argues: “Safe, accessible water is also essential to the health of people, communities…and economies—important considerations for business growth.” Engaging to provide WASH beyond the company’s ‘fenceline’ is therefore intimately linked to improving business viability. As suggested by the CEO Water Mandate (2011: 11), companies have turned to community engagement because: Companies operate not in a vacuum but in a broader societal context. Indeed, it is increasingly recognized that businesses are part of the social fabric of the communities in which they operate… [Thus,] more companies…see that supporting or actively engaging with communities…is in their enlightened self-interest.

5.4.1  Mitigating the Public-Sector Capacity Gap Some companies provide communities where they operate with potable water because they see insufficient provision as a risk to their business. PepsiCo (2014: 3), for example, pursues “strategic grants in the area of water…to provide underserved communities in water-stressed regions with access to clean and safe water.” Companies may take it upon themselves to address the problem because they lack confidence that governments in under-serviced areas will address the issue at the pace they perceive necessary. As suggested by one informant: “One of the reasons why companies have evolved in this is because of what we call the public governance gap in low-income countries” (Interview 38, 2016, unpublished). Thus, the point made in Chap. 2, that companies’ involvement is incentivised by a perceived ‘public sector capacity gap’ is here reinforced. Most actors consulted – public as well as private – agree that, in theory, governments are responsible for providing WASH to their citizens. As noted above, the Ruggie Framework stipulates that the only legal obligation that businesses have to adhere to is to respect – not remedy – citizens’ right to water. However, the CEO Water Mandate (2014b: 8) advises that, although the duty to provide WASH lies first and foremost with governments, “companies have an important role to play in supporting government efforts.” Supporting this perspective, a corporate representative noted: “[governments] need to acknowledge the responsibility that they have. If they don’t have…the capacities to deliver, then business…becomes really useful; we’re a great implementer” (Interview 42, 2016, unpublished). When companies perceive the public capability to be inadequate, and they have a vested interest in addressing the issue because their operations depend on it, they may move from ‘respecting’ to ‘remedying’ communities’ access to water:

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5  Companies and Water Sanitation and Hygiene Working on the ground in certain areas, we know the shortcomings of [some] government[s]. It is easier on occasion just to put a borehole in than to be having a discussion with the government around that they should be providing water to these communities. Because it is far quicker, far cheaper, and probably the outcome would be the same. [The government] would just turn around and say: ‘why don’t you do it?’ So we go ahead and do some things, but the question now is increasingly: where should that boundary be? Because we can’t do it everywhere (ibid).

A representative from an international organisation raised another example from the mining context where companies often end up providing access to water for the communities where their mines are located: Mining companies are the obvious case when they need to set up a mining camp in the middle of the nowhere because they’re starting a new mine, and actually creating a new township. And they create these services that go with that. And while the mine is still on-­ going, and the town depends entirely on the mine, you can say that there is no conflict between running the community services and running the mine services. When it starts to get difficult is when that community starts to get bigger than the mine. At what point should the community govern itself as a community, rather than as an appendix to the mine? Where do you draw the line? (Interview 16, 2015, unpublished).

These observations bring into sharp focus the roles and responsibilities of governments vis-à-vis companies. We will return to this topic in Sect. 5.4.3.

5.4.2  Mitigating ‘Stunted’ Consumer Spending Companies also provide access to water in communities where they operate in order to utilise an opportunity to increase consumer spending. Coca-Cola (2009: 21) notes: “[a]s a company dependent upon consumer purchasing power, the sustainability of our business depends on sustainable economies.” As explored previously, without access to WASH it is hard to attain economic and human prosperity. For companies that depend on under-serviced communities as a consumer base, initiatives that seek to target WASH in communities represent an attempt to improve the overall prosperity of those areas, and consequently their purchasing power: There is an incredibly clear link between water and general prosperity of your community. It’s where there’s economic growth, where there is social growth, social health, social well-­ being. Our own value chain depends on that. In order for us to be prosperous, we need to help the communities because our products are local. (Interview 24, 2016, unpublished).

A representative from the development community reinforced this perspective: If you provide water, you’re directly helping to improve peoples’ lives. One of the big arguments for improving water and sanitation is that you want to help people become more economically prosperous. You can’t ‘push’ people out of poverty, but you can provide the base for business to come in and take over and help the communities to ‘lift’ themselves up. And when people get to a certain economic status, they become customers. So, if you can lift them…there is a greater customer base. Investing in making people wealthier is like creating your own audience (Interview 7, 2015, unpublished).

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Essentially, the companies that engage in WASH projects often “want to sell high-­volume, low-cost products. And in order to do that, they need people to have money in the bank…And one way to make people wealthier is to make sure that they are healthy” (Interview 31, 2016, unpublished). This is because, as crudely noted by an advisor from an NGO, “sick consumers don’t buy Coke, don’t buy beer” (Interview 46, 2016, unpublished). As a result, “you’ve got Coca-Cola spending hundreds of millions of dollars on WASH projects across Africa” (Interview 31, 2016, unpublished). When a company engages in this type of activity, it generally does so in partnership with one, or several NGOs. WaterAid is, as noted above, the NGO that has been engaging most extensively with companies to further the WASH agenda. In collaboration with WaterAid, the United States Agency for International Development (USAID), and Water & Sanitation for the Urban Poor, Coca-Cola initiated the Replenish Africa Initiative (RAIN) in 2009. Working through The Coca-Cola Africa Foundation, Coca-Cola set out to improve sustainable access to safe water for two million people in Africa by the end of 2015 (Mboya 2016).4 Similarly, H&M and the H&M Foundation both partner with WaterAid. Since 2002, H&M (2015) has raised over £3.5 million for WaterAid, enabling them and their local partners to improve hygiene practices, and provide more than 530,000 people in Bangladesh, India, Pakistan, and Ethiopia with clean water.5 As noted in Chap. 3, many companies see the emerging economies as their most important future markets. SABMiller (2013: 9) estimates: “almost three-quarters of our global revenues are generated in emerging markets, so we have an interest in their social and economic development.” Similarly, PepsiCo (2012: 6) claims to invest aggressively to bolster presence in these markets, which they view as a “very attractive high-growth space”. However, many of these key growth markets are not only experiencing severe water stress, but are often also characterised by inadequate WASH provision. Therefore, the WASH agenda ought to be seen as an integral part of the business strategy on water since “providing clean water and sanitation…in the communities you operate is absolutely commercial, and a business value proposition” (Interview 21, 2015, unpublished).

4  A goal it claims to have achieved. RAIN has thus made an additional pledge to contribute US$35 million to support Pan-African safe water access programmes that will bring the total number of RAIN beneficiaries to six million through a total investment of US$65 million by 2020 (Mboya 2016). 5  In addition to working directly with local partners to implement change, WaterAid call on governments to provide solutions, as they believe that “it is only governments who can create an environment where public and private investments and civil society can all operate effectively” (WaterAid 2018).

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5.4.3  Corporate Water Service Provision: Emerging Debates Prominent issues arise when companies provide water services to communities. Most importantly, when a company takes on this duty, it calls into question public and private roles and responsibilities, and where ‘the boundary’ between them lies. As noted above, the responsibility to provide access to water is undeniably the responsibility of a government. To allow a company to take over responsibility for providing this service is controversial, particularly if the company is a commercial entity and not a private operator acting under, for example, a concessions contract,6 a BOT project,7 or as a joint venture.8 Allowing a company to provide these services thus represents a reputational risk for the public sector “[because] fundamentally, the ownership [of the resource] needs to be in the public sector…you need to have some sense that there is a link between individual users and their rights. And that the protection of those rights isn’t left entirely to the market” (Interview 40, 2016, unpublished). There is also a real concern amongst companies not to be perceived as crossing the boundary between the public and the private role, as doing so poses a significant reputational risk to them as well. As noted by a corporate representative: “the danger is that we overstep the mark between what the responsibility should be for government, and what the responsibility should be for business” (Interview 42, 2016, unpublished). There is thus a risk on both sides associated with boundary crossing. However, as seen from the statements above, it still does happen, on occasion, that companies provide access to water in communities. When they do, there is a tendency for governments to take a step back and, as suggested by WWF (2009: 33): “abdicate [responsibility because governments]…with stretched resources will often re-­ prioritise effort away from areas that are being managed, which leaves the corporate with the entire responsibility for a non-core function.” Witnessing this happening in the mining sector, one informant argued that not only does this cause a “transfer of responsibility” that is problematic, but it could also cause conflict, as it creates “new expectations on the private sector” to provide these services long-term, which they may not be equipped to meet (Interview, 29, 2016, unpublished). Another issue raised when companies provide access to water is the extent to which they consider the whole water cycle. As noted above, it may be “easier on 6  The public authority transfers the responsibility of water services in a specific area, such as collection, treatment, or distribution, to the private sector. This can be done by granting full concession to the private company, implying the transfer of possession from the public to the private authority. 7  In a typical Build Operate Transfer (BOT) project, the public authority grants the right to a private company to develop and operate what would traditionally be a public-sector project. The project company obtains financing for the project, produces the design and constructions of the works, and operates the facility during the specific period in return for a revenue stream provided by sales of its services. At the end of the specified period, the facility is transferred back to the authority. 8  In the case of an existing utility, shares in the utility are divested to the private sector. In the case of a new build project, the project company will be established with a joint share ownership structure.

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occasion [for a company] just to put a borehole in” (Interview 42, 2016, unpublished). However, sustainable access to safe WASH services requires more than just a well. Among other things, it demands proper wastewater management, pollution control, and sewage treatment to make sure that the water withdrawn is returned safely to the system. Without an adequate public water network, ensuring that the suitable infrastructure is in place, the problem can be exacerbated if simply drilling a well, or providing toilets. Although many companies that engage in CWS also work on wastewater management within their operations, it is unlikely that they take the same holistic systems approach as a government is required to do and consider sewage treatment to the same degree as water access.

5.5  Community Engagement 2: Hygiene Products Whilst the direct provision of WASH services by companies is still uncommon, the ‘provision’ (sale) of hygiene products to underserviced communities through BoP schemes is seen as a lucrative business opportunity. Corporate intervention in WASH through the provision of hygiene products is motivated by a desire to increase sales and consumer spending. The underlying motivation is partially the same as for companies that provide access to clean water, as the provision of hygiene products can also result in better health, thus requiring a lower proportion of income for healthcare and leaving a higher proportion to be spent on other products (which these companies may also sell). However, for companies that provide hygiene products, there is also a direct commercial incentive. Rather than seeking to improve the wellbeing of communities through the provision of a service (clean water), which can increase consumer spending indirectly, companies that sell hygiene goods provide a product (for example, soap) that can improve health, but which when sold also generates direct economic profits for the company. Unilever is an example of a company that engages in the WASH space in this manner, because hygiene products constitute a large proportion of its product portfolio. Placing itself within the WASH agenda, Unilever (2014: 16) writes: “with our portfolio of health and hygiene brands, Unilever is well placed to help.” Discussing Unilever’s engagement, an advisor from an NGO noted: “[Unilever’s] business model [is] to sell soap. There could not be a clearer business case to engage” (Interview 47, 2016, unpublished). Similarly, a representative from an international organisation suggested: “[Unilever engage] because they sell soap…if there is a direct link between the product you sell, and the WASH agenda, then it makes sense to be active” (Interview 48, 2016, unpublished). Because a lot of Unilever’s products require water for their use, water scarcity could have a potentially negative business impact. However, “constraint is the mother of invention, so it is also a very fertile area for Unilever to think about innovation” (Interview 27, 2016, unpublished). Part of the innovative thinking revolves around developing products that will “help people wash their clothes, or wash their

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hair with no water, or radically less water” (ibid). However, another part of the agenda revolves around exploiting new markets.

5.5.1  Creating the BoP Section 5.1.3 introduced the ‘Bottom of the Pyramid’ (BoP) as a central market-­ based mechanism that, in theory, generates profits for a company’s shareholders, whilst also creating social returns. As noted, the aim of BoP ventures is to target the socio-economic segment (i.e. poor communities) that has traditionally been under-­ served by the capitalist market. Before exploring how Unilever has utilised this scheme as a way to engage in WASH, it is necessary to examine the nature of BoP ventures critically. Most studies that assess these schemes focus on the nature of the product sold, and its contribution to alleviating poverty (Arnold and Valentin 2013), or the role that the citizens play, and the different outcomes that the schemes have when citizens are utilised as consumers, or also as suppliers, producers, and/or employees (Agnihotri 2013). Dolan and Roll (2013), however, provide a much more nuanced discussion which questions the core conceptualisation of the BoP. They argue that businesses do not simply tap ‘underserved’ consumers, but have themselves created the BoP economies through various market technologies, discourses, and practices, which “render the spaces and actors at the bottom of the pyramid knowable, calculable, and predictable to global business” (ibid: 125). Crucially, “the BoP does not exist outside of its articulation through these tools; it is described and then populated rather than discovered” (ibid: 129). According to their analysis, the BoP comes into existence through four processes: (1) the identification of a development/market problem; (2) legitimacy-building through external sources of expertise; (3) the specification of proposed beneficiaries (i.e. under-served consumers), and; (4) the creation of beneficiaries – consumers – through market education. The first step aligns with the wider shift of the development agenda where poverty is framed as a result of lagging economic growth. As evident from previous discussions, framing the issue in these terms renders business a primary actor and market solutions the ‘natural’ intervention. In the second step, a business establishes itself as a legitimate development actor by calling upon other fields of expert knowledge to convert commercial products – such as soap – into social goods. Drawing on external expertise, soap is no longer simply a commodity, but a remedy for diarrhoeal diseases, and by extension, child mortality. Thus, soap is transformed into “a ‘social good’ that is capable of simultaneously combating disease, tackling poverty and realizing value for shareholders” (Cross and Street 2009: 5). By transforming a product in such a way, Dolan and Roll (2013: 131) argue, companies are able to “confound the distinction between moral and market objectives.” In the third step, the poor, who have traditionally been seen as development beneficiaries, are being reframed as ‘modern consumers’. This entails a process whereby a “rights-bearing subject—a citizen whose rights are bestowed and enshrined by the

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state [is redefined as]—…a ‘value-driven consumer’ whose needs, desires, and preferences are fulfilled through the marketplace” (ibid: 132). Crucially, in this new narrative, “it is choice, rather than need, that characterizes the new development beneficiary” (ibid). In his assessment of the SDGs, Pingeot (2014) makes a similar point, and argues that in a narrative where companies play the central role in development, the market is the only way for individuals to relate to the world, either as consumers or as entrepreneurs. Evidence of this mind-set can be found in the High-­ Level Panel report (2013: 7), which emphasises how the new development agenda should “give people the assurance of personal safety… [and] make it easy for them to follow their dreams and start a business.” Dolan and Roll argue that in the final step of creating the BoP – once the problem is framed, the product solution legitimised, and the consumer identified – consumption is catalysed. Where companies have previously been absent, this not only entails making the product available, but also requires cultivation of new aspirations, desires, and consumption habits.

5.5.2  Tapping the BoP Unilever (2008: 27) states that embedded in its growth strategy is an explicit targeting of the population at the ‘base of the pyramid’ “through new distribution channels, using smaller formats or creating new products.” In fact, when Prahalad coined the BoP concept, he was inspired by the Indian subsidiary of Unilever – Hindustan Unilever Limited (Cross and Street 2009). Since early 2000, this company has tied the sales strategy of one of its oldest brands – Lifebuoy soap – both to educational campaigns seeking to improve hygiene practices, and to micro-credit schemes seeking to improve livelihoods (ibid). In 2002, Hindustan Unilever initiated the Swasthya Chetna (‘Health Awakening’) programme in India, focusing on the eight Indian states where deaths from diarrhoeal diseases were highest and soap sales were lowest. The programme’s initial aim was to reach and educate 200 million people  – 20% of the Indian population – about basic hygiene habits, including washing hands with soap (Unilever 2005). By 2015, the target had expanded to one billion consumers across Asia, Africa, and Latin America (Shared Value Initiative 2018). Reporting progress, Unilever claims to have reached9 337 million people between 2010 and 2015 (Unilever 2015). Following BoP thinking, Unilever (2005: 8) emphasises that Swasthya Chetna is not a philanthropic initiative but “a marketing programme with social benefits.” Recalling Dolan and Roll’s (2013) analysis of how companies do not simply ‘tap’ the BoP, but create it, Unilever has done so masterfully. Through Swasthya Chetna, it managed to recast a poverty problem as a market solution (sell hygiene products to combat poor health), build legitimacy through drawing on expertise that links 9  It is unclear what Unilever means by ‘reached.’ It is not explicitly stated whether this means people who have been part of the programme, the number of people who have demonstrated behaviour change, or people who have bought the product.

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good hygiene practices to reduced outbreaks of diarrhoeal disease (recasting ‘soap’ from a commercial to a social good), identify the customers (communities with high outbreaks of diarrhoeal disease), and finally, through outreach programmes, construct the demand for the product. Since the target group is among the poorest in society, Unilever introduced an 18-gram bar of Lifebuoy soap – enough for one person to wash their hands once a day for 10 weeks – for a price of two rupees (about US$0.03).10 Making the product affordable to the ‘base of the pyramid’, and combining the introduction of the product with public education and outreach campaigns, Unilever reports a remarkable increase in sales of the product. By 2004, Lifebuoy sales had grown by 20% in India and, as the programme has expanded, Unilever has continued to see double-digit sales growth year over year (Shared Value Initiative 2018). However, the programme has been criticised for masking commercial incentives behind a social cause (Cross and Street 2009). This perspective is reinforced by the fact that evidence linking the programme to documented health benefits is sparse. Hindustan Unilever (2014) has reported11 that Lifebuoy’s ‘Help a Child Reach 5’ campaign had resulted in an overwhelming drop in incidences of diarrhoea, down from 36% to 5% in Thesgora in India. However, despite claiming to have ‘reached’ 337 million people, no overall assessment of the programme’s global health impact is publicly available.

5.6  WASH and Reputational Enhancement Maintaining and strengthening its ‘social licence to operate’ is an important reason for why a company engages in WASH.  For example, a corporate representative notes: “if we have water in a community, which doesn’t have water, it’s not good. We lose our social licence to operate” (Interview 26, 2016, unpublished). Research has shown that companies that make a positive contribution in the communities where they operate experience an enhanced reputation, and consequently, their social licence is reaffirmed. In these cases, because the perception of the business in the community is positive, strengthened reputation may also provide some degree of protection from future unanticipated reputational risks (Rangan et al. 2012; Owen 2006). The CEO Water Mandate (2014a) therefore argues that the concept of a ‘social licence to operate’ has been a critical driver for investments, including the provision of WASH services. Efforts to develop WASH services in a community can also improve a company’s reputation amongst its consumers (ibid). There has been a significant rise in the extent to which consumers deem sustainability – environmental as well as social – to be an important aspect of a company’s portfolio, making engagement in such  To attain sufficient health outcomes, it would, however, be necessary for a person to wash his/her hands more than once a day. 11  Based on an independent evaluation conducted in 2013, of 1485 households with children aged below 12 years. 10

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issues an important part of building a successful brand. Thus, in a competitive marketplace, engaging in such projects can serve as a differentiator (Blowfield 2007). When communicating sustainability efforts, companies often associate ‘sustainability’ with ‘innovation’ (see Sarni and Grant 2018; Sarni 2013). For example, one of the informants quoted above spoke of ‘innovation’ in product development as a direct response by Unilever to assist their consumers in dealing with water insecurity. Recognising the importance for a company to demonstrate ‘visionary thinking’, Gehani (2016) consequently argues that it is those businesses that express sustainability through innovation in their brand which will be successful amongst consumers in the future. Although there are instances where companies provide WASH services, some commentators remain critical and question whether companies really treat WASH as a ‘core’ business issue, or if their engagement is predominantly driven by a desire to improve their reputation. While a representative from an NGO noted: “we’re starting to see more of the engagement…being more closely aligned with business interest,” others remain sceptical (Interview 46, 2016, unpublished). An independent consultant argued that when companies engage, “it is usually from their CSR stuff, or their social licence to operate stuff. It is not from their commercial side” (Interview 44, 2016, unpublished). Similarly, a representative from an international organisation asked: “Can we move forward because this is core to the business?… Yes, there is a lot of noise from companies…to put money in WASH, but the moment you start talking about it as a core business risk or issue [they go quiet]” (Interview 48, 2016, unpublished). Assessment of where the money for WASH is diverted from supports the more sceptical stance. In most cases, although a company supports a project, the money invested is channelled through a charitable foundation attached to the business, such as The Coca-Cola Foundation, or the H&M Foundation. Critics could argue that this is a strategy to avoid tax, since donations made through foundations are often tax deductible (Wulfson 2001). However, it is also noteworthy because channelling investments through the charitable arm of a company tends to indicate perception of a weaker link to the core business. Newborne and Dalton (2016: 9) argue: “the further from the factory fence an action…is located, the more likely it will be supported by a charitable foundation, while the activities of the core for-profit arms of companies typically come in the ‘own use’ category.” However, these authors also found that some companies use the foundation to obtain greater fiscal flexibility. Interviewing a business representative, Newborne and Dalton (ibid: 100) got the response: Our water work is funded by the company’s foundation. This is a strategic choice. Corporate culture means that any allocation from core budget suddenly moves into the realm of quarterly returns from that spend/investment, profit generated from that allocation, etc… Foundation money…provides flexibility and allows the company to invest in longer term strategic issues that it needs to be aware of.

The amount of money invested in WASH also reinforces scepticism. While it may appear substantial, the sum is rather modest in comparison with the profits

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generated by the companies, and the sum distributed to shareholders (ODI 2012). In 2012, Coca-Cola reported donations over 5 years of $247 million to ‘community water partnership’ projects – an average of around $50 million per year (Coca-Cola 2012). In contrast, in the financial year to December 2011, the company generated $8.6bn in net income, down from $11.8bn in the previous year (Coca-Cola 2011). In 2011, this consequently constituted a distribution ratio of 1:172 (ODI 2012). This divergence suggests that the extent to which businesses perceive WASH as a core business issue is questionable.

5.7  Questioning Win-Win Outcomes Companies have long lived by the mantra: ‘the business of business is business’. The reframed development paradigm, requiring business to step outside this realm and create value not only for shareholders, but also for society, thus fundamentally challenges traditional conventions. It also contradicts most current business models, since many of the large MNCs are legally obliged to prioritise the creation of shareholder value. Although the rhetoric of win-win solutions – exemplified through the BoP schemes – tends to minimise potential tensions between global development and business agendas, “making profits and assisting the poor and vulnerable may often be oppositional goals” (Banks et al. 2016: 246). Speaking from experience of collaborating with various private sector actors during development projects, an advisor from a UN body noted: If we look at it very simplistically, development objectives are often about…addressing those who are vulnerable, left behind, marginalised and poor and so on. That’s the objective for development actors… It doesn’t necessarily mean that from a strict business perspective, that you’re getting your best bargain for your buck. Because your best bargain for your buck would probably be to provide services to those that are a bit more well off. So, there is a little bit of a difference in what we’re trying to achieve (Interview 8, 2015, unpublished).

In addition, companies tend to be guided by an ‘impact-based’ rather than a ‘needs-­based’ mind-set: The approach that a lot of companies take when they address [issues in] communities, is to identify which of the communities are going to have biggest impact on them. So, who is going to cause them the most trouble?…The concern for [NGOs] is that the vulnerable communities aren’t the ones who are shouting the loudest, or who are having the biggest impact” (Interview 46, 2016, unpublished).

To assume uncritically that business interest and development objectives readily align would be naïve. As this chapter has shown, there are cases where there is a clear incentive for companies to act as ‘development agents’ because it benefits their business. However, to assume that they can provide a remedy for all development shortcomings would be misguided. As noted in Chap. 2, businesses tend to ignore issues that fall beyond the realms of their own business interests, so that their “discussions of ‘exclusion’ tend to be of services that can be extended to poor popu-

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lations, not of the inequalities in power and voice that keep poor populations systematically socially and politically excluded” (Dolan and Roll 2013: 192). Perceiving poverty as a symptom of market failure, businesses are capable of addressing only those poverty issues for which they can produce a market solution.

References Agnihotri, A. (2013). Doing good and doing business at the bottom of the pyramid. Business Horizons, 56(5), 591–599. Arnold, D. G., & Valentin, A. (2013). Corporate social responsibility at the base of the pyramid. Journal of Business Research, 66(10), 1904–1914. Banks, G., Scheyvens, R., McLennan, S., & Bebbington, A. (2016). Conceptualising corporate community development. Third World Quarterly, 37(2), 245–263. Banks, N., & Hulme, D. (2014). New development alternatives or business as usual with a new face? The transformative potential of new actors and alliances in development. Third World Quarterly, 35(1), 181–195. Blowfield, M. (2007). Reasons to be cheerful? What we know about CSR’s impact. Third World Quarterly, 28(4), 683–695. Blowfield, M. (2012). Business and development: Making sense of business as a development agent. Corporate Governance, 12(4), 414–426. Blowfield, M., & Dolan, C. S. (2014). Business as a development agent: Evidence of possibility and improbability. Third World Quarterly, 35(1), 22–42. CEO Water Mandate. (2011). The CEO Water Mandate: An initiative by business leaders in partnership with the international community. New York: UNGC. CEO Water Mandate. (2014a). Exploring the business case for corporate action on sanitation (White Paper). Oakland: Pacific Institute. CEO Water Mandate. (2014b). The CEO water mandate fourteenth working conference meeting summary September 1–3, 2014 Stockholm, Sweden. Oakland: Pacific Institute. CEO Water Mandate. (2015). Guidance for companies on respecting the human rights to water and sanitation: Bringing a human rights lens to corporate water stewardship. Oakland: Pacific Institute. Clarke, J.  S. (2015). Child labour on Nestlé farms: Chocolate giant’s problems continue. The Guardian, [online]. Available at https://www.theguardian.com/global-development-professionals-network/2015/sep/02/child-labour-on-nestle-farms-chocolate-giants-problems-continue. Accessed 24 Oct 2018. Coca-Cola Company. (2009). Live positively: 2008/2009 sustainability review. Atlanta: The Coca-­ Cola Company. Coca-Cola Company. (2011). The Coca-Cola 2011 annual review: Passionately refreshing a thirsty world. Atlanta: The Coca-Cola Company. Coca-Cola Company. (2012). The water stewardship and replenishment report. Atlanta: The Coca-­ Cola Company. Coca-Cola Company. (2018). Our approach to water stewardship. [online] Available at http:// www.coca-colacompany.com/stories/about-water-stewardship. Accessed 24 Oct 2018. Coleman, D. (2003). The United Nations and transnational corporations: From an inter-nation to a “beyond-state” model of engagement. Global Society, 17(4), 339–357. Cross, J., & Street, A. (2009). Anthropology at the bottom of the pyramid. Anthropology Today, 25(4), 4–9. Dolan, C., & Roll, K. (2013). Capital’s new frontier: From “unusable” economies to bottom-of-­ the-pyramid markets in Africa. African Studies Review, 56(3), 123–146.

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Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, September 13, 1970. Available at http://umich.edu/~thecore/doc/Friedman. pdf. Accessed 24 Oct 2018. Gehani, R. R. (2016). Corporate brand value shifting from identity to innovation capability: From Coca-Cola to Apple. Journal of Technology Management & Innovation, 11(3), 11–20. Goldman, M. (2007). How “Water for All!” policy became hegemonic: The power of the World Bank and its transnational policy networks. Geoforum, 38(5), 786–800. Grusky, S. (2001). Privatization tidal wave: IMF/World Bank water policies and the price paid by the poor. Multinational Monitor, 22(9), 14–19. H&M. (2015). Conscious actions, sustainability report 2015. Stockholm: H&M. Hickman, M. (2010). 21 Workers die in fire at H&M factory. The Independent, [online]. Available at http://www.independent.co.uk/life-style/fashion/news/21-workers-die-in-fire-at-hm-factory-1914292.html. Accessed 24 Oct 2018. High-Level Panel of Eminent Persons on the post-2015 Development Agenda. (2013). A new global partnership: Eradicate poverty and transform economies through sustainable development. New York: UN. Hindustan Unilever. (2014). Lifebuoy reduces diarrhoea from 36% to 5% in Thesgora. [online] Available at https://www.hul.co.in/news/press-releases/2014/lifebuoy-reduces-diarrhoeafrom-36-perc-to-5-perc-in-thesgora.html. Accessed 24 Oct 2018. Hutton, G., & Haller, L. (2004). Evaluation of the costs and benefits of water and sanitation improvements at the global level. Geneva: WHO. IFC (2014) Shared prosperity through inclusive business: How successful companies reach the base of the pyramid. Washington, DC: IFC. Kalmijn, T. (2010). PepsiCo’s Dan Bena on water stewardship and strategy. Sustainable Brands, [online]. Available at http://www.sustainablebrands.com/news_and_views/articles/pepsicosdan-bena-water-stewardship-and-strategy. Accessed 7 Dec 2018. Kinsley, M. (2008). Creative capitalism: A conversation with Bill Gates, Warren Buffett, and other economic leaders. New York: Simon and Schuster. London, T., Anupindi, R., & Sheth, S. (2010). Creating mutual value: Lessons learned from ventures serving base of the pyramid producers. Journal of Business Research, 63(6), 582–594. Mawdsley, E., Savage, L., & Kim, S. (2014). A ‘post-aid world’? Paradigm shift in foreign aid and development cooperation at the 2011 Busan High Level Forum. The Geographical Journal, 180(1), 27–38. Mboya, S. (2016). Let it RAIN – Taking our replenish Africa initiative to the next level. [online] Available at http://www.coca-colacompany.com/coca-cola-unbottled/let-it-rain-taking-ourreplenish-africa-initiative-to-the-next-level. Accessed 24 Oct 2018. Nestlé. (2006). The Nestlé concept of corporate social responsibility as implemented in Latin America. Vevey: Nestlé S.A. Nestlé. (2016). Nestlé in society: Creating Shared Value and meeting our commitments 2016. Vevey: Nestlé S.A. Newborne, P., & Dalton, J. (2016). Water management and stewardship: Taking stock of corporate water behaviour. Gland/London: IUCN/ODI. ODI. (2012). Private sector investment in water management (Briefing Paper 78). London: ODI. Owen, D. P. (2006). Beyond corporate social responsibility: The scope for corporate investment in community driven development. Washington: World Bank. PepsiCo. (2012). PepsiCo 2011/2012 GRI report. New York: PepsiCo. PepsiCo. (2014). Delivering access to safe water through partnerships. Purchase: PepsiCo. Pingeot, L. (2014). Corporate influence in the Post-2015 process (Working Paper). Aachen/Berlin/ Bonn/New York: Misereor/GPF/Brot für die Welt. Prahalad, C. K., & Hammond, A. (2002). Serving the world’s poor, profitably. Harvard Business Review, 80(9), 48–57. Prahalad, C.  K., & Hart, S.  L. (2002). The fortune at the bottom of the pyramid. Strategy + Business, 6, 1–14.

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Rangan, K. Chase, L.A., & Karim, S. (2012). Why every company needs a CSR strategy and how to build it (Working Paper 12-088). Cambridge, MA: Harvard Business School. Rasche, A., Waddock, S., & McIntosh, M. (2012). The United Nations global compact: Retrospect and prospect. Business & Society, 52(1), 6–30. SAB Miller. (2013). Sustainable development summary report 2013: The value of local growth. London: SABMiller plc. Sarni, W. (2013). Getting Ahead of the “Ripple Effect”: A framework for a water stewardship strategy. Deloitte Review, 12, 84–97. Sarni, W., & Grant, D. (2018). Water stewardship and business value: Creating abundance from scarcity. New York: Earthscan. SDSN. (2014). An action agenda for sustainable development: Report for the UN Secretary-­ General. 6 June 2013. New York: UNSDSL. Shared Value Initiative. (2018). Unilever s lifebuoy improves hygiene in rural India. [online] Available at https://sharedvalue.org/examples/lifebuoy-swasthya-chetna-soap-and-publichealth-education. Accessed 24 Oct 2018. Swaithes, A. (2015). Water, prosperity, and the new global goals for sustainable development. The new bottom line: Collaborative solutions for growth, FT Water Summit 2015, October 27th, London. [online] Available at https://live.ft.com/Events/2015/FT-Water-Summit. Accessed 23 Oct 2018. UNDP. (2008). Creating value for all: Strategies for doing business with the poor. New  York: UNDP. UNGC. (2010). Coming of age: UN-private sector collaboration since 2000. New York: UNGC. UNGC. (2015). Impact: Transforming business, changing the world. New York: DNV GLAS. UNGC. (2018). The ten principles of the UN global compact. [online] Available at https://www. unglobalcompact.org/what-is-gc/mission/principles. Accessed 24 Oct 2018. UNGC & WBCSD. (2013). Joint report to the high-level panel of the post-2015 UN development agenda. [online] Available at www.unglobalcompact.org/docs/issues_doc/development/ Joint_Report_HLP.pdf. Accessed 24 Oct 2018. UNHRC. (2008). Protect, respect and remedy: A framework for business and human rights. Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie. A/HRC/8/5, submitted 7 April 2008. UNHRC. (2011). Human rights and transnational corporations and other business enterprises. A/HRC/RES/17/4. Unilever. (2005). Unilever environmental and social report. Merseyside: Unilever PLC. Unilever. (2008). Sustainable development 2008: An overview. Merseyside: Unilever PLC. Unilever. (2014). Unilever sustainable living plan: Scaling for impact. Merseyside: Unilever PLC. Unilever. (2015). Unilever sustainable living plan: Mobilising collective action. Merseyside: Unilever PLC. UN News Centre. (2013). Deputy UN chief calls for urgent action to tackle global sanitation crisis. [online] Available at http://www.un.org/apps/news/story.asp?NewsID=44452#. WDxgn2Mwzdk. Accessed 24 Oct 2018. UN-Water. (2008). Sanitation is an investment with high economic returns. Factsheet. International Year of Sanitation 2008. [online] Available at https://esa.un.org/iys/docs/2%20fact-sheet_economic%20benefits.pdf. Accessed 25 Oct 2018. UN-Water. (2016). Water and sanitation interlinkages across the 2030 Agenda for Sustainable Development. Geneva: UN-Water. UN-Water. (2018). A dedicated water goal. [online] Available at http://www.unwater.org/sdgs/adedicated-water-goal/en/. Accessed 24 Oct 2018. Warhurst, A. (2005). Future roles of business in society: The expanding boundaries of corporate responsibility and a compelling case for partnership. Futures, 37(2–3), 151–168. Water Action Hub. (2018). WASH4Work. [online] Available at https://wateractionhub.org/wash4work/. Accessed 24 Oct 2018.

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WaterAid. (2018). Our approach. [online] Available at http://www.wateraid.org/uk/what-we-do/ our-approach#/delivering-services. Accessed 24 Oct 2018. WaterAid, The CEO Water Mandate, & WBCSD. (2016). Scaling corporate action on access to water, sanitation and hygiene in supply chains. White Paper (Draft) August, 2016. WBCSD. (2004). Doing business with the poor, a field guide: Learning journeys of leading companies on the road to sustainable livelihoods business. Conches-Geneva: WBCSD. WBCSD. (2018). Business action for safe water, sanitation and hygiene. [online] Available at http://www.wbcsd.org/washatworkplace.aspx. Accessed 24 Oct 2018. Wulfson, M. (2001). The ethics of corporate social responsibility and philanthropic ventures. Journal of Business Ethics, 29(1/2), 135–145. WWF. (2009). Investigating shared risk in water: Corporate engagement with the public policy process. Surrey: WWF-UK.

Part III

Influence

Chapter 6

Corporate Legitimacy in Collective Action

Companies are getting into ‘political games’ here. Interview 38, 2016, unpublished

A recurring topic in previous chapters has been the instrumental role that NGOs play in incentivising companies to engage in CWS. So far, however, little attention has been devoted to how NGOs and companies work together. Thus, this chapter turns to consider ‘collective action,’ a term used in the water sector to denote a multi-stakeholder partnership working together to find common solutions. Collective action has become an integral component of CWS; there are many projects of various sizes and budgets spanning the globe. To investigate this area fully would demand assessment of the planning and execution of the various projects, which is beyond the scope of this book. Instead, this chapter will critically assess one element central to all projects: how companies establish themselves and their actions as legitimate when engaging in collective action. The processes of legitimation – understood as “the justification of authority” (Bodansky 1999: 601) – are of particular importance in the collaborative context because, through these projects, companies move beyond their own bounded sphere of influence (for example, a factory, farm, or plantation) into communities and political deliberations. Essentially, this is where a company’s actions shift from the realm of water management to water governance. Because companies are non-elected entities, they cannot draw upon conventional forms of democratic legitimacy, as an elected government may. Instead, they are required to invoke alternative sources of authority to establish themselves as legitimate actors. This chapter begins by revisiting the topic of multi-stakeholder governance (Chap. 2) and provides examples of collective action in the water sector. This overview lays the foundations for understanding the grounds on which companies’ legitimacy may be questioned when engaging in such initiatives. Next, alternative sources of authority beyond ‘democratic legitimacy’ are identified and used as a framework to critically assesses how companies establish legitimacy in collective action.

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_6

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6.1  Revisiting Multi-Stakeholder Governance Chapter 2 argued that global governance – characterised as an intangible structure, a political function, and an unconventional set of actors  – breaks from the Westphalian tradition, and constitutes a progressive advancement of practice in the realm of international policy-making. As noted, although governance does not automatically mean a decline in state power (Compagnon et al. 2012; Reed and Bruyneel 2010), it does imply the entry of new actors, such as companies, and new mechanisms to address international political issues, including multi-stakeholder partnerships (Biermann and Pattberg 2008, 2012). Emerging alongside traditional multi-lateral agreements, multi-stakeholder partnerships are conceived as a form of ‘post sovereign governance’ (Bäckstrand 2006). Operationalised through voluntary cooperation across sectors, such partnerships “display a minimal degree of institutionalization, have common non-hierarchical decision-making structures and address public policy issues” (Steets 2004: 25).1

6.1.1  Collective Action The rise of multi-stakeholder partnerships has permeated the water sector under the banner of ‘Collective Action’: “a new manner of solving complex social problems, one in which unlikely partners come together with new business models, technologies, and an appetite to work together to find solutions” (Lopez and Sarni 2015: 23). One prominent initiative that facilitates collective action in the stewardship arena is IWaSP. It is managed by the GIZ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and DFID. The programme has a total funding of over €27 m, of which BMZ has committed €6 m, and DFID a total of €21.4 m. Coca-Cola has provided an additional €0.2 m to support partnerships in Tanzania and Uganda (IWaSP 2018a). As of 2018, the programme facilitates 29 local partnerships involving more than 100 public institutions, companies, and NGOs across 9 countries (IWaSP 2018b). Each local project has its own objectives and draws on the expertise of different partners. For example, in South Africa, IWaSP works with South African Breweries (SAB), WWF-South Africa, and the National Department of Environmental Affairs to improve the water balance in the 1  This definition excludes a number of other cooperative relationships that are commonly labelled as ‘partnerships’, which will not be considered in this chapter. For example, Public-Private Partnerships (PPPs), where a government outsources a public service to a private enterprise, will not be discussed because of the partnership’s contractual, and thus highly institutional nature. Corporate philanthropy where a company forms a partnership with a civil society organisation with the sole aim of sponsoring an initiative will also be excluded because, although the aim may be to address a public policy issue, the collaboration is not set up to facilitate collaborative decision-making, and does not display a non-hierarchical decision-making structure. In addition, both these forms of partnerships are of a bilateral rather than multi-lateral nature.

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Southern Cape hop-growing region. Activities have included groundwater monitoring and supporting on-farm water efficiency (IWaSP 2016a). In contrast, in Uganda, IWaSP works with the Ministry of Water and the Environment and The Coca-Cola Africa Foundation to improve community livelihoods and water management in the River Rwizi catchment. There, activities have included the development of community-­based wetland action plans, with approximately 500  ha of wetlands restored at the time of writing (IWaSP 2016b). Another prominent initiative is the 2030 WRG. It was formed by WEF in 2008 but is, since January 2018, hosted by the World Bank Global Water Practice.2 The programmes’ global partners include multinational companies,3 bilateral donors,4 development banks,5 international NGOs,6and international organisations7 (2030 WRG 2018a). The global partners fund the 2030 WRG, although local partners make additional financial contributions for specific projects. Operating in a similar way to IWaSP, the 2030 WRG facilitates local initiatives, focusing on Latin America, Africa, and Asia. In Tanzania, the WRG works with IWaSP, IUCN, and Olam to restore water flow in the Ruaha River, and to design and launch ‘innovative financing instruments’ for water-efficient smallholder agriculture (2030 WRG 2018b). The financing landscape for water has seen significant diversification, with mechanisms like blended finance,8 green bonds,9 local currency financing,10 social impact investing,11 and debt swaps12 being tested around the world (UNDP and AFD 2016). In Mongolia, the 2030 WRG works with WWF and CocaCola to develop projects and financing for water-use efficiency within industry and 2  Prior to being hosted by the World Bank Global Water Practice, 2030 WRG was hosted by the International Finance Corporation 2012–2017. 3  Coca-Cola, PepsiCo, Nestlé, ABInBev, Grundfos, and Dow. 4  Swiss Agency for Development and Cooperation, the Swedish International Development Cooperation Agency, and the Government of Hungary. 5  International Finance Corporation, the World Bank, African Development Bank, and InterAmerican Development Bank. 6  International Union for Conservation of Nature, and Building Resources Across Communities. 7  United Nations Development Programme, Global Green Growth Institute, World Economic Forum, and the Global Water Partnership. 8  Blended Finance is an approach to development finance that employs the strategic use of development finance to mobilise private capital flows to developing markets (OECD/WEF 2015). 9  A ‘green’ bond signifies a commitment to exclusively use the funds raised to finance or re-finance ‘green’ projects, assets, or business activities (OECD 2015). 10  A decade of financial crises in emerging markets has demonstrated that currency markets can be unexpectedly volatile. Firms that borrow in currencies different from those of their revenues are ultimately gambling. Thus, there is an increased push for lending and borrowing in local currency to finance long-term development projects (IFC 2018). 11  Social Impact Investment is the provision of finance to organisations addressing social needs with the explicit expectation of a measurable social, as well as financial, return (OECD 2018). 12  Debt swaps refer to the exchange of debt in the form of a loan or, more typically, of securities other than shares, for a new debt contract (i.e. debt-debt swap) or the exchange of debt for equity shares (i.e. debt-equity swap) (IMF 2000).

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mining clusters, and to develop appropriate water valuation methodologies to incentivise efficient water use and wastewater treatment across sectors (2030 WRG 2018c).

6.1.2  Why Has Collective Action Emerged? The rise of – and the continued demand for – multi-sectoral partnerships stems from the recognised interdependence between the different actors (Young 2009; Karkkainen 2004) when faced with new, complex problems like that of the water challenge. Recognising that “we have entered an era when we can no longer [solve water issues] alone” (Interview 43, 2016, unpublished), companies and NGOs alike argue that “the only way to address [these issues] is to work together” (Interview 48, 2016, unpublished). Working collectively has many benefits. One is “how much you can achieve individually versus collectively” (Interview 2, 2015, unpublished). Another is the sharing of knowledge: “different people have different experiences and different expertise and if you pool them, you would be able to…address different parts of the problem” (ibid). Sharing the financial burden is another key reason; when working together, “one dollar becomes two, becomes three, becomes four, so you can do something more impactful” (Interview 9, 2015, unpublished). Many perceive companies as critical participants in initiatives because of their substantial use of – and impact upon – water resources: “[Companies] don’t own the resource, but they do own the impacts that they have upon that resource, and that’s why they have a role and a responsibility for managing [water], and mitigate[ing] [their impact]” (Interview 13, 2015, unpublished). Companies are de facto involved “because water is an ingredient…use[d] to produce what [they] produce” (Interview 15, 2015, unpublished). Moreover: Most values and decisions [about water] are based on economic transactions. They are… about individual consumers all around the world deciding that they need to buy something, or making that decision in the market, and how those decisions in the market influences political choices by governments. And if you try and leave out the private sector, then you’re going to miss that whole story” (Interview 40, 2016, unpublished).

Essentially, “global water use is completely tied up in the private sector, so you can’t suddenly say: ‘sorry, this is a public good, you’ve got nothing to do with this.’ They’ve got everything to do with it” (Interview 12, 2015, unpublished).

6.1.3  Companies, NGOs and Collective Action Companies are drawn to working with others for a range of reasons. Most commonly, they collaborate to mitigate water risk, which often originates beyond companies’ direct control (WBCSD 2015). They recognise that “you [need to] fix the

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problem ‘out there’, [otherwise] you can have as many technical fixes [on site] as you’d like, but if the water stops flowing, it stops flowing” (Interview 24, 2016, unpublished). A related reason is that companies often have insufficient knowledge of how to address these water risks beyond their operations. Although a company knows how to improve water use efficiency in its production process, it may not know, for example, the best way to restore river flow: “we can run breweries and produce good quality products, but we’re not necessarily water experts…[So] we will partner with experts…to address water risks in supply chains” (Interview 21, 2015, unpublished). Commonly, the ‘expert’ that companies turn to for assistance is an NGO: “we work with WWF and others, for them to…show us the way” (Interview 26, 2016, unpublished). Although few companies draw explicit attention to it, many also recognise that working collectively  – rather than alone  – could generate legitimacy. Companies “recognise that there is inherently a mistrust of the private sector so if they get the involvement of a recognised…NGO, they can get the confidence of the stakeholders much more quickly” (Interview 35, 2016, unpublished). For a company, “working with…a trusted NGO that says ‘what [the company] is doing here is good,’ that is important” (Interview 50, 2016, unpublished). A representative from a UN body confirmed this view: When working with certain partners, you increase the credibility of the work that you do. If [companies] were working on…projects directly, which they probably could do, they wouldn’t get the same credibility as if they were working with UNDP or WWF. People are less likely to criticise [companies’] activities if it’s a partnership with WWF or UNDP or WaterAid…than if they would do it alone (Interview 7, 2015, unpublished).

The very act of collaboration at least partially legitimises corporate activities since other trusted actors such as NGOs endorse their actions (CEO Water Mandate 2009). However, a more critical interrogation of the ‘trusted’ nature of NGOs is needed. Much of the faith placed in NGOs is derived from the assumption that they  – by representing social and environmental causes  – counterbalance private interests. However, do these NGOs always deserve the reputation of being credible partners that put forth the interests of socially underprivileged groups, and the environment? Contrary to common perception that NGOs are somehow ‘neutral’, it is critical to recognise that they “have their own political agenda in terms of what should happen….[They are] caused based organisation[s]. They start with a solution” (Interview 31, 2016, unpublished). This means that in many ways, NGOs are very similar to business as they are both driven by an ‘organisational self-interest’. No doubt, as demonstrated in Chap. 3, NGOs and companies have very different types of agendas. Nevertheless, it should be recognised that each type of organisation has clear objectives that it strives actively to achieve. Recognising this fact led one representative from an NGO to argue: “Essentially, NGOs are exactly the same as businesses. If you look at the governance structure of a major NGO, it is exactly the same as business. You have board, and they have their own agenda of things that they want to do” (ibid). Thus, when these organisations collaborate to implement

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projects together, there is “a danger of a chief NGO with a big idea of what they want to do, and a chief corporate with a big idea of what they want to do… [Essentially] big NGOs talking to big corporates” (ibid). And the risk with that is that in the process of getting their own agendas across, “they’re not necessarily asking the…[people affected] what they think, and if what they’re doing is good” (ibid) This suggests that the common belief of NGOs univocally prioritising the interests of socially underprivileged groups and the environment might need to be viewed with some scepticism. It is also worth questioning whether the objectives of NGOs are altered by their partnerships with companies. For instance, Sect. 7.4.2 provides an example of how NGOs mirror the language of business, to increase the chances of achieving their objectives. Such tactics may appear harmless but over time, they may result in more substantial changes. As noted in Chap. 2, Blowfield (2005a) argues that close collaboration between NGOs and businesses have resulted in the blurring of organisational boundaries, as seen from a conflation of the language and methods used. He suggests that amongst NGOs in development circles, a business-like mind-set is already visible, as evident from their emphasis on measurement, standardisation, and quantifiability, and the focus they place on codes of conduct, auditing, and monitoring and evaluation tools. In a cautious note, Blowfield (2005b: 521) suggests that “perhaps the biggest influence business will have on development is…the influence of business thinking and related notions of managerial efficiency on how we view and construct the world”. Similarly, Fyke et al. (2016: 221) note: “while for-profit businesses have started to emphasize philanthropy, volunteerism, cause-­related marketing, and community-based problem-solving, not-for-profit organizations have begun to focus on revenue streams, ‘customer service,’ outcome metrics, and bottomline decision making.” The observation made by Fyke et al. that businesses have also altered their conduct was supported by a representative from an NGO who noted: “there is a real mirroring of skills-sets amongst the big companies who are involved in corporate water stewardship with NGOs” (Interview 31, 2016, unpublished). Returning to the discussion around legitimacy, it is worth questioning how the blurring of organisational boundaries between NGOs and companies affects NGOs’ capacity to act as ‘credible partners’ to business, and inject legitimacy into corporate behaviour. In other words, will close collaboration between NGOs and business eventually hollow out the trust placed in NGOs? Whilst an important area for future enquiry, it is beyond the scope of this book. Endorsement from a trusted partner is, however, not enough for a company to be perceived as a legitimate actor – they also have to invoke alternative sources of legitimacy.

6.2  Alternative Sources of Legitimacy The institutionalisation of private governance through the multi-stakeholder partnership creates new governing patterns which, unlike traditional government, cannot establish legitimacy through democratic processes (Schouten and Glasbergen

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Table 6.1  Source-based, process-based, and outcome-based legitimacy Component of Legitimacy Source-based legitimacy

Process-based legitimacy

Outcome-based legitimacy

Sub-­ component Expertise

Indicator The extent to which an initiative draws upon ‘expert knowledge’ Tradition The extent to which an initiative follows conventional problem-solving protocols Discourse The extent to which the discourses propagated fit with the dominant discourses of society, reflecting particular normative principles Representation The extent to which partnerships include various stakeholders’ interests Transparency The extent to which individuals who may be significantly affected by a decision can obtain information about the decision-making process Accountability The extent to which there is a relationship of accountability established between actors.  Internal  Internal accountability means that companies are accountable to their shareholders  External  External accountability means that companies have to justify their action vis-à-vis stakeholders that are affected by their decisions Effectiveness The extent to which governance contributes to problem-solving Equity The extent to which the initiative adheres to principles of distributive justice

Karlsson-Vinkhuyzen and McGee (2013), Dingwerth (2007) and Bäckstrand (2006)

2011). Yet, as noted by Bäckstrand et al. (2012: 137), democratic legitimacy is only one form of legitimacy, closely associated with domestic models of electoral democracy, and a model that is “less suitable for evaluating nonelectoral, nonterritorial governance arrangements, such as partnerships.” Therefore, many scholars instead employ the work of Bodansky (1999) when assessing partnerships’ legitimacy. Defining legitimacy as “the justification of authority,” Bodansky (1999: 601) identifies three alternative sources of legitimacy (Table 6.1).13 The first form of legitimacy is derived from the source of authority. Bodansky argues that an actor can demonstrate source-based legitimacy by, for example, belonging to a trusted institution, such as a university. Karlsson-Vinkhuyzen and McGee (2013) identify three components of source-based legitimacy: expertise, tradition, and discourse. Another form of legitimacy can be derived from the perceived fairness of the process of decision-making. Bodansky (1999: 612) argues: “authority can be legitimate because it involves procedures considered to be fair.”  Bodansky’s framework overlaps to a great extent with Sharpf’s (1999) two-fold model of legitimacy, which makes a simpler distinction between ‘input legitimacy’ and ‘output legitimacy’, where the former includes source-based legitimacy and process-based legitimacy, and the latter includes outcome-based legitimacy (Karlsson-Vinkhuyzen and McGee 2013).

13

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Critical components include demonstrating a balanced representation of different affected stakeholder groups, providing a forum for transparent deliberation amongst stakeholders, and having a reliable accountability and monitoring mechanism (Karlsson-Vinkhuyzen and McGee 2013; Bäckstrand 2006). Finally, legitimacy can be drawn from the substantive value of the outcome. Outcome-based legitimacy is thus “based on the substantive quality of the decision, notably its potential to enhance the common good” (Dingwerth 2007: 15). Moreover, Bäckstrand (2006: 294) suggests that authority grounded in outcome-based legitimacy is derived from “rules and institutions [that] lead to collective problem solving.” Outcome-based legitimacy consequently refers to both effectiveness in terms of problem solving, and equity in terms of enhancing the common good (Bäckstrand et  al. 2012; Bäckstrand 2006). Closely tied to legitimacy is the concept of legitimation. Whereas legitimacy is about tacit recognition, acceptance, and support of the system by those who are governed, legitimation “is the process of gaining that recognition, acceptance and support” (Häikiö 2007: 2150). The legitimation process takes place in scenarios where an actor feels that legitimacy is contested. Understood in this manner, legitimacy and legitimation become useful concepts for analysing political power. This is because, ultimately, “legitimation is a discursive practice. It is about managing meanings: knowledgeable actors aim to create legitimacy for their ideas, actions and demands, and to delegitimate the demands of their opponents” (ibid). Consequently, legitimation must be understood as a relational process, where legitimacy ultimately “arises in a multi-dimensional process of social interaction” (Schouten and Glasbergen 2011: 1892). The following sections will demonstrate how corporate actors draw upon the three alternative sources of legitimacy discussed here in their search for legitimation.

6.3  Source-Based Legitimacy As displayed in Table  6.1, three sub-categories of source-based legitimacy have been envisaged: expertise, tradition, and discourse.14 Among these three, expertise is of particular importance for companies when legitimising their involvement in collective action, justifying a specific focus on this category.

14  Sojamo (2016) suggests that legitimacy derived from ‘tradition’ depends on how well the engagement aligns with prevailing institutional frameworks, and legitimacy derived from ‘discourse’ depends upon how well the engagement fits with the established ideals of multi-actor water management and governance.

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6.3.1  Expertise The type of expertise invoked by companies is often grounded in scientific knowledge, particularly referencing hydrological data: “in a lot of regions around the world where we operate, we’ve actually got the best evidence base in terms of hydrological models. And so do the other business actors in the political landscape” (Interview 33, 2016, unpublished). It is a common stance amongst corporate representatives to succinctly suggest that “we bring in knowledge” (Interview 47, 2016, unpublished). Representatives from other organisations tend to agree, and confirms that “businesses certainly bring hydrological data” (Interview 44, 2016, unpublished), allowing them, for example, to “contribute to monitoring the status of biodiversity” (IUCN 2012: 5). This wealth of knowledge is noteworthy because, as argued previously, companies often seek to work with NGOs because they do not perceive themselves as ‘water experts.’ This shows that although companies hold significant amounts of data – and use possession of this information to gain a seat at the table – they are unsure of how to translate it into suitable action beyond their own operations. Remembering that legitimation is a relational process, requiring other actors to confirm and accept the process for legitimacy to be created, it is interesting to observe that companies’ knowledge is used by others as justification for collaboration. The CEO Water Mandate (2013: 8) notes: “businesses can provide…a wealth of data (e.g. on water quality and groundwater depletion)…that allow[s] governments to make informed decisions.” Similarly, speaking of the “quite enormous realms of data and information” that companies possess, a representative from an international organisation remarked that “companies need to be at the table to contribute the information…[because by] sharing this with governments, it could be used to make better decisions” (Interview 37, 2016, unpublished). The interest expressed by other actors in working with companies also stems from the sources of knowledge that companies retain. When exploring policy options, it is desirable to “get as close to the implementation side as possible” (Interview 14, 2015, unpublished). Companies have the capacity to “bring…the realism of what is actually going on, and inform the policy makers. And [this]…is very important because there is always that risk that bureaucrats are disconnected from reality” (Interview 8, 2015, unpublished).

6.3.2  Challenging Source-Based Legitimacy If legitimacy can be gained, it can also be challenged. It remains a sensitive question to what extent companies share their knowledge; if it is not shared, their claim to legitimacy on the basis of expertise is undermined: [The role of] information is potentially huge, as is companies’ ability to provide data, marshal their own data, and share their own data. But data always has this problem of

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c­ onfidentiality [attached to it] and with information being [associated with] money more and more – especially if it not just raw data, but if you’ve done a bit of analytical work on it – you don’t want to share it publicly (Interview 40, 2016, unpublished).

A lack of trust in companies is another challenge. Bodansky (1999) defined source-­based legitimacy as granting authority based on an actor’s origin, specifically its organisational nature or position in society. For a company, this can be problematic because “in some countries, there is a long-standing history of fighting across the sectors…there is [thus] a lot of groundwork that needs to be laid before you can even begin to have meaningful conversations around how these stakeholders can work together to solve the problem” (Interview 28, 2016, unpublished). Due to the lack of trust, collaboration with companies can be seen as a reputational risk for other sectors: There have been informal discussions revolving around if we can we work with the private sector when it comes to promoting governance in a specific country. Let’s say a big multinational approach us, to promote governance. This could be very…sensitive. I am not saying that the company actually put pressure [on the government] or [attempts to] influence [decision-making], but just the idea of being backed by private sector funding can be very sensitive (Interview 34, 2016, unpublished).

Although companies work intensively to rebrand their image, their historical legacy can still pose an obstacle since it may inhibit others from trusting their intentions. This could especially be the case for companies belonging to a sector that has, in a number of prominent cases, been publicly ‘shamed’, for example the oil industry in relation to the Exxon oil spill (1989) and Deepwater Horizon (2010), or the textile and apparel industry in the context of various sweatshop exposures in Asia (1990s and 2000s).

6.4  Process-Based Legitimacy Table 6.1 illustrates that a partnership – and by association its members – is perceived to have process-based legitimacy if it displays a balanced representation of different affected stakeholder groups, provides a forum for open and transparent deliberation between the different actors involved, and has in place a reliable accountability and monitoring mechanism. Whilst practitioners do not tend to speak of ‘process-based legitimacy,’ they refer to ‘good governance’ and ‘integrity,’15 judged by similar qualities: “Transparency, accountability and participation, those are the three lead words of integrity. And they’re also key words when it comes to good governance” (Interview 8, 2015, unpublished). Thus, to judge an actor’s process-­based legitimacy is essentially to ask how well it conforms to standards of good governance and integrity.

15

 ‘Strengthening integrity’ is often used as a euphemism for ‘reducing corruption’.

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6.4.1  Representation Representation concerns the extent to which the various stakeholders affected by an issue are able to express their view and play an active role in the partnership (Mena and Palazzo 2012; Bäckstrand 2006). The question of what role each actor ought to play is, however, a sensitive one. Although a general consensus exists “that the overall role for [water] allocation and for legislation is ultimately with governments” (Interview 30, 2016, unpublished), there is also recognition that “in that process, leading up to that decision, [governments]…have an obligation…to discuss, interact, and listen to all the various stakeholders” (Interview 10, 2015, unpublished). Due to the growing water risk to which they are exposed, companies increasingly see themselves as stakeholders with a right to have their voices heard. Chapter 3 explored how companies frame the ‘water crisis’ as one that predominantly revolves around financial risk. When given the chance to provide their perspective, it is therefore unsurprising that their concerns revolve around economics: “water is an economic tool as much as everything…what we can do [as a company] is to bring that perspective” (Interview 21, 2015, unpublished). Accordingly, when engaging in collective action, “one thing we can bring to the table [as companies] is [to look] at water more from a ‘value added’ perspective. That’s economics. Not necessarily always the answer, but it could be” (Interview 48, 2016, unpublished). Whilst other actors in the field display largely positive reactions to the inclusion of an economic perspective in the discussions – arguing, for example, that this could illustrate “what the different trade-offs [of government policy alternatives] might be” (Interview 44, 2016, unpublished) – there is also a view that the endorsement of an economic perspective legitimises a market environmentalist discourse in water governance. Chapter 7 analyses this latter view. When reflecting on the relational nature of legitimation, it is noteworthy that the economic perspective brought by companies is one that other actors use to justify collaboration. As noted in Chap. 3, a key reason why various actors are interested in collaborating with companies is that it can increase their political leverage; an economic perspective resonates more strongly with public administrations than do issues seen as the ‘green’ interests of NGOs. Under the heading “bringing power to the table,” representatives from WWF and Water Witness argued that “there’s not a government in the world which doesn’t listen to business!” (Orr and Hepworth 2013). In a similar vein, a representative from the development community noted: An interesting premise is that companies can…get Ministries of Finance to listen. Presidents to listen…Ministries of Finance finally realise that water matters to the economy, that water matters to job creation…There is a really interesting dynamic that water has been moved away from being a minor peripheral environmental issue, managed by Environment Ministries, to Ministries of Finance” (Interview 49, 2016, unpublished).

When sharing their perspective, however, companies have to be careful not to ‘drown out’ the voices of others. When a company dominates a discussion, this may not be deliberate, but may result instead from power imbalances. In meetings, it can be “very difficult to withstand…the negotiation power that a company could have…

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So, there is a risk…that the relationship [amongst actors] can become a bit asymmetrical, and…could be tilting in favour of the private sector interest” (Interview 34, 2016, unpublished). Sometimes, therefore, companies acquire a disproportionately large role because of conditions dictating the relationship among participants in an initiative; this could particularly be the case if ‘representation’ is equated to ‘financial contribution.’ As noted, companies often have the capability to mobilise substantial financial resources, putting them in a stronger position than other stakeholders in an initiative, and possibly marginalising actors that cannot contribute financially. On the subject of how asymmetrical financial capabilities can throw multi-stakeholder initiatives off balance, a representative from an NGO said: I think one of the challenges that we’ve come across through our work is making communities true partners. There is often recognition at a certain level of the importance of participation. But, in conversations that we’ve had, it has been quite a strong message that, for example, small farmers’ groups don’t have money to bring to the table, but they still want to sit at the table as partners…It becomes a challenge when finance becomes the core of whatever the relationship is based upon because at a certain point it is people with finance that sit around the table. And stakeholders [like farmer groups] don’t necessarily come with finance (Interview 20, 2015, unpublished).

Whether deliberate or unintentional, tilting an initiative in favour of the company’s interest can undermine the legitimacy of an entire initiative. Crucially for this discussion, it also weakens any claim made by the company that it has the right to be involved on the basis of ‘equal representation.’

6.4.2  Transparency An actor’s perceived legitimacy is closely tied to its ability to act in a transparent manner: “The extent to which external stakeholders support and provide legitimacy to engagement is largely dependent on the company’s ability to clearly communicate the objectives, strategies, and outcomes of engagement efforts” (CEO Water Mandate 2010: 64). For example, the mining company BHP Billiton (2014; 33) writes: “Being a responsible water steward requires transparent and consistent reporting of water use and impacts.” The increasing amount of reporting done by companies confirms the perceived importance of transparency. For example, in 2015, Coca-Cola published an 800-page report quantifying the benefits of the company’s replenishment programme in its community water partnership projects (LimnoTech 2015). Some suggest that the report reflects an “unprecedented level of transparency” since it “detail[s] every project, why Coca-Cola did what it did, what the company did, who it did it with, what the company paid, [and] what the other people paid” (Interview 9, 2015, unpublished). Furthermore, the number of companies reporting through CDP (see Sect. 3.1.4) is growing annually (CDP 2018). For many companies, transparency is linked to legitimacy because to operate in a transparent manner helps to alleviate suspicions of policy capture, which is a key concern. A corporate representative made this connection when arguing that “as

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long as there is transparency in the processes that we have, and in how decisions are reached…then people can see the evidence base, and…the process, [and] then [our engagement] is fine” (Interview 42, 2016, unpublished). Displaying similar sentiments, representatives from other companies made statements like “our biggest watch-out is this concept of policy capture, so, we…are very careful to be transparent” (Interview 9, 2015, unpublished), and “I’m not that concerned about [policy capture] as long as what we’re doing is done in an open and transparent manner” (Interview 24, 2016, unpublished). Although there is consensus that transparency is an essential element of legitimacy, some also acknowledge its challenges. Even though many companies, like Nestlé (2014: 140), refer to water as a “pre-competitive” issue, it is demanding for companies to be transparent amongst competitors. In some cases, it can even be illegal to share certain information with competitors under competition law,16 which exists to protect consumers. Even when there are no legal barriers, collaboration is challenging. Many informants spoke about the relative ease of collaborating in global forums, such as the CEO Water Mandate, the WBCSD, or the 2030 WRG, but also noted that “at the local level [collaboration] gets hard. Because that’s where the commercial sensibilities and the challenges come into place” (Interview 33, 2016, unpublished). Even if being members of the same business association, It is not natural for a commercial enterprise to collaborate on certain levels with competitors. All of sudden, you’re next to your competitor, next to other sectors that you’re competing against for water, or for other issues like Capital Investments. And you have to share information and trust each other. And trusting relationships are hard to build” (Interview 33, 2016, unpublished).

In addition, transparency can also be a challenge when communicating with stakeholders: In a strange way, transparency is a risk. Because through transparency, you’re opening yourself up. So, it allows anybody [to scrutinise your actions] in an age where communication is so simple…But [information] can often be misconstrued, and miscommunicated… There is a need for transparency, but depending on who is communicating, that can deliver very different outcomes depending on how one word is used…So, one of the bigger risks is actually being transparent. But, if you’re not transparent, then it is really difficult to build that necessary degree of trust. And that necessary understanding of what the issues are. So, you’ve got to move forward in terms of transparency” (Interview 42, 2016, unpublished).

Thus, although companies perceive transparency as a critical component of building trust (and by extension legitimacy) amongst their stakeholders, as well as their peers, many acknowledge that complete disclosure is challenging.

16

 In the US, this is referred to as ‘antitrust law’.

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6.4.3  Accountability Accountability concerns the relationship between actors, and the extent to which a link of responsibility is embedded in those relationships (Bäckstrand 2006). Keohane (2006, 2003) distinguishes between ‘internal’ and ‘external’ accountability to unpack the complexity of accountability in the ‘post-sovereign’ era; a distinction that is also useful for examining the accountability of companies. In this context, internal accountability means that there is an institutional link between the company and those to whom it is accountable. A company is consequently internally accountable to its shareholders. In contrast, external accountability, which is a more controversial concept, means that the company is increasingly also seen as being accountable for its actions to other affected stakeholders (Bäckstrand 2006; Keohane 2006). Whereas internal accountability has always been important for a company, responding to the pressures of external accountability is a relatively new, but increasingly important, aspect of legitimation. The rising importance given to external accountability also reinforces claims of a wider renegotiation of companies’ role in society (Sect. 2.3): from ‘society’s economic engine’ to a ‘a positive force’ contributing to social development goals. That companies have responded to this pressure is evident in their own communicative materials. In the case of the beverage company Diageo, for example, the emphasis has been altered from exclusively focusing on value creation for shareholders (internal accountability), to acknowledging, in addition, value creation for stakeholders (external accountability): Through the taxes and duties we pay, the returns we create for shareholders, the employment we provide and the suppliers and other business partners we support, we contribute significantly to the markets in which we operate and to the world economy (Diageo 2003: 22). Creating wealth in a lasting way requires partnering with others to address development challenges such as education and health, and advocating high standards of governance in the communities where we operate. We invest in a variety of programmes that aim to empower our stakeholders, which represent our long- standing commitment to investing in communities (Diageo 2015: 58).

Transparency is at “the heart of accountability” (CEO Water Mandate 2007: 12). Recognising this close connection, companies are abolishing “the old ways…which [were in] some ways very secretive” (Interview 43, 2016, unpublished) and now acknowledge that “they have to be transparent towards consumers who want more transparency, want more accountability” (Interview 30, 2016, unpublished).

6.4.4  Companies and Good Governance Taking a holistic view of representation, transparency, and accountability, the critical question is whether companies are doing enough to claim process-based legitimacy. As noted above, practitioners refer to representation, transparency, and

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accountability as features of ‘good governance’ and ‘integrity’ rather than as components of ‘process-based legitimacy’. Whatever the terminology used, the heart of the matter is whether or not companies take sufficient measures to ensure that their actions and decision-making procedures are considered to be fair (Bodansky 1999). The key issue with respect to representation is that, to be legitimate, decisions on an initiative should have involved the participation of representatives of all affected groups. Some corporate representatives suggest that any initiative should have at least six groups represented: the ‘expert’ (e.g. hydrologists); the ‘broker’ (e.g. NGOs that could mediate); the government (local or national); the multilateral organisation (e.g. DFID, or USAID); the industry association (e.g. the CEO Water Mandate, or ICMM); and the community (Interview 24, 2016, unpublished). However, all of these groups – particularly ‘the community’ – are heterogeneous; simply to have a ‘community representative’ involved could be deeply misleading because “the people aren’t the same… the interests aren’t the same” (Interview 31, 2016, unpublished). Of course, the involvement of a company does not mean that it bears sole responsibility for ensuring that the remaining participants reflect the range of stakeholder groups. Nevertheless, in some cases, companies not only participate in collective action, but may even take the lead, in which case they do bear significant responsibility in this context. However, it may sometimes be the case that the lead involvement of companies can even discourage the participation of other groups. In relation to transparency, there is no doubt that companies provide an abundance of valuable information, much of which is publicly available. Beyond their own reports, for example, it is possible to access meeting minutes from the CEO Water Mandate and the 2030 WRG. At the same time, the very abundance can make it challenging to find specific information. Standardised reporting – through CDP and the Global Reporting Initiative – has contributed to easier access, and greater comparability, but uncovering specific information can still be difficult (UNGC 2015). Another concern is that, in order for ‘transparency’ to result in legitimacy, there have to be sufficient monitoring mechanisms in place to check the information provided; simply to invoke ‘transparency’ is not enough. However, because “there is such asymmetry in resources and capacity…these checks and balances [to monitor companies’ behaviour] are not operating” (Interview 22, 2015, unpublished). On accountability, while companies take on greater responsibility, and increasingly act as ‘development agents’ (Blowfield 2012), the question remains as to what exactly they perceive themselves to be accountable for. Though they are certainly not responsible for everything, companies are accountable for the actions that they take, whether these actions – and their consequences – are deliberate, or unintended. They cannot “just be accountable for what they want to be accountable for” (Interview 14, 2015, unpublished). Without a robust monitoring mechanism, however, it is hard to ensure that they accept accountability, not only when it serves their interest, but also when they have a responsibility to do so. To accept companies’ claims of representation, transparency, and accountability uncritically would be unwise. Nonetheless, they draw upon these features to legitimise their involvement in collective action, and portray themselves as ‘good governors.’

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6.5  Outcome-Based Legitimacy The CEO Water Mandate (2010: 106) notes: “Companies can gain legitimacy through demonstrable achievement”, identifying that producing results is a crucial part of a company’s legitimation process. This statement provides a good springboard for turning to the last of the three sources of legitimacy: outcome-based legitimacy, resting upon the sub-categories of effectiveness and equity.

6.5.1  Effectiveness Effectiveness refers to the extent to which an initiative  – including the actors involved  – contributes to problem solving. Thus, to make claims that invoke ‘outcome-­based legitimacy’, a company has to demonstrate that it can contribute to ‘better’ outcomes. Analysing companies’ modes of operating, it is evident that they utilise two specific characteristics in arguing that they can have a useful impact: an ‘efficient’ way of working, and a different kind of ‘access.’ The first characteristic – a more efficient way of working – is seen as a key contribution that companies can make to any initiative: “The biggest advantage that the private sector brings…is efficiency. They have a much greater incentive [than the public sector] to deliver [results]…in an efficient way” (Interview 14, 2015, unpublished). As companies “want action very quickly…[and because they bring this sense of] urgency [to initiatives]” (Interview 10, 2015, unpublished), they can trigger the public sector into becoming “more disciplined about…[producing] results” (Interview 5, 2015, unpublished) when the sectors collaborate. This sense of urgency can be particularly evident amongst companies in certain sectors. For example, a representative from a clothing company explained that “in the textile sector where you [depend on] the different seasons in a year, things should go quicker…[We typically] have a timeframe of three months” (Interview 50, 2016, unpublished). However, companies could also contribute to expanding the time-horizon of a collaborative initiative because “business is typically not a short-term issue” (Interview 42, 2016, unpublished). Having long-term strategies leads some companies to “take a long-term view around…business viability and success, [meaning that they]…sometimes…have a longer view on some of these [water] issues than elected officials who work on election cycles for how they do water policy and management” (Interview 28, 2016, unpublished). The different timescales of companies and governments are not only contributing to more effective outcomes of initiatives, but are also a source of conflict, particularly when companies demand swift results. When collaborating with governments, companies often feel that “the challenge is different timelines” (Interview 9, 2015, unpublished), because in their view, “[the] private sector likes to agree on something and start it up and get it running…[whereas] governments…are a lot slower [due to]… a lot of bureaucracy” (Interview 24, 2016, unpublished). However, just as companies experience frustration when faced with a long and cum-

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bersome process, other actors are frustrated with companies’ lack of patience: companies “lose interest quickly. And they move the goal posts…because their priorities shift and change” (Interview 20, 2015, unpublished). As illustrated by, for example, the Building Block Method (Sect. 2.1.3), managing things like environmental flows beyond ‘the fenceline’ is inevitably complex and time-consuming. Therefore, whilst companies’ effectiveness is often highlighted as something positive, it can also create tensions between the different actors. A second characteristic – a different kind of ‘access’ – is highlighted as another key contribution that companies can make to generate effective outcomes of initiatives. In terms of capacity to influence decision-makers, companies enjoy a different form of access from NGOs (see Sect. 3.2.3), to more powerful parts of government. Companies can, for example, “open the eyes of the Minister of Finance or the Prime Minister” (Interview 10, 2015, unpublished), because they are “the economic engine[s]. They bring in foreign exchange and GDP to a country through their supply chains, through their operations, through their own markets. They bring an urgency to the issue that NGOs can’t bring” (Interview 12, 2015, unpublished). This capacity to reach decision-makers can cause tensions, since companies’ perspectives may not align with that of, for example, NGOs: “There are definitely different agendas… Sometimes those agendas conflict. And sometimes, organisations do start from very different starting points” (Interview 32, 2016, unpublished). Therefore, even when groups come together, “there isn’t always a shared understanding of what the endgame is” (Interview 28, 2016, unpublished). This misalignment of objectives creates a significant source of tension in any initiative. The tension can be further exacerbated if uneven financial contributions tilt the initiative in one – often the private – actor’s favour. Companies also enjoy a different form of access to finance; they are, as one informant suggested, “more connected to financial flows, or at least a different set of financial flows than …government[s]” (Interview 6, 2015, unpublished). There is a hope that companies will channel some of these financial resources into water initiatives,17 “[given] that [many governments] don’t have the resources needed to invest…in sustainable water resources management” (Interview 13, 2015, unpublished). For some initiatives, this hope has, at least to some extent been realised. For instance, it is not uncommon for a company to contribute with ‘seed funding’: What we do typically is this model where we’d start up with a lot of initial funding – seed funding – basically to get the partnership off [the ground]. And then over time, that would taper off and local operations would pick up…. That helps to get the initial momentum going, and get the initial research done, and the legwork done, and get something viable going where the local operations then can see the point of it and where they fit in and the role they can play, and then they’ll start to put their resources in as well (Interview 24, 2016, unpublished).  The Addis Ababa Action Agenda (AAAA), adopted during the third International Conference on Financing for Development in July 2015, set out a comprehensive financing framework – including the role of the private sector – to advance the implementation of broad development objectives, including the SDGs (UN 2015 A/RES/69/313). Not only does the AAAA call for the mobilisation of resources, but for new mechanisms through which both public and private resources could be channelled. As a result, new financial instruments like ‘blended finance’ have emerged.

17

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More often, however, “companies would tell you that they don’t feel like they should be footing the bill for improved water resource management across the board” (Interview 28, 2016, unpublished). It cannot be assumed that companies always have – or are willing to provide – the financial resources needed: “sometimes we are seen as the pot of money, but that is not the case” (Interview 48, 2016, unpublished). There is a potential tension here, since both the public sector and NGOs are at least partially motivated to collaborate based on the belief – or at least the hope  – that businesses will compensate for their relative lack of financial resources.

6.5.2  Equity Equity refers to the extent to which initiatives “enhance the common good” (Dingwerth 2007: 15). As with ‘process-based legitimacy,’ practitioners tend not to use the term ‘outcome-based legitimacy.’ Instead, they speak of CSV: business practice that “creat[es] economic value in a way that also creates value for society by addressing its needs and challenges” (Porter and Kramer 2011: 64) (Sect. 2.3.2.4). Prior to Porter and Kramer’s publication of the concept in 2011 under the heading “The Big Idea”, they worked with Nestlé to develop a framework for CSV, and together with Nestlé (2006) they published The Nestlé concept of corporate social responsibility as implemented in Latin America. Since then, Nestlé has produced annual “Creating Shared Value” reports. Following this, many other companies have adopted the concept. Though Nestlé (2009: 3) holds that it makes “no proprietary claim, and Creating Shared Value is a way of thinking that is available to any company that wants to utilise it”, the terminology is closely associated with the Nestlé brand. Consequently, although many companies have adopted the thinking, they often utilise a different name (Table 6.2). Moreover, PepsiCo and Coca-Cola not only attempt to distance themselves from the Nestlé brand by renaming the CSV concept, but also attempt to integrate the CSV concept into their own brand name. Thus, PepsiCo has rebranded CSV as ‘Performance with Purpose’, and Coca-Cola speaks of ‘Connected Capitalism’. Through such rebranding, the companies seek to create a close connection between their own names and the CSV concept in the minds of their consumers, and strengthen their brand. Although companies use slightly different terminologies, companies adopt the concept of ‘CSV’ as a legitimation strategy when they collaborate with others to address various societal challenges. Although the excerpts presented in Table 6.2 often do not address water specifically, they illustrate companies’ conviction that their engagement to address societal issues – like water – not only generates benefits for their shareholders, but also produces positive outcomes for their ‘stakeholders’, ‘society’, and ‘the world’. There is evidence too that companies connect CSV

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Table 6.2  Companies appropriation of ‘Creating shared value’ Company Use of CSV Nestle S.A. “Creating Shared Value says that for our business to be successful in the long run, it must consider the needs of two primary stakeholders at the same time: the people in the countries where we operate and our shareholders.” Olam “Creating mutual value is at the core of growing responsibly.” The Coca-Cola Company PepsiCo

“Business must catch up to these changes and embrace a new model of connected capitalism. It’s a way of building your business so it is fully engaged with society.”

“Our commitment to sustainability is long-standing and today forms the foundation of our operating strategy which we call ‘Performance with Purpose.’ It means we bring together what is good for business and good for the world.” SAB Miller “Our emphasis is on exploring ways in which our core business activities can best contribute both to our business and towards wider social and economic objectives, creating what has been referred to as ‘shared value.’” Diageo “We have a responsibility to create shared value – for our shareholders, our people, and for the societies that enable our business to grow.” Unilever “This way of working, which has been described as ‘shared value creation’, has been at the heart of Unilever’s approach since the inception of the business. Today, we are applying it to the challenges of the early twenty-first century: climate change, water scarcity, poverty alleviation and malnutrition to name but a few.” Rio Tinto “We seek to create mutual value by managing our own business risks and interests alongside those of our investment partners and host communities. Our aim is to deliver the best possible outcomes for our business, our shareholders and our many stakeholders.” Anglo “Our approach to sustainable development is shaped by the American concept of mutual benefit. Without the support of key stakeholder groups, we cannot operate, as they supply the foundations for mining: capital, labour and access to natural and mineral resources.” Barrick “Host community members grant us our social license to operate Gold and it is critical that we adopt consistent and proactive approaches in managing our impacts – both positive and negative – and working with host communities for mutual long-term success.” H&M “We want to contribute to these communities and make sure they benefit from having us there. We work throughout our value chain to drive lasting change. Through strategic investments and together with our community partners we can extend these efforts and achieve a wider impact. In doing this, we want to create win-win situations and shared value for us as a company, our customers and local communities”

Source Nestlé (2009: 3)

Olam (2012: 2) Isdell (2009) (former CEO of Coca-Cola) PepsiCo (2007: 3)

SAB Miller (2008: 3)

Diageo (2015: 2) Unilever (2009: 1)

Rio Tinto (2014: i)

Anglo American (2013: 10)

Barrick Gold (2011: 41)

H&M (2013: 76)

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directly to gaining legitimacy in the water context. A representative from a company spoke about instances when their engagement had been questioned, and said: ‘Why are you trying to improve things in the river basin as a whole, and not only for your suppliers?’ Well, [the answer is that] it leads to ‘shared value’ for many, and that is going to be good for us. Definitely…We talked about [that], as a way to legitimise our water stewardship strategy and explain what we were doing (Interview 50, 2016, unpublished).

For a company, any claim that the outcome of an initiative is inequitable directly contests claims that collective action in water leads to the creation of shared value. Of central importance in this context are accusations of corporate capture of licence, policy, and discourse. Licence capture involves private “acquisition of additional or privileged access to the water resource itself” (CEO Water Mandate 2015: 61). When this happens in a multi-stakeholder initiative, there is a risk that the ability of other users to secure the water they need is undermined. For a company, “there is a real challenge around being seen to be lobbying for water rights, or water access, or entitlements, that may not be in the best interest of surrounding communities or the environment” (Interview 44, 2016, unpublished). However, when water becomes scarce, many companies see themselves as having privileged access to that water: Look at what Nestlé and Coke do at basin level. They say, in a very genuine way: ‘we’re experiencing competition between our company and other companies, farmers, cities, so we need to engage in more cooperative water management to make sure that everybody has the water that he or she needs.’ That’s fine. But the only option that they never consider is simply closing their factory…they will present themselves as being senior water right holders… They’re happy to coordinate with others, as long as they’re guaranteed to access the water that they need (Interview 22, 2015, unpublished).

Policy capture occurs “where private organisations unduly dominate a policy or law-making process, excluding or shadowing other stakeholders’ views, and resulting in policy formulations or legal provisions that favour vested interests to the detriment of the public interest” (CEO Water Mandate 2015: 60). One of the situations where the risk of capture is highest is where public capacity is limited, public oversight is weak, and public accountability structures are opaque. Many of these features exist in developing countries where, ironically, “public policy on water most needs support and where shared water risks are greatest” (CEO Water Mandate 2010: 53). If a company perceives the public architecture for water management to be inadequate, they might bring their own convening power, and analytical resources, and lead the work to improve the situation. However, as Mason (2013: vii) argues, “the considerable economic and political power wielded by major MNCs means that these analytical, convening and partnership activities can indelibly shape… outcomes.” Due to the great reputational risks, no company openly admits to attempting to influence policy. Moreover, the line between legitimate lobbying and capture is blurred, and when policy capture happens, it tends to work through subtle processes. The process of policy capture can therefore be hard to identify, difficult to prove, and challenging to guard against (CEO Water Mandate 2010). Nevertheless, “dangers of intentional or unintentional policy capture are very real” (ibid: 53). Further, when it does happen, it almost invariably leads to an outcome that does not

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favour the public good, and which undermines the legitimacy of the company’s involvement. Discursive capture refers to “the subtle power exerted through influence on the way things are portrayed or described and the development of concepts, theories, and ways of looking at the world” (CEO Water Mandate 2015: 61). This is the most extreme form of capture, since it not only frames what problems are seen as prominent, but also what solutions are deemed possible, and who should be involved in their implementation. This form of capture extends beyond the realms of a single initiative, as it is slow moving, and involves accumulation of years of subtle discursive processes. It could nevertheless influence the outcome of a particular collaborative project. Discursive capture will be discussed further in Chap. 7, but it is useful to touch on the issue here. It is significant that companies almost exclusively frame the water crisis as a crisis of scarcity, and pursue a number of specific strategies to address the issue. Most importantly for the present discussion, if scarcity is framed as the principal problem, then it structures the discussion in such a way that the big water users are seen as the main solution providers. This presents a problem for organisations that advocate integrating alternative voices into the discussion: When companies focus on…[water scarcity], and [frame] the discussion… [around how to ‘save’] big volumes of water, [it becomes a problem because] actually, communities don’t generally use big volumes of water compared to agriculture, and other industrial users. And so, our concern is that the community voice gets squeezed out of those discussions, when it is about how you become more efficient as a key player” (Interview 46, 2016, unpublished).

The effect is that “[companies] promote stewardship to show how responsible they are, but in doing so, they also capture part of the agenda” (Interview 22, 2015, unpublished). Further, as a result of this discursive capture, they position themselves as the central actors, and the central solution providers. As the statement above illustrates, however, framing the agenda around scarcity marginalises the voices of non-private water users and may undermine their access to water; these effects ultimately challenge the outcome-based legitimacy of collective action, and of the companies involved.

6.5.3  Assessing Outcomes One of the key issues with ‘outcome-based-legitimacy’ is that the concepts it rests upon (effectiveness and equity) are both hard to measure; to assess and verify outcomes is often impossible. A company claims legitimacy because it can contribute to a more effective way of working, by underwriting the initiative with its resources and its ‘privileged’ access. However, to evaluate the effectiveness of each actor’s contribution in a particular intervention, it would be necessary to consider what alternative interventions could have been (including doing nothing), and to compare what was actually done against the alternatives. Since such comparison is not

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practicable, it is difficult to assess and critique companies’ claims that they contributed to an initiative’s ‘effectiveness.’ CSV suffers from the same limitation; it is impossible to assess whether a more equitable outcome could have been reached with an alternative approach. CSV is also criticised by practitioners for being difficult to implement. Specifically, their concern is that it is impossible to measure the creation of social value, and consequently to judge if an outcome is positive and beneficial: How do you measure the value for all those different stakeholders that get some kind of value? When you start breaking it down, and measure the value for many different stakeholders, the data becomes ‘fluffy’… Without having…clear Key Performance Indicators,18 it is hard to get everyone on board. I think shared value can be something that is nice to talk about on a case-to-case level, but to drive it is tricky (Interview 50, 2016, unpublished).

Beyond the difficulty of measuring CSV, it is questionable whether ‘shared value’ really equates with ‘equity.’ Reiterating the critique outlined in Chap. 2, Crane et al. (2014) argue that the most pressing problem is that the concept suffers from a failure to address sufficiently any trade-offs between economic and social value creation. Raising concerns over this, one informant argued: I hear the private sector saying: ‘we want to be a part of the solution, and we care about the world’s future. Of course we have a profit motive, but only in a prosperous world can we sell our products…’ They’re somehow trying to convince the rest of the world that there is no conflict between a profit motive and the collective interest of a future world. I’m a little bit sceptic[al] of that view (Interview 11, 2015, unpublished).

To a great extent, the CSV concept appears simply to advance the conventional neoliberal argument that ‘what is good for business is good for society.’ This is problematic because, in using the company as the basis for analysis and intervention, it “places the company in the center node of any network of stakeholders. Any value for others is essentially spillover from the company’s success” (Aakhus and Bzdak 2012: 240). Thus, if judging ‘equity’ on the basis of CSV, it is important to ask whose equity is being advocated, and with what consequences for development.

References 2030 WRG. (2018a). Our global partners. [online] Available at https://www.2030wrg.org/whowe-are/partners/. Accessed 24 Oct 2018. 2030 WRG. (2018b). Tanzania. [online] Available at https://www.2030wrg.org/tanzania/. Accessed 24 Oct 2018. 2030 WRG. (2018c). Mongolia. [online] Available at https://www.2030wrg.org/mongolia/. Accessed 24 Oct 2018.

18  A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Companies use KPIs to evaluate their success at reaching targets.

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Chapter 7

Corporations and the Shaping of the Global Water Agenda

Do companies have a heart? Well, they certainly do when it aligns with their spreadsheet. Interview 43, 2016, unpublished [Companies] are playing their game, and no one can blame them for that. And to the game… they bring a lot of expertise, a lot of capacity, and a lot information, and potentially a lot of means to have an impact… I just wish that the global arena was more balanced. Interview 22, 2015, unpublished.

The previous chapters have outlined how and why CWS emerged (the product of growing discontent with state-mandated water resources management and the concurrent renegotiation of businesses’ role in society); how it is practised (primarily as a risk mitigation strategy); and how companies legitimise their engagement in collective action (through deploying strategies of source-based, process-based, and outcome-based legitimacy). In this penultimate chapter, the focus is widened significantly to illuminate how CWS affects GWG. To explain this, the topic of GWG is revisited to show how actors come together to advance the ideas that constitute this structure. As shown in Sect. 2.4, the use of ‘storylines’ is a critical device to disperse knowledge (Dryzek 2013; Molle 2008; Fischer 2003; Roe 1994). This chapter analyses specifically what ‘story’ companies tell about CWS, and assesses the extent to which this story has influenced the global water discourse. The analysis of companies’ ‘stories’ shows that their framing of market environmentalism – a doctrine resting on the possible alignment of environmental and economic objectives (Chap. 2) – as the solution to the water crisis perpetuates the use of particular strategies. This, in turn, legitimises particular approaches to water governance: the commercialisation of management, the economic valuation of water risk, and the liberalisation of governance.

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_7

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7.1  Shaping Objectives GWG is understood as “the development and implementation of norms, principles, rules, incentives, informative tools, and infrastructure to promote a change in the behavior of actors at the global level in the area of water governance” (Pahl-Wostl et  al. 2008: 422). Chapter 1 argued that because water has arisen as an issue of global concern, a GWG regime has emerged in response. As a loose network, GWG consists of a wide range of actors and organisations. However, scholars have increasingly observed the presence of companies in this space, and argue that, through their engagement, companies have the capacity to “redefine hydrosocial territories at a supranational governance level” (Vos and Hinojosa 2016: 42). Revising theoretical debates introduced in Chap. 2, this section will show how GWG comes into existence through performativity (and the role that storylines and language play in that process), and how companies can use their influence (un)consciously to “set global research and implementation agendas…and legitimize certain forms of water governance” (Varady et al. 2009: 152).

7.1.1  ‘ Constraining’ and ‘Constructing’ Global Water Governance GWG should not be understood as a tangible thing, with a specific locus, but is better conceptualised primarily as a discursive construct, shaped by those actors operating within it. That being said, it can still be characterised as an institution. Recalling Schmidt’s (2010: 14) perspective, institutions are “internal to sentient agents, serving both as structures (of thinking and acting) that constrain action and as constructs (of thinking and acting) created and changed by those actors”. Those who analyse GWG tend to treat it as a constraining and/or a guiding structure; essentially one that sets the ‘rules of the game’ for water management and governance at all scales. For example, Cooley et al. (2014: 6) suggest that GWG “informs the way challenges are tackled (or not)…and suggests opportunities for, and barriers to, meeting global objectives”. The perception that GWG structures action, and operates as an overarching normative framework through which actors across all scales are guided, exists among practitioners as well. As a NGO representative put it: “the global level function is…just to provide a framework of reference…It shapes and steers the dialogue” (Interview 20, 2015, unpublished). Similarly, others argue: “You have a global network of water that tends to frame some of the discussions, and some of the agenda” (Interview 22, 2015, unpublished). As a structure, therefore, GWG has the power to shape the discursive environment, which effectively sets the framework for the implementation of water management in specific locales. It is less widely recognised that GWG is also a construct; a product of actions, created and changed by the actors involved. In other words, GWG does not just

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‘appear’, it is actively made. Here, it is useful to recall Hajer and Versteeg’s utilisation of ‘performativity’ as a framework for understanding how governance networks are created. Hajer and Versteeg (2005: 342) suggest that “governance networks provide arenas in which actors argue, explain and justify themselves and (re)interpret history, thereby creating frameworks for a continuity of argument and an interpretation of competing identities and loyalties.” Consequently, the shared experience of negotiation becomes the key reference, which joins the network together, whilst also constantly recreating it. As explained in Chap. 2, networks are bound together through performative experience because they are characterised by the conditions of ‘institutional ambiguity’ (the absence of predetermined norms and procedures) and ‘multi-­signification’ (the paucity of a shared worldview amongst the actors involved). The presence of these conditions means that, when participants in GWG engage in this performative exercise, they essentially negotiate the establishment of a particular ‘discursive order’ through the deliberation of a shared language and a shared problem definition. For Hajer (1993: 46), ‘successful establishment’ encompasses ‘discourse structuration’, which occurs when “a discourse starts to dominate the way a society conceptualizes the world,” and ‘discourse institutionalisation,’ which is when the worldview “solidif[ies] into an institution, sometimes as organizational practices, sometimes as traditional ways of reasoning.” Connecting this to our discussion of GWG, the argument can be made that a particular discursive order has been established when it impacts GWG’s organisational practices and the ‘rules of the game’ that GWG promotes. Two conclusions can be drawn at this point. Firstly, that the use of language – particularly the use of storylines – is of crucial importance because storylines are critical devices to disperse knowledge and negotiate a common language. Secondly, GWG is not static, but at any one time, multiple storylines compete to be represented as the dominant normative framework, and in essence establish ‘discursive order’.

7.1.2  A Note on Influence In theory, the potential to shape water governance at the global level is open to a wide range of stakeholders, but, “the capacity of some actors [in contrast to others] to play a central role, to be vocal, to be part of the discussions, to be part of the meetings, to draft some papers, creates a number of asymmetries” (Interview 22, 2015, unpublished). Thus, it is important to recognise that access to GWG, and the capacity to influence its ‘discursive order’ is, in large part, a matter of compulsory power (Chap. 2). Big companies carry significantly more resources than many other actors in the water sector. They are, in essence, “big ‘people’ with big voices” (Interview 31, 2016, unpublished). This helps to explain why CWS, as part of the tapestry of GWG, is predominantly a reflection of companies’ perspectives. History is, as argued by one informant “made by those who turn up’… Those companies that are

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engaging, are setting the trends, setting the pace, they’ll help to set the rules of the game” (Interview 14, 2015, unpublished). Foreshadowing an argument that will be explored in Sect. 7.5.2, we can also point to the importance of industry associations in enabling companies to have a voice. Working together in these groups increases companies’ capacity to exert influence, and to lobby for specific strategies at the global level. As noted by one informant who works for an organisation that facilitates cross-sector collaborations: I would say that we have influenced the global debate. I think the pure existence of us as a group has brought awareness to the international community around what role the private sector can play; both their role as influencers of the global discussions around water management, and also how it can be done (Interview 10, 2015, unpublished).

Understanding GWG not only as a constraining structure, but also as a discursive construct reflecting the view of the dominant actors, allows us, in Hajer’s (1993: 45) words, to “study the political process as mobilization of bias”. Given that companies wield great power and resources, it is important to unveil what ‘discursive order’ they promote, the extent to which this worldview has successfully permeated CWS, and how CWS shapes GWG and legitimises certain forms of water management and governance.

7.1.3  The Corporate Storyline The different ideas and frameworks that constitute GWG are, at least to an extent, the outcomes of discursive struggles. If the fundamental linguistic mechanism for creating and maintaining discursive order is the ‘storyline’ (Fischer 2003), these struggles could be understood as a competition between storylines, promoted by the different actors involved. To analyse a discursive position as a ‘story’ is helpful because it encourages analysis of the whole cognitive decision-making chain underpinning a particular policy position, including how a proposed solution corresponds to a particular problem. Moreover, because stories often “have the objective of getting their hearers to assume or do something” (Roe 1994: 37), it incentivises analysis of how the story is changing the positions of others. As companies are in a particularly strong position, they have the capacity to advance their ‘story’, including conceptualisation of the problem and its proposed solution. Chapter 2 presented a graphic representation of the CWS storyline, which it is worth revisiting here (Fig. 7.1).

Fig. 7.1  The CWS storyline 2

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The storyline in Chap. 2 illustrated the components of a typical story: a problem, a cause, a ‘villain’ responsible for the problem, and a ‘hero’ who will come to the rescue. In the context of the present discussion, we can make some additions to the original illustration. Firstly, we should reconsider the box outlining ‘the problem.’ Whilst all actors involved in CWS perceive ‘the water crisis’ to be the key problem, companies frame this crisis principally as a problem of water scarcity (see below). Secondly, whilst the original illustration did not include a ‘box’ for proposed solutions, it is necessary to add this to seek an understanding of how companies suggest that the problem should be addressed. Based on findings from the previous chapters, we can conclude that companies present ‘market environmentalism’ (Sect. 2.3.3) – “a mode of resource regulation that promises both economic and environmental ends via market means” (Bakker 2005: 543) – as the solution. While all components of the story are important, the framing of ‘the problem’ and ‘the solution’ are particularly significant. Companies frame the water crisis (‘the problem’) as a crisis of scarcity, a framing which is underlined by their understanding of water as a business risk. The water crisis is a complex multi-faceted issue, connected to biodiversity loss and wetland destruction (the focus of WWF and IUCN), as well as human health and livelihoods (the focus of WaterAid). Nonetheless, when companies discuss water issues, they focus specifically on the volumetric availability – or lack thereof – of water. Nestlé (2015: 143) writes: “We…fully share concerns about water availability, especially during times of scarcity and drought.” Similarly, Diageo (2015: 22) notes: “A variety of trends…affect our business, in particular the risk of water scarcity.” Companies’ tendency to focus on scarcity was noted by several practitioners. For example, one informant stated that “they’re so focused on scarcity. That’s 90% of how I hear the private sector talk about water” (Interview 6, 2015, unpublished). Similarly, another participant argued: “All the companies that talk about water stewardship actually talk about scarcity… None of these companies work on floods. On pollution. On freshwater ecosystems. Although from a water perspective, the risks are just as significant as the issue of scarcity” (Interview 22, 2015, unpublished). Analysing the material published by companies, there is some evidence that they also acknowledge water quality issues as a pressing problem. Anglo American (2015: 59) writes: “Poor quality water is harmful to the environment and human health, can affect mining and processing equipment, and present closure liabilities.” It is unclear, however, whether companies perceive diminishing water quality as a problem in its own right, or whether they perceive it as another aspect of the scarcity issue: Some [companies]…take some action on water quality and pollution prevention. But [the reason for this is] essentially because if the water is polluted, it prevents other water users downstream [from accessing it], or it makes water use downstream more costly because the water will have to be treated [to a higher degree]. So, when they are addressing quality issues…it is actually indirectly a way to address scarcity issues, to make more water available for other users downstream (Interview 22, 2015, unpublished).

Turning to the framing of ‘the solution’, companies present market environmentalism as the answer to the water crisis, suggesting that companies’ activities are not

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necessarily at odds with environmental protection, but can rather have positive effects. As already recognised, the NGOs referred to throughout this book (WWF, IUNC, WaterAid) also stand behind this idea. However, their starting points differ from that of the companies involved. Whereas the NGOs suggest that better water management can be achieved through the involvement of companies (thus focusing on the ‘environmentalism’ aspect of market environmentalism), companies suggest that their economic activities could also have positive effects on water management (thus focusing on the ‘market’ aspect of market environmentalism). Although the nuance is slight, companies’ emphasis on ‘the market’ produces a very specific set of strategies for how to address water management.

7.2  I ntegrating the Corporate Storyline into Global Water Governance GWG is simultaneously a constraining and a constructed institution; it shapes the global water discourse in accordance with the prevailing discursive order. The direction of the global water discourse has been altered as a direct result of the inclusion of companies into this realm, and their capacity to convey their ‘story’. Although companies are not doing this with ill-intent, they seek to influence how GWG shapes the global water dialogue in ways that direct resources and interventions to locales that are of importance to their operations and business continuity. Companies frame the global water agenda through discursive capture: “the subtle power exerted through influence on the way things are portrayed or described and the development of concepts, theories, and ways of looking at the world” (CEO Water Mandate 2015: 61). All actors involved in CWS come with their own biases and perspectives, essentially with a ‘story’ of their own. However, companies frame the discussion by integrating their story into GWG, and by promoting certain understandings of ‘the problem’, and ‘the solution’. As one informant put it: “they are not promoting their own work, but they are promoting a framework, which is the one that they can master” (Interview 22, 2015, unpublished). This is problematic, because, as the same participant argued: [Companies] have such huge capacity to promote their own agenda, and they’re used to… the ‘checks and balances’ [not being]…in place. You could think about environmental NGOs… They’re supposed to have the capacity to check and balance the activities of the corporate sector, but there is such asymmetry in resources and capacity to influence this global agenda…that in the end, I don’t think that these checks and balances are operating” (ibid).

Examining the story that companies tell, we can identify its influence in shaping GWG. While it is still the case that scarcity is not the only problem that is talked about in the global arena, its prominence has certainly been elevated through companies’ involvement. This could be seen, for example, from the rising prominence of the ‘water crisis’ (framed as scarcity) in the WEF Global Risk Reports. Water was

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mentioned only in brief in the first report (2006), but was named as the number one global risk in terms of impact in 2015. Although the WEF is sometimes portrayed as a ‘neutral platform’, with the capacity to bring together the public and private sectors, its agenda is, according to one informant, “really driven by the food and beverage industry” (Interview 22, 2015, unpublished). The same representative thus argued: Is it a coincidence that … the whole debate, globally, is focused on scarcity… [despite] some of the major risks related to water…[being] related to too much water – like floods and heavy rains  – or to the pollution of water, or to the destruction of freshwater ecosystems?…I think that it is interesting that the one issue that has actually topped the global water agenda is scarcity, whereas it may not be the most significant one. Simply, scarcity is an issue for [companies]” (ibid).

The mere visibility of CWS can in itself be seen as evidence of how ‘the solution’ that companies promote to address ‘the problem’ has permeated GWG. What started amongst a few companies and NGOs has spread, and has achieved global ‘discursive institutionalisation’ (Hajer 1993) through the establishment of bodies like the CEO Water Mandate and the 2030 WRG.  These organisations not only provide companies with legitimate platforms through which to disseminate their ideas, but also form a significant part of GWG itself, further influencing the norms and incentives that are promoted. Companies have an interest in steering the agenda at the global level in order to direct financial resources to particular places. A representative from an NGO argued: At the global level, there is a lot of ‘hot air’ around the private sector. And by that, I mean that there is just a lot of talk. At some point, it’s not about solving real problems, with real interests, with real risks. It’s about trying to shape the dialogue so that investments flow ‘in the right places’ (Interview 20, 2015, unpublished).

Companies that understand that lack of water poses a risk to their business continuity are interested in mitigating this risk. However, addressing risks often requires large investments, both in ‘soft issues’ like capacity building, and in ‘hard issues’ like infrastructure. Water challenges around the world are numerous, but resources are limited. Companies are thus interested in directing the available resources to places that will allow them to secure the water that they need. Speaking of one of the industry associations through which companies are active, a representative from another NGO argued: “We felt that [the organisation] was using its power and public money to set up and secure corporate supply chains. This…is not governance at all. In fact, I found it to be a real misuse of power” (Interview 12, 2015, unpublished). From a pure business perspective, this is rational. However, the question is how this affects other users’ ability to secure the water that they need. For the same reason, companies are also interested in steering interventions to places that are of interest to their business, essentially redirecting public resources. One informant remarked: [Companies] distract the public sector in areas that they care about. And because it’s high profile, and the minister says it’s a great idea, suddenly, instead of looking at everything,

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[the government] get interested in this sort of ‘flagship project’, and they put all of their energy into this one catchment and forget all the other catchments that require just as much work (Interview 5, 2015, unpublished).

Like all actors active in the water sector, companies are biased in seeking to further their own interests. However, the power asymmetries of the global playing field mean that companies (notably, MNCs) have the capacity to influence how GWG shapes and steers the global water dialogue. Allowing companies to do this without the proper ‘checks and balances’ could eventually have a detrimental effect on the public good. Next, the impact of the company storyline on water management and governance practices will be assessed. Drawing on the dimensions of market environmentalism (Table 2.1), the next three sections outline how the involvement of companies and the integration of their storyline into GWG, have led to the commercialisation of water management, the valuation of water risk, and the liberalisation of water governance.

7.3  Commercialising Water Management Applied as a strategy for resource management, commercialisation involves “changes in resource management practices that introduce commercial principles (such as efficiency), methods (such as cost-benefit assessment), and objectives (such as profit-maximization)” (Bakker 2005: 543). Although these are not exclusively advocated by companies – many governments use, for example, cost-benefit analysis – their application should be understood as ‘commercial’ here because, when companies utilise these, market-based principles rather than conceptions of ‘the public good’ steer the decision-making process. There is emerging evidence that companies frequently advocate and deploy commercial principles and methods when engaging in CWS as a way to address water scarcity.

7.3.1  C  ommercial Principles: Connecting Efficiency, Scarcity, and Savings The concept of ‘efficiency’ does not have to be understood as ‘commercial’; it could simply denote a well-organised and effective way of working. However, when speaking of an ‘efficient resource allocation’ for ‘the optimum economic use’, the concept’s commercial nature should be acknowledged. For companies, ‘efficiency’ is the relationship between physical input (water) and output (product). Improved efficiency thus implies lower inputs for the same, or higher, output (Alcott 2005); basically, making more products with less water. This leads companies, like Diageo (2015: 5) to promote efficiency as a strategy, and work “extensively to improve water efficiency…particularly in areas of water scarcity”, as they hold that that

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improved water-use efficiency could, at least in part, solve resource scarcity concerns given that less water is needed per unit of product. For those industries that require inputs from the agricultural sector (for example food, beverages, and textiles), improved water-use efficiency often entails a shift from traditional surface irrigation to sprinkler or drip irrigation, which is characterised by higher water application efficiency (Berbel et al. 2015). Linked to this is also companies’ claim that improvements in water-use efficiency will ‘save’ water (Dumont et al. 2013). SAB Miller (2015: 17), for example, suggest that “[l]ast year alone, we used 23 billion litres less water than we would have at 2008 efficiencies, equivalent to saving enough water to fill Wembley stadium [in London] to the roof 22 times.” Furthermore, companies suggest that the water ‘saved’ is ‘freed up’ for other (non-private) users. In theory, improving water use-efficiency therefore not only addresses the scarcity issue (as ‘saved’ water supposedly becomes available), but also contributes to altering the resource allocation. There are, however, a number of problematic assumptions embedded in this supposition: (1) that water is saved through improving efficiency; (2) that if water is saved, it is redistributed, and; (3) that efficiency is a desirable end-point for society. These issues will be explored in turn.

7.3.2  Questioning the Efficiency Principle 7.3.2.1  The Rebound Effect In theory, improving water-use efficiency implies a reduced water consumption. However, the ‘rebound effect’ proposes that an “increase in efficiency of use of a resource tends to increase (rather than decrease) the rate of consumption of that resource” (Berbel et  al. 2015: 664). This is because when considering the wider economic system in which the action is taken, an improvement in efficiency may trigger an increase in demand (Dumont et al. 2013). This is commonly attributed to a lower level of input at the micro-economic level, leading to a reduction in the marginal cost per unit of output, which potentially translates to a lower price for the product, and a rise in demand (ibid). For most companies, ‘efficiency gains’ are measured as improvements in ‘water-­ use ratios’: the relative amount of water used per unit of product. Nestlé (2015: 144), for example, reports that “[t]oday, we withdraw 40% less water per tonne of product…than we did 10 years ago.” However, whilst water-use ratios have decreased as a result of improved efficiency, production volumes – and thus also absolute water demand  – are still rising. Coca-Cola (2011: 20) writes: “[g]reater efficiency in our water use does not mean making less product. In fact, we intend to reduce our water use ratio—the amount of water we use to make a litre of product— while growing our business.” Consequently, as suggested by the rebound effect, gains in efficiency do not necessarily lead to a reduction in water consumption. In fact, because companies seek

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to increase production – as exemplified by Coca-Cola – water demand is likely to rise rather than fall. Moreover, it is doubtful whether improved operational efficiency alters resource allocation, since the efficiency gain is often re-invested into higher production volumes rather than allocated to other users. This leads to the second issue deserving scrutiny. 7.3.2.2  Who Owns an Efficiency Gain? Discussing the benefit of improving water productivity  – i.e. efficiency  – in the agricultural sector, the 2030 WRG (2009: 31) writes: “Such measures have the effect of conserving water resources, thus increasing water availability for other uses.” Lankford (2013), however, poses an often overlooked but acute question: who receives the material benefit of an efficiency gain? Analysing the utilisation of the global commons, Lankford argues that in a resource-scarce world, the competition for losses and wastes – what he refers to as the ‘paracommons’ – will increase. Focusing on the idea of the paracommons therefore “puts competition for an efficiency gain alongside competition for resources in their natural capital state” (Lankford 2013: 5). ‘Paracommons’ are interesting for this discussion because those who promote operational efficiency as a mechanism for solving the problem of water scarcity often deploy the argument that the water ‘saved’ will be distributed to other non-­ private water users. However, as Lankford (2013: 20) notes, when an efficiency gain is materialised, there are four possible destinations to which the saved resource can flow: “the proprietor making the efficiency shift, the proprietor’s closely connected neighbours, the common pool that supplied the resource and other users (or other systems) in the wider economy.” Companies promoting CWS base their argument on the value of any material efficiency gain flowing to one of the latter three ‘destinations’. Yet, the water saved often flows back to the company, supporting its expanding production. Thus, whilst ‘efficiency gains’, expressed as improved ‘water use ratios’ (water efficiency savings in terms of litres of water used per unit of product) may convey a seductive story of impressive water use reductions, Mason (2013: 13–14) argues that such measures can underplay a key issue for water efficiency savings  – namely whether, in situations where water resources are constrained, they increase availability for additional uses. For the multi-national corporations concerned the imperative to grow the business and increase shareholder returns remains. As a result, water saved…may effectively be diverted back into the growing overall product volume of the business as a whole, and may not translate into an overall saving that would free up water for other users.

Although CWS often portrays efficiency gains as inevitably flowing back to non-­ private users, it is crucial to note that this does not happen automatically. Unless there are governance mechanisms in place that regulate the water flow, it is possible that private rather than non-private users benefit from an efficiency gain.

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7.3.2.3  A Socially Desirable Distribution Promoting efficiency is problematic from both environmental and social perspectives. From an environmental sustainability standpoint, promoting efficiency is problematic because efficiency arguments tend to portray water as fixed rather than fluid: Water is a variable resource, and the variability is the sustainability. It’s about how you work with that variability and scarcity and over-abundance and seasonality and inter-annual variability. Those are all components to maintain, not to remove… Efficiency is like Climate Adaptation 101. It’s like a beginner’s course. As soon as you get past that, there are all sorts of other things that you need to think about, and efficiency can actually be counterproductive. Efficiency is not a universal solution…but that’s often how the private sector thinks. When I hear someone going on and on about efficiency, that tells me that they haven’t thought about water as a cycle, as a process, as something that is present all across the landscape (Interview 6, 2015, unpublished).

In other words, discussions that promote efficiency as the desired end point often frame water as a static good or a fixed volume that ought to be managed better – essentially controlled – rather than embracing its natural variability and its continual flux. Such arguments frame water in terms of the costs or benefits of having it, or not having it, rather than appreciating the value of the flow. It is also debatable whether ‘efficiency’ is the desired endpoint in terms of social equity because only taking ‘the optimum economic use’ into consideration fails to account for the overall well-being of society, or the equality of distribution. Neither is ‘efficiency’ concerned with any regulatory frameworks, like the human right to water and states’ obligations to fulfil this right. If water is distributed purely on the principle of the highest economic return, it is likely that some communities – particularly the poor and marginalised – will be excluded, and an increased amount of water can potentially be redirected towards industry.

7.3.3  Market Instruments: Applying Hydro-Economic Analysis While cost-benefit analysis is not new, and companies are by no means its exclusive user – for example, it underpinned the state-hydraulic paradigm (Sect. 2.1.1) – it has been revived and revamped through the ‘hydro-economic analysis’ conducted by the 2030 WRG. Initially formed to analyse the issue of global water scarcity, the 2030 WRG shifted its focus in 2010 to finding practical actions and solutions to alleviate the impact of water scarcity through innovative partnerships (Sect. 6.1.1). The aim of the 2030 WRG is to “catalyze sustainable, rational, economics-based solutions to close the water supply-demand gap” (2030 WRG 2017). Economics-based solutions form a crucial aspect of WRG’s modus operandi. In their 2009 landmark report Charting Our Water Future, they outline their main tool for supporting decision-­making: the “water-marginal cost curve”, which, in their words, “provides

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a microeconomic analysis of the cost and potential of a range of existing technical measures to close the projected gap between demand and supply in a basin” (2030 WRG 2009: 11). The curve sets out the unit cost (annualised capital costs plus change in net operating costs) per cubic metre reduction in a country’s aggregate supply-demand gap (Mason 2013). The vertical axis measures the cost per unit of water released by each measure in the year of the cost curve; it shows the annualised capital cost of an action, plus the net operating cost compared to business as usual. Hence, “a measure’s height on the vertical axis…indicates its financial cost—or savings—to the decision-maker” (2030 WRG 2009: 72). The measures are ordered according to net expenditure from left (net financial gain) to right (net financial cost). In contrast, the horizontal axis shows various technical responses,1 with the width of each block relating to the potential positive net impact on water availability. Therefore, “the wider a measure on the horizontal axis, the larger its net impact on water availability to close the supply-demand gap” (ibid).2 The curve is consequently designed to be a tool for decision-makers to prioritise measures on both the demand and supply sides of freshwater management, by allowing for comparison based on the cost per cubic meter of water ‘saved’.

7.3.4  Questioning Hydro-Economic Analysis For companies, the water-marginal cost curve is an excellent tool because it translates the issue of water into a language that they can use, and on which they can build a business case. However, the cost curve has met with criticism. Particularly within the NGO community, there is a sense that it is an inadequate decision-­making tool for generating sustainable water resources distribution. One NGO representative remarked: The problem…was that [the 2030 WRG] were driven by McKinsey analytics. And McKinsey analytics are not governance analytics, they are finance analytics … [so] it became sort of a ‘how do we set up projects to finance’. It defaulted back to the cost curves. And that’s not governance (Interview 12, 2015, unpublished).

Similarly, another NGO representative suggested: There is a tendency [for the WRG] to look at [water] from classic supply side solutions, which is: ‘we’ll just build a dam’ or ‘we’ll just build a pipe’ or … ‘money will solve everything’. And to use classic academic language, [solving the water crisis] is much more about soft power than the hard infrastructure (Interview 31, 2016, unpublished).

The cost curve values water from a purely financial standpoint, estimating what actions would generate the highest potential economic return from a national growth 1  These include ‘agricultural productivity measures’, ‘industrial efficiency measures’, ‘domestic and municipal efficiency measures’, and ‘supply measures’ (2030 WRG 2009: 71). 2  A detailed explanation of the water-marginal cost curve can be found in 2030 WRG 2009: 70–72.

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perspective. The model gives no indication what measures would be most suitable from a social or environmental perspective, but operates purely under the assumption that if water efficiency increases – and water can be directed to its most productive use – enough water will be ‘freed up’ to satisfy social and environmental needs. As the discussion above has shown, however, greater availability of water does not necessarily mean that these needs will be satisfied. Furthermore, for market-based instruments such as hydro-economic analysis to reach their full potential, they need to be combined with the strategy to which we now turn: the valuation of water.

7.4  Economic Valuation of Water (Risk) Another strategy that companies advocate to address water scarcity is economic valuation: “the process of calculating monetary values for environmental goods and services and incorporating this valuation into policy and management” (Bakker 2014: 481). As argued by Bakker (ibid) these arguments for valuation have gained much support, “given the large-scale inefficiencies and outright waste associated with the underpricing of water in key sectors (such as irrigated agriculture in many countries).” Critical to understand is that valuation is not privatisation. Privatisation involves the transfer of ownership or management of resources from the public to the private sector; it is often associated with the creation or reallocation of private property rights, rather than solely a change in management strategy. Moreover, valuation is not commodification – “the creation of an economic good through the application of mechanisms intended to appropriate and standardize a class of goods or services, enabling…[them] to be sold at a price determined through market exchange” (Bakker 2005: 544). Full commodification is hard to achieve for water, in part because water is difficult to exchange due its high transportation cost (ibid), and partly because non-paying users need water (including the environment). Furthermore, valuation is not pricing. In the water sector, the price has traditionally reflected a limited set of costs to treat and transport water. However, the former has tended not to cover the latter adequately. To rectify this, ‘full-cost pricing’ has been developed as a model for water management “whereby prices should reflect the full cost of infrastructure and maintenance” (Bakker 2014: 481). Nonetheless, Morgan and Orr (2015: 2) argue that even full-cost pricing “results in significant undervaluation of water in corporate decision making,” because such measure still fails to capture the value of water.

7.4.1  Valuation: The Corporate Perspective Among those companies that engage in CWS, it is not the water resource itself that is valued, but the financial risk attached to water scarcity. In other words, given the difficulties and political sensitivities of estimating an accurate value for a complex

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resource like water, companies instead place a monetary value on the water risk. As argued in Chap. 2, the critique of the attempted monetary valuation of nature has been fierce, and it has both methodological and conceptual dimensions: not only how can we value nature, but should we value nature in this way (McCauley 2006; Hargrove 1992)? However, quantifying the ‘value at risk’ for companies rather than the water itself essentially sidesteps the difficulties commonly associated with the valuation of nature, precisely because such valuation does not monetise the actual resource. For example, as one corporate representative put it: “We try as much as possible to put a dollar value on our water [risk] exposure” (Interview 24, 2016, unpublished). As discussed in Chap. 3 (Sect. 3.3.3), some companies have developed assessment methods for estimating the financial value of the risks they face, “plot[ting] out on how likely it is that it is going to happen, and then if it does happen, [estimating] how it is going to impact financially” (ibid). In addition to the models that companies have developed in-house to estimate the financial value of water risk, a number of tools have been developed. One example is Ecolab’s (2018) Water Risk Monetizer, which seeks to help businesses understand water-related risks and quantify those risks in financial terms. Another example is Veolia’s (2018) True Cost of Water which, under the slogan “If correctly valued, water will be better managed”, combines capital expenditure and operational expenditure calculations with analysis of water risks and their financial implications. Together with the companies’ own models, these tools indicate that the companies that engage in CWS have established valuation strategies to estimate water risks as convention within water resources management. Valuation is critical for a company because, without it, water could not be accurately integrated into an internal cost-benefit analysis, which could make explicit the cost associated with losing it (Balmford et al. 2002; Costanza el al. 1997). Thus, assuming that the cost-benefit analysis justifies conservation of the resource (which is not necessarily the case – see Sect. 2.1.3), the ability to attach a financial value to the risk is crucial in order to drive action within a company. As noted by a representative from a business association: “When we looked at the reasons why some companies moved forward, it was because they were able to translate ‘the risk’ to ‘the value at risk’…just saying that water is a risk is not enough” (Interview 48, 2016, unpublished). The necessity to quantify and monetise risks also serves to explain further why water scarcity is the issue that companies focus on. Comparing scarcity to other societally pressing water issues (which as argued above, companies tend to focus on less), scarcity is the only issue that can be directly quantified and monetised in terms of business impact. In essence, companies need a certain quantity (and quality) of water in order to produce their goods. Therefore, water scarcity poses a quantifiable threat to many companies’ growth strategies because these strategies “have been developed on the assumption…[that] a stable supply of freshwater…[exists, but that] …is no longer a safe assumption to make” (Interview 13, 2015, unpublished). Furthermore, when the key issue is conceptualised as the necessity of closing a quantifiable ‘supply-demand gap’, this also further rationalises companies’ promotion of the commercial principles discussed in the previous section, as these are

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primarily conceived of as strategies for closing the gap. Companies have undoubtedly been instrumental in promoting valuation. However, economic valuation of water (risk) is increasingly promoted beyond the business community.

7.4.2  Valuation: A Discursive Shift Amongst NGOs Companies’ emphases on economic valuation has also influenced NGOs approach to CWS. Various NGOs – with WWF as the most prominent example – utilise the power of framing ‘water risks’ in monetary terms as a strategy for incentivising companies to engage in water conservation. Chapter 3 outlined the ‘evolution’ of CWS: from Water Footprinting, to Shared Value, to Shared Value at Risk. As a result of companies’ emphasis on economic valuation, there is evidence that CWS has entered into a new phase: Water in The Economy (Fig. 7.2). WWF’s publication record tells a story of how economic valuation has become normalised in CWS. It has promoted various concepts at different times as a way to influence companies, as well as governments. Outlining why WWF began to promote economic valuation, one informant stated: “WWF focused more on ‘shared risk’ historically, but the organisation now focuses more on ‘shared value at risk’”

Fig. 7.2  Valuation in CWS

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(Interview 23, 2015, unpublished). The reason for this shift is, as the same person went on to explain, the belief that the only way for WWF to obtain its environmental objectives is to align them with market agendas, and to tap into businesses’ conceptualisation of water as a financial risk: WWF recognises that it could go on and talk about [the risks for] ecosystems, but the only way it could get companies to engage in that is through Corporate Social Responsibility. And that is not going to be sufficient to actually get the scale of action that WWF wants. So it started to talk about risk affecting businesses and really emphasising that risk for the bottom line” (Ibid).

Another representative further explained how making explicit the financial case for water can help to mobilise public sector support: WWF does analytics on what it calls ‘water in the economy’. Trying to make that connection between the water used through the corporate supply chain and the connection to GDP and foreign exchange, and why governments should care about it. In essence trying to make a business case for the water body. Because WWF could never do it just on fish. But you can do it when you…link water to energy, jobs, foreign exchange, and GDP, and say: ‘you’ve got so much [economic value] resting on the need to manage this [water] system.’ That’s the way to make the case (Interview 12, 2015, unpublished).

WWF is aware that businesses perceive water as a risk that could pose a threat to their economic returns, and has taken this logic a step further to promote valuation methods in order to mobilise further and wider action among companies. Similarly, recognising that many governments lack financial incentives to take sufficient action to protect water resources, WWF has promoted a valuation methodology where water is connected to, for example, GDP and foreign exchange. This makes water – or the lack thereof – a more tangible and urgent threat for governments to deal with. Consequently, in situations where there is a possibility for economic objectives and environmental conservation to align, WWF uses economic valuation as a tool to mobilise support from those who need risks quantified and monetised. Given their extensive engagement around the world, it is likely that the state of the world’s water resources would be declining even more rapidly without the involvement of NGOs. Moreover, without their attempt to steer companies to benefit not only the private but also the public interest, it is also likely that economic valuation would only be serving companies. Thus, these NGOs’ actions should not be lightly dismissed. Nonetheless, although valuation has mobilised support for conservation from unconventional actors, which is welcome seeing the urgent and widespread action needed, it has simultaneously justified a market-based environmentalist logic and enabled it to be integrated as a prominent strategy in CWS.

7.5  Liberalisation of Water Governance The final strategy that companies promote to address water scarcity issues is a call for governance reform. Chapter 1 examined the idea of governance, and defined it as a structure (a web, or network), a function (an instrument to steer outcomes, and

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a political process), or an unconventional set of actors (the inclusion of non-public stakeholders). For Bakker (2014: 484), governance is primarily a function: “the range of political, organizational, and administrative processes through which community interests are articulated, their input is incorporated, decisions are made and implemented, and decision makers are held accountable.” Based on this understanding, Bakker (ibid) argues that those who call for governance reform inspired by market environmentalism emphasise liberalisation, which she understands as “the transfer of decision making and oversight from governments to nongovernmental actors via deregulation, devolution, decentralization, and delegation.” The inclusion of non-public stakeholders and their perspective, which some see as the core feature of the shift from government to governance (see Rasche and Gilbert 2012; Bodin et  al. 2011; Biermann et  al. 2009), is, for Bakker, indicative of a liberalisation process.

7.5.1  Consultation or Liberalisation? Bakker (2014) distinguishes between four different types of governance: ‘traditional governance’, ‘multilevel governance’, ‘consultative governance’, and ‘delegated governance’. The last of these epithets denotes ‘liberalised’ governance, because it signifies a high level of involvement of non-public stakeholders, and significant delegation of decision-making. As noted above, liberalisation is not only about non-public stakeholders being present, but also about their capacity to steer the process actively. In theory, most actors involved in CWS (including companies) do not call for delegated governance, but for consultative governance, which implies significant participation of non-state actors in deliberations, but no delegation of decision-­ making. Broadly, CWS is perceived as “an incentive to bring the private sector into the public-sector debate” (Interview 12, 2015, unpublished). As noted previously, those involved in CWS still see governments as the principal agents of water resources management, and agreeing with guidelines set out by the UN Global Compact (2013: 23), they believe that “the full potential of business to advance sustainable development is only fulfilled when supportive policy frameworks are in place.” Particularly, there is a consensus across all sectors that governments have the ultimate responsibility to regulate, and to ensure equitable water resources allocation. As one informant argued: “I think governments have the primary responsibility to ensure – although not necessarily deliver themselves – access to basic services and adherence to quality standards” (Interview 25, 2016, unpublished). Or, as many remarked: “governments are very critical for setting ‘the rules of the game’” (Interview 34, 2016, unpublished). Working with bringing companies into water governance deliberations, one informant nevertheless argued: We believe that water governance and decision-making ultimately resides with the public sector, but that good water governance will involve a multi-stakeholder context and would also by extension benefit from having meaningful engagement by the business community

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Those in the business community adhere to this perspective, and also perceive their role as being mainly consultative. Nestlé (2013: 30) writes: “Providing our expertise to assist informed decision-making, in a collaborative environment with governments, authorities and other relevant bodies is…an important responsibility.” However, as admitted by one corporate representative, companies often end up taking up more than a consultative role: What we try to encourage is to work more positively with governments on long-term planning around water and regulation. It is not our responsibility but clearly, if we can see [water] through an economic perspective, and demonstrate to governments that our investment decisions might be related to a reliable supply of water, particularly in water scarce areas, then clearly we have a role to play there (Interview 21, 2015, unpublished).

In particular, companies often eventually assume more responsibility in developing countries where “the capacity of the public sector to meaningfully engage in these [CWS] processes is somewhat limited” (Interview 28, 2016, unpublished). There are those who argue that “if the state fails, corporates [should] take the leadership and move this together with the NGOs and deal with the water issues” (Interview 48, 2016, unpublished). However, even without going to extreme cases like ‘failed states’, it might be that: “government…has not been at the front. It has not been leading the agenda. It has been responding to the agenda…Collective action is more like private sector – NGO collaborations, bringing governments along on the side” (Interview 49, 2016, unpublished). Thus, although what companies call for resembles ‘consultative governance’, their involvement has sometimes led to ‘delegated governance’, primarily because they are given more responsibility when governments lack capacity.

7.5.2  Neutralising ‘The Business Voice’ Chapter 3 listed a number of industry associations (Table 3.1), and argued that the existence of these associations indicates that CWS has achieved what Hajer (1993) referred to as ‘discourse institutionalisation,’ since each institution serves as a platform where the actors involved can develop, solidify, and disseminate the idea of CWS. For example, a corporate representative stated that these organisations “provide a very useful convening space for businesses to come together in a non-competitive space” (Interview 27, 2016, unpublished). As a result, “you collaborate over toolkits, you collaborate over new ways of working or sharing knowledge” (Interview 24, 2016, unpublished). Moreover, these associations form a significant part of the GWG network, allowing them to influence the norms and incentives that are promoted, as well as provide companies with legitimate platforms through which to disseminate their ideas.

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Rarely acknowledged, however, is that when engaging in high-level policy discussions, companies use industry associations as channels to neutralise controversy over ‘the business voice’. Just as business engagement is controversial at site level, so their involvement in global policy discussions is contested. Thus, “it is very hard for companies to individually have a voice. They have to go through those kinds of groups” (Interview 12, 2015, unpublished). Consequently, when companies express their views, it rarely comes from one specific company but rather: “The input comes from their associations” (Interview 8, 2016, unpublished). A representative from an industry association confirmed this view: “At the UN-Water conference in Spain in Zaragoza…[we] were invited to be a business voice in terms of action on water stewardship. It is a really special and privileged position for us to be able to have a seat at that table” (Interview 33, 2016, unpublished). In other words, whilst one company alone could be seen as a conspicuous – and controversial – contributor to any policy discussion, business associations are perceived to defuse the biases of individual companies and provide a neutral business perspective. Further evidence of this perceived neutrality of associations can be seen from the operation of NGOs. Speaking about ICMM, an NGO representative explained: We deal mostly with the ICMM rather than individual mining companies. Because we’ve got a list with ‘blacklisted’ companies that we can’t work with. We could not have a partnership with a mining company individually, but we are engaged with ICMM on collective action projects (Interview 23, 2016, unpublished).

By ‘neutralising’ their voice, companies position themselves as legitimate stakeholders in global water discussions. As a result, the likelihood of companies gaining ‘consultative’ status in governance increases, and their power to exert influence grows in tandem. Moreover, although companies may not always look for it, they are sometimes delegated the responsibility not only to consult on decisions, but to make them. Particularly in developing countries, where public capacity is weak, the likelihood of more responsibility being transferred to companies increases if they are perceived as not only ‘resourceful’ but also ‘neutral’. This book has argued throughout that companies have a legitimate claim to participate in discussions and to be consulted on water issues. However, whether a company is presenting a view individually, or through an association, their perspective cannot be seen as ‘neutral’. As argued by a representative from an international organisation: “They are promoting their own agenda through a platform and claim that they are neutral. But they cannot be” (Interview 22, 2015, unpublished). Like all stakeholders, companies have an agenda for how they wish to shape CWS, as well as GWG more broadly. This agenda embodies a specific framing of ‘the ­problem’ (water scarcity), and  a specific understanding of what ‘the solution’ is (market environmentalism). As the previous three sections have illustrated, the fact that water management is being commercialised, water risk is being monetised, and water governance is being liberalised indicates that companies have been quite successful in promoting their agenda.

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Chapter 8

Imagining Pathways Forward: Corporate Water Stewardship and the Future of Global Water Governance

The fact is that global water use is completely tied up in the private sector, so you can’t suddenly say: ‘sorry, this is a public good, you’ve got nothing to do with this.’ They’ve got everything to do with it. So, if we just pull hard and say that corporates have no place at the table, I do not think that is a very helpful future. Instead we need to help shape what that future is. Interview 12, 2015, unpublished

The water crisis not only impacts people and planet, but also profits. The different parts of this book have collectively addressed how this fact has resulted in corporations playing an increasingly prominent role in the water sector. More specifically, the three parts have provided answers to why companies engage with water issues, how they engage, and the effects their actions have on the norms and practices promoted through the global water governance system. As shown, under the banner of CWS, companies work independently in different locations around the world to improve their own water management practices at production sites, as well as in partnerships with other stakeholders to ensure the wider health of watersheds. As more and more companies wake up to the water challenges they face, their collective involvement in the water sector is likely to become even more prominent in the future. No doubt, this is an encouraging development. To address adequately the enormous water challenges we collectively face, all actors will have to play their part. And, as illustrated in this book, when we speak about all the water that is withdrawn from our rivers and aquifers, the vast majority “goes into corporate supply chains” (Interview 12, 2015, unpublished), be it for use in agriculture or in industry. A scenario where global water challenges can be tackled without working collectively with companies is therefore inconceivable. As a result of the close entanglement between water use and corporate behaviour, collective interventions where companies work in a consortium with others to address water challenges can be powerful. Beyond altering their direct operational water use, companies have the power to move into their supply chains to incentivise

© Springer Nature Switzerland AG 2019 T. Rudebeck, Corporations as Custodians of the Public Good?, Water Governance - Concepts, Methods, and Practice, https://doi.org/10.1007/978-3-030-13225-5_8

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a transformative shift in the production process of many of our global commodities. Companies are thus authoritative agents in driving positive ‘ripple-effects’ where sustainable water management can spread from isolated facilities to basin-wide initiatives far beyond the ‘fencelines’ of a single company. Thus, in the words of the former UN Secretary-General Kofi Annan (2000: 65): “nothing would be more foolish than neglecting the enormously positive role the private sector can play in promoting environmental change.” Inviting companies to the table is, however, associated with challenges as well as opportunities. When taken holistically, this book attests to the basic point that the inclusion of companies in the water sector matters; it changes the status quo of water management and governance. Companies are mighty actors, meaning that their inclusion into initiatives inevitably alters the balance of power. On the ground, the unequal distribution of (among other things) money, manpower, and hydrological data is evident when comparing companies with NGOs and even governments, meaning that companies’ capacity to steer outcomes is skewed in their favour. At the more abstract level, the material capabilities that companies possess also allow them to attend meetings and participate in the discussions where the global water agenda is set, something which is beyond the access of many less resourceful actors. In this sense, while it may be necessary to invite companies into the water sector because they are such large users, it is nevertheless a move with high risks which, if not properly managed, could undermine global water security. The opportunity that CWS presents can be illustrated through a few stories displaying examples of the great work done by companies in concert with other stakeholders, while other simultaneous stories can highlight the danger of relying too heavily on companies to ensure collective water security. These stories make up this final chapter, which ends with some reflections upon how to ensure that the actions companies take in the name of CWS help shape a GWG agenda that serves the public good rather than simply contributing to private profit.

8.1  Promising Developments: How Companies May Help There is reason for optimism. Across the sectors discussed in this book, there are numerous examples of companies working in concert with other stakeholders to further collective water security successfully. From the Food and Beverage sector, one of many initiatives worth highlighting is the global agri-business Olam International’s implementation of the AWS Standard (see Sect. 4.1) at their Aviv Coffee Plantation in the Upper Ruvuma Basin in Southern Tanzania. Supported by the UK-based NGO Water Witness International and IWaSP, the initiative has sought to advance and formalise Olam’s approach to stewardship, in order to better mitigate risk and strengthen overall water security in the basin through collective approaches. For Olam, the Aviv Coffee Plantation constitutes an important business investment. However, the area faces a complex mix of water challenges, making the

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p­ lantation vulnerable to water stress. Beyond regular flood and drought events, rapid demographic change alongside new economic investments are putting more pressure on existing resources, as water demand is growing rapidly. Moreover, the overall water governance of the basin is weak, and public authorities lack the necessary resources to impose and enforce appropriate regulations (AWS n.d). To respond to these challenges, Olam decided to implement the AWS standard. Amongst other benefits, the project has provided Olam with a platform to initiate communications with the municipal sewage provider to address pollution risks. The initiative has also allowed Olam to co-invest in the establishment of the Upper Ruvuma Water User Association, tasked to lead efforts to support more equitable water allocation and draft responses to extreme climate events such as droughts (ibid). On the back of this initiative, Olam is currently exploring opportunities to advance similar initiatives in other geographies. For instance, in California’s Central Valley, the company works with Ecolab and WWF to pilot the implementation of the AWS Standard at their onion drying plant in Firebaugh (Olam 2016). Whilst just one example, the learnings from this case demonstrate that, with the right support, companies can work together with other actors in basins to strengthen governance and enhance water security. Another example from the Textile and Apparel sector that inspires optimism is the STWI, briefly mentioned in Sect. 4.3.3. This initiative is a great example of where individual companies have moved beyond interventions in their own factories, and instead work collectively toward achieving systemic change by tackling environmental challenges in the complex system making up their intertwined global value chains. STWI was launched in 2010 as a public-private partnership between SIDA, Stockholm International Water Institute (SIWI), and major Swedish textile and leather brands with an objective to “catalyse a shift toward environmentally sustainable production in major textile and leather industry production hubs” (OECD 2016). To further sustainable water and wastewater supply chain management, the programme has worked with 277 textile and leather suppliers in Bangladesh, China, Ethiopia, India and Turkey between 2014 and 2018 (STWI 2018). Priority areas for the programme have included: to reduce the environmental impact of factories by improving water efficiency, preventing water pollution and advancing wastewater treatment; to build and share knowledge on sustainable water use in the textile and leather industries by producing guidelines; to offer a platform for participating brands to exchange and communicate on methods and case study results; to build institutional capacities for improved industrial water governance by conducting governance and water risk assessments; and to the raise profile of water in international processes that address the environmental impact of the textile and leather industries (STWI 2018; OECD 2016). STWI has generated notable results. Firstly, allowing participating factories to make substantial cost-savings, it has demonstrated the business case for factories to invest in solutions that enable more efficient use of water, chemical and energy. Secondly, it has raised industry standards by imposing stricter policies, and inspired retailers to move from a reactive auditing approach to proactively addressing the

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risks facing them. Finally, it has proven the power of actively working with companies, as having industry support has been critical in mobilising suppliers – who are often competitors – to participate in the programme (ibid). Building on the success of the programme, from 2018 onwards, STWI will move beyond Sweden and progress to a global network in order to continue to advance sustainable resource management in textile supply chains. Looking to the Metal and Mining sector, Anglo American’s eMalahleni Water Reclamation Plant in the north-eastern region of South Africa is another great example of a corporate initiative that has served to enhance collective water security. The initiative not only demonstrates innovative thinking on behalf of the company, but also unconventional  – but productive  – collaboration between a company and a municipality. eMalahleni (formerly known as Witbank), is one of the fastest growing urban areas in South Africa. However, rapid industrial, commercial, and residential growth has put unsustainable pressure on the region’s water resources, resulting in overextraction and declining resources availability. By the mid-2000s, there were real concerns about how the area would be able to meet its future water demands. Ironically, while this was playing out, Anglo American’s Thermal Coal operation was facing the opposite problem. A body of the mine’s wastewater, which was growing substantially by the day, was sitting above the coal deposit it was trying to mine. Research was commissioned to try and find a joint solution. The result was the eMalahleni Water Reclamation Plant, a joint public-private initiative between Anglo American Thermal Coal, BHP Billiton Energy Coal South Africa, and eMalahleni Local Municipality. Whilst Anglo American had previously treated its wastewater to the required quality to discharge it into the nearby Olifant River, investments in innovative technology such as reverse osmosis allowed the plant to treat the wastewater to potable quality. About 80% of the treated water is now piped directly into the eMalahleni municipality’s reservoir, contributing 12% of the daily public water requirement. The remaining 20% is sent back to supply Anglo American’s operations (Anglo American 2013). Since its inception, the plant has expanded and is now able to treat water from other mining facilities in the area. In the words of the former CEO of Anglo American’s thermal coal business: “The eMalahleni Water Reclamation Plant is a shining example of how an environmental liability – mine water – can be transformed into an asset with extensive benefits for the local community, the environment and our own operations” (ibid).

8.2  Potential Roadblocks: How Companies May Hinder The three stories above clearly demonstrate that corporate involvement in addressing water issues can generate societal value. However, it would be foolish to ignore that, at their core, most companies exist to serve their shareholders, not their stakeholders. This fact has been demonstrated in numerous discussions throughout the book, raising concerns as to what extent companies can be entrusted to further

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collective water security. Here, we review these discussions to provide a synthesis of two of the most prominent barriers.

8.2.1  The Nature of Business The first barrier is the inherent nature of business itself. Whilst we could point to development like Social Entrepreneurship, Corporate Citizenship, and Corporate Social Responsibility (Sect. 2.3.2) and argue that we have moved a long way from Friedman’s conceptualisation of the role of business in society, it is impossible to shift completely from the simple truth that ‘the business of business is business.’ At the core, the mandate held by public and private actors diverge. Thus, whilst the business and society realms may have become more intertwined, it would be a mistake to confuse interdependence with aligning interests. Ultimately, just because business and society face common problems does not mean that they advocate the same jointly beneficial solution. What does this mean for CWS? In the context of water resources management, it means that we must guard against uncritically accepting narratives around ‘winwin outcomes’ and ‘shared value creation.’ As seen in the previous section, there are instances where interests can align, and mutual benefits can be generated, but it is not a given. Like any actors, companies act in accordance with their own interests, and as a result, they seek to direct investments into places that are of importance to their business. As discussed in Chap. 7, companies may essentially try and redirect public resources so that they flow into “the right places” (Interview 20, 2015, unpublished). Water challenges around the world are numerous, but resources are limited. Acting on their interests, companies thus seek to channel the available resources to places that will allow them to secure the water that they need. In the chapter, one informant was quoted who emphasised this dilemma: “[Companies] distract the public sector in areas that they care about. And because it’s high profile… [the government] get interested in this sort of ‘flagship project’, and they put all of their energy into this one catchment and forget all the other catchments that require just as much work” (Interview 5, 2015, unpublished). The chapter also raised another example that speaks to this danger. Highlighting a particular publicprivate stewardship initiative, a quoted NGO representative argued that the outcome of the partnership in question was that it “was using its power and public money to set up and secure corporate supply chains” (Interview 12, 2015, unpublished). It cannot be stressed enough: from a pure business perspective, this is rational. However, seen on the back of the power asymmetries that underpin the global playing field, the question is how this affects other users’ ability to secure the water that they need. This discussion perhaps becomes even more acute when discussing CWS in the context of WASH. Drawing on Blowfield and Dolan (2014: 22–23), Chap. 5 demonstrated that companies increasingly reposition themselves from ‘development tools’ (organisations “widely engaged in economic activity in developing countries

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but assuming little responsibility for the impact of that activity”) to ‘development agents’ (“organisation[s] that consciously [seek] to deliver outcomes that contribute to international development goals”). However, even when companies recast themselves as ‘development agents’, it would be misguided to assume that they can provide a remedy for all development shortcomings. Similarly to the context of water resources management, this stems from the often competing interests of business and society. Chapter 5 explored the idea of ‘Bottom of the Pyramid’ (BoP) schemes in order to highlight an example of a business narrative that often masks the tensions embedded in ‘win-win outcomes’. However, although the rhetoric of win-win solutions tends to minimise potential tensions between global development and business agendas, it should not be ignored that “making profits and assisting the poor and vulnerable may often be oppositional goals” (Banks et al. 2016: 246). Quoting a professional with vast experience of working with development issues in the field, the chapter raised the point that “development objectives are often about…addressing those who are vulnerable, left behind, marginalised and poor and so on… [But] from a strict business perspective… your best bargain for your buck would probably be to provide services to those that are a bit more well off” (Interview 8, 2015, unpublished). Moreover, as shown through numerous examples in Chap. 4, companies across different sectors tend to decide their course of action by conducting a risk assessment and assessing which problem in what location is most likely to have the greatest impact. This strategy holds equally true in the WASH space as it does with reference to water resources management. This has implications if setting out to devise plans to address issues like poverty, as companies tend to be guided by an ‘impact-based’ rather than a ‘needs-based’ mind-set. Focusing interventions around those communities that could have the most impact on the company is problematic, because as argued by a representative from an NGO in Chap. 5, the most “vulnerable communities aren’t the ones who are shouting the loudest, or who are having the biggest impact” (Interview 46, 2016, unpublished). No doubt, businesses have made great contributions to furthering access to WASH.  However, as noted in Chap. 2, businesses tend to ignore issues that fall beyond the realms of their own business interests, so that their “discussions of ‘exclusion’ tend to be of services that can be extended to poor populations, not of the inequalities in power and voice that keep poor populations systematically socially and politically excluded” (Dolan and Roll 2013: 192). Perceiving poverty as a symptom of market failure, businesses are capable of addressing only those poverty issues for which they can produce a market solution.

8.2.2  Discursive Capture The second barrier to placing complete trust in companies to deliver collective water security is their ability to capture agendas. Whilst it may be true that “policy is always captured by somebody” meaning that “somebody always gets more

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benefit out of something than somebody else” (Interview 12, 2015, unpublished), it also has to be stressed that the balance of power is often tilted in companies’ favour. Though perhaps not always done deliberately, this book has outlined numerous examples of how companies ensure that “Water keeps flowing uphill, to money and power” (Swyngedouw 2013: 827). We can see evidence of this capture both in terms of the broader water crisis narrative, as well as in the promotion of specific management tactics. Influencing the story told about water, companies are not necessarily “promoting their own work, but they are promoting a framework, which is the one that they can master” (Interview 22, 2015, unpublished). This is expressed primarily in two ways. Firstly, companies tend to frame water in terms of a risk threatening financial returns, rather than an issue affecting environmental sustainability or human livelihoods. This conceptualisation of water as a business risk stands in stark contrast to how WWF, IUNC, and WaterAid – the three NGOs that have been discussed extensively throughout this book – understand water’s link to society. As outlined in Sect. 3.2, these organisations frame the water crisis as an environmental or social risk. This frame has long permeated the water debate. But, as a result of growing corporate involvement in the water sector through CWS, we can see indications of companies’ framing of the water issue starting to influence wider agendas. For instance, WEF, which is officially a neutral multi-stakeholder platform, has set out to “to show how water is an integral piece to economic growth and development” (Interview 37, 2016, unpublished). Ultimately, WEF now strives to change the political economy of the water agenda from “an MDG-related ‘access’ issue to an issue of ‘access in the context of wider resource security and economic growth’” (2030 WRG 2012: 18). Framing water in these terms could result in its climb onto political agendas  – something that is desperately needed. As noted in numerous chapters, making explicit the links between water and economic growth may mobilise political support not only from government departments of water or environment, but also from the Ministries of Finance and Presidential Offices. In turn, being of interest to those officials may spark more aggressive action and unlock further resources to address the issues at hand. However, whilst framing water in relation to its contribution to financial return and economic growth could be productive, it also has to be stressed that it could be problematic. Doing so risks overshadowing water’s environmental and social dimensions, as these – albeit valuable – are not easily quantified and thus hard to account for. Secondly, companies tend to take a narrow view of the water crisis itself and focus primarily on the volumetric availability – or lack thereof – of water. To a company, water scarcity is the primary concern because water is essentially understood as an input in production processes, which a company needs at particular times in specific locations during the production process. Unlike many other water issues, scarcity therefore poses a direct threat to business viability. Moreover, because a company can calculate the amount of water ‘input’ that it needs for its production, scarcity – again, unlike many other issues – is a problem that can be quantified. By showing that companies concentrate on the one issue that they perceive to be quantifiable, this book adds an additional layer to previous research. Blowfield (2008)

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has previously argued that companies only rally support for social and environmental causes if it can – in numerical terms – demonstrate a positive correlation between ‘doing good in the world’ and ‘doing well financially’. This book shows that quantifying the benefit of an intervention is not enough; a company also needs to be able to quantify the problem. If the problem itself cannot be quantified, it is more difficult to construct the ‘business case’, because it is more challenging to set baselines and targets, and to measure success in ‘closing the gap’. Having drawn up a problem frame which they can master, companies are also capturing agendas by promoting correlating solutions that they can manage. Highlighting once more the emphasis given by companies to being able to quantify issues, we can see this permeating the water management tactics promoted by them. For instance, companies promote commercialisation, which involves “changes in resource management practices that introduce commercial principles (such as efficiency), methods (such as cost-benefit assessment), and objectives (such as profit-­ maximization)” (Bakker 2005: 543). Focusing specifically on how companies promote commercial principles like efficiency, Chap. 7 demonstrated that companies promote water efficiency savings as they hold that improved water-use efficiency could, at least in part, solve resource scarcity concerns given that less water is needed per unit of product. Chapter 7 also explored how companies promote economic valuation as a strategy: “the process of calculating monetary values for environmental goods and services and incorporating this valuation into policy and management” (Bakker 2014: 481). Using internally developed mechanisms, as well as tools like Ecolab’s Water Risk Monetizer, the chapter showed how companies place a monetary value on water risks to justify engagement. Like the corporate framing of the water problem, the promotion of these solutions has started to permeate other sectors. For instance, many NGOs now actively endorse valuation as a conservation strategy. However, here lies serious risks. Although valuation has mobilised support for conservation from unconventional actors, which is welcome seeing the urgent and widespread action needed, it has simultaneously justified a market-based environmentalist logic and enabled it to be integrated as a prominent strategy in the water sector. This is treacherous, as it cannot always be assumed that market-based mechanisms will generate public-good outcomes.

8.3  Paving a Pathway: Overcoming Obstacles It is clear that corporate involvement can generate benefits as well as challenges. However, despite not being an easy route, we have to recognise that engaging with companies is the only way forward if we want to ensure collective water security. It is therefore of imperative importance to find ways to navigate around the challenges and capitalise on the benefits. The following sections set out four areas that we have to address if we are to ensure that CWS will contribute to public-good outcomes.

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8.3.1  Aligning Agendas The water sector is characterised by silos; there is little coordination between different interventions and between different actors. Whilst the problem is multifaceted, a first critical step would be to work towards greater alignment between public and private efforts to ensure water security. Looking at public efforts, IWRM has been the dominant public sector paradigm since the 1992 Dublin Conference, where the concept became institutionalised through the adoption of the Dublin Principles (see Sect. 2.1.2). Through the formation of the SDGs in 2015, the world saw a revived commitment to implement IWRM across all levels of society. So far, however, efforts to advance stewardship, and IWRM activities undertaken by the public sector have been largely detached. This is despite the approaches sharing similar objectives of ensuring water security for people, planet, and the economy. Actors in the water sector generally suggest that “[i]f IWRM is considered as actions by an authority mandated by the state to manage water resources on behalf of all water users, then water stewardship can be considered as actions by water users themselves to contribute to the management of the shared resource towards public-good outcomes” (Morgan and Orr 2015: 19). There are several examples of ways in which CWS and IWRM initiatives could benefit from alignment, and a first step is to build on those potential synergies. For instance, at the broadest level, many NGO representatives hold that integrating private users’ perspective into IWRM processes could play a critical role in building public commitment to reform processes, by “supporting and ‘waking-up the economic pillar of IWRM” (Newborne and Dalton 2016: 45). The capacity for companies to act as catalysts for better water management “by making the business case for why governments need to be investing in better water governance” (Interview 12, 2015, unpublished) has been a recurring theme in this book. More specifically, companies could also contribute with data and expertise (see Sect. 6.3.1) that could help public authorities make informed decisions. The present lack of alignment between IWRM processes and CWS is a result of both the public and private sectors either having been reluctant to engage with one another, or being unsure of how to do so effectively. This will have to change. An approach where everyone works in their own silos has brought us to where we are today, and a radical change is needed. To ensure water security, the first step is to ensure that all sectors coordinate efforts, and work towards the same goal.

8.3.2  Building Strong Partnerships Once a collective agenda is set, the next step is to work collectively on the ground to further common objectives. A notable feature of all positive examples highlighted in Sect. 8.1 is that they are underpinned by joint efforts. Whilst companies are critical for catalysing and driving change, these examples show that support from the

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public sector and/or NGOs is imperative for successful outcomes. To ensure that companies’ actions further good water management and governance, we therefore first need to recognise that it has to be done as a wider collective of actors. It has to be stressed that there is nothing novel about this point; partnerships are already advocated across the board and as many chapters in this book have demonstrated, numerous successful collaborations are already operational. Nevertheless, collective action is still the exception rather than the rule; though partnerships may be promoted by all actors in theory, many still choose to work alone. Looking at how to overcome barriers to forming partnerships, a number of issues have to be addressed. The first issue is that of public sector capacity building. Whilst CWS is sometimes advocated as a solution to weak public governance, this argument misses the crucial point that public sector involvement is imperative. CWS should never be framed as ‘instead of’ public sector action, but rather as ‘complementary to’ existing institutional structures. However, the reality is that in some places, the public sector in unable to play this leading role as a result of weak capacity. Whilst tempting, the solution in those cases is not to move ahead without the public sector, but instead make public sector capacity building an integral part of the partnership design. NGOs and donor agencies are critical here in assisting the processes of building institutional capacity. Perhaps more controversially, companies may also have a role to play in supporting public capacity building by, for example, sharing knowledge and data, provided there is sufficient transparency. Setting up and running successful partnerships involves a lot of preparatory work, including data gathering and analysis, strategy development, and relationship building with local stakeholders. This takes time. Thus, the second barrier that has to be torn down is the idea that partnerships are easy and provide a ‘quick fix’. As one informant put it: “It is like the ‘Vietnam syndrome’. Companies want to be like the politicians: ‘You go in, you solve the problem and you get out in 6 months.’ And water does not work like that. It works like Vietnam. You are stuck in there for like a decade. And companies do not like that” (Interview 5, 2015, unpublished). As discussed in Sect. 6.5.1, conflicting expectations of timelines is one of the key sources of tension when setting up cross-sectoral partnerships with companies being frustrated with slow public processes, and other actors being discouraged with companies’ lack of patience. As an NGO representative candidly put it: “There is all of this naiveté. The corporates think they can just roll in and set up all of these collective action initiatives and solve all problems and we’re like…NO NO NO. This is really hard stuff” (Interview 12, 2015, unpublished). For partnerships to be productive and generate results, there has to be recognition on all sides that they require a significant investment of time. Beyond being time consuming, these activities are also costly. Securing funding, especially for the preparatory work like data gathering and relationship building remains another key barrier that has to be addressed. Although critical, the benefit of such preparatory work is often intangible, which means that it is hard to frame it in the language of a ‘business case’. As a result, few companies are willing to sponsor these types of activities as it is rare for companies to invest unless they can quantify the benefit. To mobilise additional resources and

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enable more partnerships to thrive, it is therefore necessary to broaden the spectrum of funding opportunities.

8.3.3  Recognising Differentiated Responsibilities Working together in partnerships does not mean that roles should be conflated; private and public actors still have distinct mandates and are thus bound to carry out different duties. However, identifying precisely what those roles and responsibilities are can be challenging. More precisely, one of the greatest points of tension revolving around corporate water engagement is where the private responsibility ends, and where public responsibility should pick up. Failure to have an open discussion around where responsibilities lie may lead some corporations – as well as governments – to avoid cross-sectoral engagement altogether. It is thus critical to bring these debates to the forefront of any collaborative effort. Failure to speak openly about the specific roles and responsibilities that should be assigned to each actor in specific contexts may result in actors being unsure of where the boundary is, and thus overstepping their appropriate mark. This is problematic for all actors involved as boundary crossing could have serious reputational risks for both sectors; for corporates, there is a reputational risk around e.g. policy capture, and for governments there are risks around e.g. being seen as bending to private interests. Failure to address these questions openly could also lead to conflicts between the sectors. In administrations where public sector capacity is weak, efforts from corporates to provide access to water could lead to governments abdicating responsibility because those with stretched resources will often re-prioritise effort away from areas that are being managed, which leaves the corporate with the entire responsibility for a non-core function. This could not only cause a transfer of responsibility that is problematic, but it could also lead to conflict, as it creates new expectations on the private sector to provide these services long-term, which they may not be equipped or willing to meet. In essence, working together in partnerships is critical; it allows participants to do more than they could have achieved alone. However, for any collaboration to be successful, there have to be open conversations around who is responsible for what.

8.3.4  Designing Appropriate ‘Checks and Balances’ To safeguard against actors overstepping their appropriate mark, it is critical that ‘checks and balances’ are in place. The question of checks and balances has been a recurring theme throughout this book, as a requirement to guard against private interests unduly influencing the public good. Doubts have been raised as to whether we have the right mechanisms in place to prevent boundary crossing, and to avoid different forms of capture. As one representative from a large international

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organisation put it: “Everybody promotes their own agenda. But the question is: do we have in place the critical gaze to understand who is promoting what?” (Interview 22, 2015, unpublished). Unpacking what these checks and balances are, and who should be responsible for setting them up are two of the most imperative questions moving forward. Setting up the required checks and balances will, in short, revolve around ensuring that partnerships display process-based legitimacy: a balanced representation of different affected stakeholder groups, a forum for open and transparent deliberation between the different actors involved, and a reliable accountability and monitoring mechanism. Calls for these features to be integrated in any governance system is not new but, as stressed in Sect. 6.4, actors in the field use slightly different terminology and tend to speak of good governance, rather than process-based legitimacy. In the context of collaborating with companies, the question of ensuring equitable representation is particularly acute. The capacity to influence processes and outcomes is intimately tied to the amount of financial resources an actor has access to, but as has been demonstrated throughout the previous chapters, resources are unequally distributed amongst different stakeholders. Resources – and thus influence – is heavily tilted in companies’ favour. Stressing the problem of how asymmetrical financial capabilities can throw multi-stakeholder initiatives off balance, an NGO representative quoted in Chap. 6 argued: “It becomes a challenge when finance becomes the core of whatever the relationship is based upon because at a certain point it is people with finance that sit around the table. And all stakeholders don’t necessarily come with finance” (Interview 20, 2015, unpublished). One solution to this problem would be to genuinely place a larger significance on non-financial resources, and to acknowledge that although not all stakeholders come with money, that does not imply that they do not bring value. For example, cultural embeddedness and social capital may be two forms of resources that could be imperative to project success, but which may not be of monetary value. This is thus one ‘check’ to ensure ‘balance’ that could be integrated into partnership design; to embed an understanding of differential but equally valid contributions. Regarding ensuring transparency and accountability, this goes to the heart of the next question: who should be in charge of overseeing that checks and balances are held in place? This question has different answers depending on the scale in which we situate it. At a project specific level, this is often the role assigned to NGOs. Standing outside public as well as private interests and obligations, it is assumed that they have the capacity to act as ‘watchdogs’ and hold the other stakeholders accountable. However, as emphasised by a representative from an international organisation in Chap. 7: “Environmental NGO…are supposed to have the capacity to check and balance the activities of the corporate sector, but there is such asymmetry in resources and capacity to influence this global agenda…that in the end, I don’t think that these checks and balances are operating.” (Interview 22, 2015, unpublished). A shift in mindset is required. For long, weak public sector capacity has prompted this idea that NGOs can step up and carry out one of governments’ core functions: to safeguard the public good. The time has come to recognise that it is governments, not NGOs that have the responsibility to ensure that initiatives follow good

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g­ overnance practices. Here, we return once more to the necessity of integrating public sector capacity building into partnership design, in order to strengthen governments’ ability to carry out these functions in places where it is currently weak. Thinking of CWS as a whole, and how checks and balances should be put in place to ensure that corporate activities to further good water management contribute to GWG in a productive way, we need to think beyond individual governments. This is primarily because even governments with great capacity may struggle to monitor corporates’ behaviour, given the mismatch between governments’ national mandate, and corporations’ global operational scope. Given this mismatch, it is worth recalling the other actors beyond nation-states and companies who are active in GWG. As recognised in Chap. 2, scholars like Cooley et al. (2014) and Gupta and Pahl-Wostl (2013), draw attention to the role of UN, international NGOs, epistemic communities like IWA, and public-private bodies such as the WWC. Among these entities, the UN is in a prominent position to mantle the responsibility for ensuring that these ‘checks and balances’ are in place. It must be acknowledged that the UN is fragmented and weak with regard to water. Over 30 UN entities carry out water and sanitation programmes. UN-Water is tasked to act as a coordinating agency across this myriad of organisations, and ensure that it ‘delivers as one’ in response to water-related challenges. However, the absence of comprehensive global water frameworks makes this a difficult task. The lack of global inter-governmental agreements is one of the key challenges of researching, and indeed operationalising, GWG.  The fabric of GWG is, as concluded in Chap. 2, not woven by legally binding, or even formal, structures. Like global governance in general, it exists in a state of ‘institutional ambiguity’ (Hajer and Versteeg 2005), operating by networked and hierarchical interactions that steer the overarching ‘rules of the game’. Despite the absence of a global framework, and the fragmentation of the UN system, UN-Water could still have an important role to play in providing the necessary ‘checks and balances’. One of the organisation’s key objectives is to monitor and report key management trends and, to this end, it has launched the Integrated Monitoring Initiative for SDG 6. The initiative does not only seek to develop monitoring tools, but also to enhance technical and institutional country capacity for monitoring (UN-Water, 2018). Much of the experience of driving such an initiative could potentially be transferred to the monitoring of companies’ (in)actions. UN Water’s ability to act as a ‘global watchdog’ could be strengthen by building stronger ties between the organisation and the UN Global Compact. Launched in 2000, the Compact is one of the largest corporate reporting initiatives worldwide. It is a voluntary partnership initiative between the UN and businesses with a mission to advance ten universal sustainability principles (pertaining to human rights, labour, and the environment) amongst corporations. Self-reporting is carried out annually by companies who are signed up to the initiative through The Global Reporting Initiative; the leading scheme in the field. Many scholars, like Brühl and Hofferberth (2013: 351), point towards the dangers of self-reporting, which in their view leads to a situation where “the regulation of private business has changed to new forms of regulation together with or even through private business.” Concerns

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like these are valid; disclosure without monitoring an evaluation does not lead to strong governance. However, integrating this information into, for instance, UN Water’s Integrated Monitoring Initiative for SDG 6 could not only strengthen UN Water’s capacity to assess progress, but also serve as a critical assessment and validation of corporate data. Encouraging greater assessment of the data that corporations disclose could ultimately serve to put in place checks and balances that could ensure that corporate water stewardship serves the public good.

8.4  Concluding Thoughts What can the examination of CWS tell us about the relations between corporate influence and global water discourse? When taken holistically, this book attests to the basic point that the inclusion of companies in the water sector matters; it changes the status quo of water governance. That the presence of companies matters is not in itself a novel finding; there has been a long debate as to whether the inclusion of companies serves to ‘close the governance gap’ or lead to ‘corporate capture’. As identified early on, however, the arguments presented on either side of this debate are often ideologically rather than empirically grounded, meaning that, even though the debate is fierce, grounded evidence of the effects of private sector involvement remains sparse. Thus, whilst this book supports the claims that the inclusion of companies ‘matters’, it goes beyond such assertions, and points towards how. Critically, it has shown that companies influence how GWG shapes and steers the global water dialogue, with the sought effect of directing resources and interventions to locales that are of importance to their operations and business continuity; although companies may not be doing this in an ill-intentioned – or even conscious – way. Exploring the phenomenon through the theoretical lens of ‘storylines’, this book shows how the management and governance of water in specific locales has started to conform to market environmentalist ideals as a direct result of companies’ involvement, and their ability to insert their storylines into global discourse. More specifically, their inclusion has led to the commercialisation of water management, the valuation of water risk, and the liberalisation of water governance. Despite this, it is undoubtedly a productive step forward to start recognising that companies are an integral part of the solution to addressing water issues. Without the involvement of companies, it would be hard – most likely impossible – to ensure water security in the twenty-first century and beyond. However, to establish effective collaborations with companies, it is critical to devote more resources to setting up adequate governance structures that can clarify ‘the rules of the game’. In the words of a representative from one of the world largest environmental NGOs: “At the end of the day, the biggest failure within water resource management in the last 30–40 years is about governance. It’s not water efficiency. It’s about governance. It’s the institutional structures, and the things we do not focus on, or do not spend

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Appendix: List of Organisations Interviewed

Type of actor Company

NGO

Donor International Organisation

International Association/ Network

Organisation The Coca-Cola Company Coca-Cola Enterprises Diageo SAB Miller Marks & Spencer Unilever Olam Nestlé H&M CDP World Wide Fund for Nature (WWF) – International World Wide Fund for Nature (WWF) – UK The Nature Conservancy (TNC) International Union for Conservation of Nature (IUCN) Water Witness International (WWI) WaterAid Circle of Blue Swiss Agency for Development and Cooperation (SDC) UK Department for International Development (DFID) United Nations Development Programme (UNDP) The World Bank Organisation for Economic Cooperation and Development (OECD) 2030 Water Resources Group World Business Council for Sustainable Development (WBCSD) World Economic Forum (WEF) (continued)

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198 Type of actor

Research/Think Tank

Consultancy

Appendix: List of Organisations Interviewed Organisation The CEO Water Mandate International Council on Mining and Metals (ICMM) AquaFed – The International Federation of Private Water Operators Alliance for Global Water Adaptation (AGWA) Stockholm International Water Institute (SIWI) International Water Management institute (IWMI) Overseas Development Institute (ODI) Partnerships in Practice (PiP) Pegasys