Dante Terzigni/theispot.com
We live on a blue planet where water appears to be plentiful. But there are strong warning signs indicating that our reliance on the fresh water we perceive to be abundant will need to change. Although water covers 70% of the Earth’s surface, only 0.5% of it is effectively usable. Further, global water cycles are increasingly becoming unbalanced in ways that threaten humans, plants, and other life forms that depend on fresh water.
Rapidly growing demands for water due to population growth and industrial uses, as well as issues such as misuse, pollution, and the interconnected effects of climate change, are contributing to a situation in which companies and communities can no longer take the availability of water for granted. As competition for water intensifies, the consequences could be severe for health and well-being, economic development, societal stability, and security — that is, unless we significantly rethink how all of us, including companies, manage it.
Growing Water Risks and Challenges
Many companies treat water as a utility controlled by operations or plant managers. They calculate their demand for it based on their business models, process designs, and product characteristics but rarely manage it as a key factor shaping economic competitiveness and strategic decision-making. In many cases, water is seen as a hygiene factor: essential, but not critical enough to register as a risk. Accordingly, procurement teams seek to ensure the security of the water supply, and costs are kept low, while public affairs teams handle any regulatory questions. But this widely established approach is now coming under significant pressure amid consensus that water demand and related challenges are intensifying globally.
In a 2024 report, the Global Commission on the Economics of Water warned of a growing water disaster: “We can no longer count on freshwater availability for our collective future.” By the end of 2025, 35.8% of the U.S. was experiencing a drought, with conditions touching nearly every region. Impacts included catastrophic wildfires in Southern California, historic low water levels for the Mississippi River, and record‑low streamflow in the Northeast. Worldwide, roughly 30% of global land area experienced drought conditions in 2025, driven by near‑record warming.
Drought is one of many current problems, such as poor water quality due to pollution from farm runoff, pharmaceutical residues, and the proliferation of nanoparticles in water. All of those issues create new operational and regulatory demands and challenges. For example, France’s ban on PFAS, which came into force in June 2026, requires that drinking water be tested for those synthetic “forever chemicals,” which are estimated to affect the water supplies of some 12.5 million people across Europe. The law also penalizes companies for releasing such chemicals into the environment.
All of those situations raise the stakes for how companies manage their use of water, because the exposure to water risks is widespread. Consider fast-growing companies and sectors that significantly depend on water for their operational processes. These notably include AI data centers, which require substantial amounts of water for cooling purposes; growing public opposition to these operations is driven in part by their threat to the sustainability of local water supplies. The emerging green hydrogen sector, which uses water rather than fossil fuels as the primary raw material for hydrogen production, faces pushback, given the process’s high demand for water. The technology industry’s increasing demand for critical minerals, such as those used in rechargeable batteries, also puts pressure on water, which is used in mining operations worldwide. Traditional sectors, such as the food and beverage industry, account for 20% of water withdrawals. Textile production continues to consume — and contaminate — large amounts of water: It is responsible for 20% of industrial water pollution worldwide.
However, it’s not just large industries that face water risk. It also plays a nontrivial role in many small businesses, including car wash facilities, breweries, and restaurants; shortages can also affect the construction, health care, sports, and tourism sectors. What this means is that executives can no longer ignore water issues.
The Complexities of Managing Water
Executives tuned in to these issues have begun to appreciate the complex relationships of water flows and cycles and are taking greater interest in and ownership of the resources across their production and supply chain processes. Managing water and making its use more efficient requires the creation of multiple new KPIs everywhere the company uses water. Managers must monitor multiple indicators for water stewardship, such as total water withdrawal, the water recycle/reuse rate, wastewater treatment improvements, and watershed restoration impact, to name a few. They must account for both the inflows and outflows.
However, many companies have a worrisome blind spot: They typically view water as an organizational concern, potentially ignoring extensive dependencies in their supply chains. For example, companies dependent on agricultural inputs can’t ignore the fact that this sector is responsible for almost 70% of global withdrawals of fresh water. As one manager in the agri-food sector we interviewed put it, “If you are not monitoring water in your supply chain, what are you doing? In my sector, droughts and water contamination both happen in my supply chain.”
Another factor adding to the complexity is that water supplies are essentially local, held in basins and aquifers, and so water scarcity creates localized (rather than general) risks. For companies with large and extended supply chains, this means that one-size-fits-all approaches and policies are unlikely to be sufficient or effective. For instance, a company with three sites in the U.S. Northeast could be affected by sewage contamination while its two sites in the Southwest face severe drought conditions. Uniform corporate policies and standards provide insufficient guidance here. Instead, companies need to empower all site managers to complete a thorough water risk analysis, identify local stakeholders they can work with, and develop action plans to tackle such localized risks.
Strategic Water Management Responses
So how should companies respond to the changing realities of this critical resource? As with so many similar issues, understanding the risks and dependencies is key. There are freely available resources that can provide businesses with detailed guidance and support, including the International Water Stewardship Standard, the Science Based Targets Network’s Step Up for Nature initiative, the U.N. Global Compact’s CEO Water Mandate, the World Resources Institute’s Aqueduct tools, and the WWF Water Risk Filter.
Companies must shift from treating water as a utility to elevating it to a strategic priority. Doing this well may require that they establish cross-functional teams to obtain all relevant managerial perspectives and tap into diverse expertise. Crucially, they must engage with key stakeholders, including suppliers, regulatory authorities, nonprofits, and academia, in order to get the full and evolving picture.
Executives should familiarize themselves with the key issues and the specialist language used to discuss matters such as water abstraction and withdrawal, water basins, water stress levels, and so on. At a minimum, they need to assess the direct and indirect water footprints involved in running their businesses before gauging the extent to which this dependence is threatened by emerging water trends.
Operationally, reducing water consumption through greater efficiencies, recycling, and business model transformation is essential but requires investment and technological know-how. Dedicated supplier engagement and/or diversification will be critical if risks cannot be mitigated. Where possible, replenishing or balancing water at source levels must be considered as an option for increased legitimacy and resilience. This requires companies to actively engage or invest in efforts to help restore aquifers or other water reservoirs to effectively balance out the amount of freshwater withdrawn.
In short, there are no simple answers, but ignorance is likely to create growing business risks. Managers must therefore approach water as a valuable resource to be preserved, not drained.