In 2018, Cape Town, South Africa, was hurtling toward a doomsday scenario. City officials projected the city would run out of water on April 12, 2018, deemed "Day Zero."

The city managed to prevent Day Zero, but not without significant cutbacks in water usage. Some women even resorted to cutting their hair because it was too difficult to wash with water restrictions in place.

The city's drastic measures got the attention of Procter & Gamble. "Without innovation, this means a lot of compromise, like those women having to cut their hair," Virginie Helias, chief sustainability officer at P&G, told Supply Chain Dive.

The severe drought in Cape Town led to the development of Waterless, P&G's collection of hair care products requiring no water for use.

The drive for innovation to reduce water use and consumption, however, began long before Cape Town’s water crisis. Monika Freyman, director of investor engagement at Ceres, said water sustainability has been an industry focus for several years because of growing global risk to water supplies. 

Researchers from the Water Resources Group expect a 40% gap in global water supply and demand by 2030, and several U.S. cities are showing signs of water scarcity to some degree. Major corporations track water usage in their operations and innovate to reduce water throughout the product lifecycle and supply chain.

Measuring the H2O risk

An extreme-risk event, such as Cape Town's water crisis, often prompts organizations to take a closer look at threats to their supply chain. Recent drought in California propelled significant action and direction of resources to conserve water among companies with operations in the state, according to Meghan Stasz, VP of packaging and sustainability at the Grocery Manufacturers Association.

In 2015, Ceres launched an initiative called Connect the Drops, promoting corporate and legislative action to conserve water. Dozens of consumer packaged goods (CPG) companies, fashion brands and tech companies have joined the initiative.

Sustainability goals aren't always a reactive approach to a risk, however. Stasz said companies often take a proactive approach to look across their supply chains, using data and metrics to establish a baseline and targets.

"You can't manage what you can't measure," she told Supply Chain Dive.

A McKinsey report noted companies that conduct a risk assessment often find small changes create significant improvements or waste reduction. One mining company found 30% of its water-related expenses came from potable water. Fixing a leak in one pipe led to a potable water cost reduction of 5%.

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"If you're doing a lot of products in beverage or cleaning ... you're thinking very seriously about water."

Meghan Stasz

VP of Packaging & Sustainability, Grocery Manufacturers Association

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For companies looking to start water conservation efforts in their operations, Freyman recommended starting with internal disclosure and simply measuring without taking immediate action. She also emphasized the importance of the C-suite in naming water management as a critical strategic focus.

"Companies need to invest more into understanding their water internally," Freyman told Supply Chain Dive. Those with "really big water dependencies just have to create that DNA in their systems."

Water risk varies across industries and even within product lifecycles. With haircare products, Helias said, the greatest water impact is at end use, in the shower. But with manufacturing, water usage is greatest in production, and in agriculture, it may be upstream in the supply chain. 

"We're using the life cycle assessment methods to make sure what we do on the brand level has a real impact," Helias said.

For CPG companies, not a drop to waste

P&G developed a product line called EC30, which stands for enlightened clean, and includes products such as shampoo, body wash and laundry detergent, Helias said. "It's basically a little square of dry fiber. Absolutely no water in the product," she said. Instead, they activate and foam when they make contact with the water in the shower or sink.

Helias said the removal of water from the products results in 70% space reduction, thereby requiring less space on a truck or delivery vehicle. She named Tide pods as another example of a product innovation that significantly condensed the package size.

P&G's focus on water isn't surprising given its portfolio of brands that, by their nature, rely on water for their products. "The front runners have been industries and companies that have a high water footprint in their products," Freyman said.

CPG companies, in general, have named water sustainability as a top-three priority, Stasz said.

"If you're doing a lot of products in beverage or cleaning ... you're thinking very seriously about water," Stasz said. "It's one of the key ingredients, and it's critical to the production of your product."

The dependency on water and risk of lacking the critical ingredient have driven CPG companies to invest in "net zero" water usage policies.

Stasz named Coca Cola as one of the front runners in the water sustainability push. "They are putting as much clean water back into the watershed as they are using for their products," she said. Coca Cola estimates it gives back 115% of the water it uses in its products. In essence, for every liter Coca Cola uses in its operations, it returns 1.15 liters through community water partnerships and watershed protection.

Nestlé invested in "zero water" factories, starting with a plant in Lagos de Moreno, Mexico, which opened in 2014. Instead of using freshwater resources, it extracts water from the milk it processes, resulting in 1.6 million liters of water saved every day. The company plans to convert additional facilities to "zero water" factories in California, as well as Brazil, China, India, Pakistan and South Africa.

P&G set a 2030 goal to reduce water use in its manufacturing facilities by 20% per production unit. The company reported it has already met this goal, achieving a 24% water reduction per unit.

Colgate Palmolive set a goal to cut its manufacturing water intensity by half by 2020, set against a 2002 baseline. "The targets are huge," Stasz said. "50% reduction is a pretty notable goal." As of 2017, the most recent sustainability report available, Colgate Palmolive had reached a 43.8% reduction. CDP gave the manufacturer an A- grade for its water security score.

Where water sustainability flows next

Corporations as a whole have made significant progress in reducing water usage and reusing water. In fact, overall industrial water usage has fallen 43% since 1985, according to the U.S. Geological Survey.

Disclosure as well has grown. In its latest water report, CDP noted 2,114 companies responded to request to provide data on their water management efforts, up from 1,432 in 2016. 

But there's always room for improvement. Water-stressed areas often get the attention, Stasz said, while regions less prone to drought may not be the primary focus for reducing water usage.

"Everyone's on a journey," Freyman said, "but we have a long way to walk still."