Managing the climate-water nexus in organizations

Managing the climate-water nexus in organizations

CDP (formerly Carbon Disclosure Project) is a highly reputable surveyor of corporate environmental performance, and a source of data used extensively in management research on organizational sustainability. For the past two decades, CDP has been querying large Multinational Enterprises (MNEs) about their energy use and carbon emissions, and since 2010, it has also been collecting data on water performance.

Our interest in the climate-water nexus at the organizational level was piqued by the following CDP survey question: “Does your organization recognize any tradeoffs and linkages between their water and energy issues”?  Delving deeper into the rationale behind this question, we discovered that almost every industrial sector faces a intricate connection between these two challenges. For example, water is used extensively in mining and mineral extraction, in power production and in cooling of facilities and equipment, while energy is used to withdraw, purify, transport, heat and dispose of water in a variety of manufacturing contexts. In the corporate world, this bi-directional relationship is commonly known as the water-energy nexus. Managers can either employ the nexus as an opportunity for synergy (e.g. by implementing technologies that save on both), or perceive it as a tradeoff, or some combination of the two. However, it is currently unclear whether they are even aware of the nexus to begin with.

To shed light on this question, we examined how organizations engage with the nexus using their responses to the CDP survey. First, we tested whether managerial attention to water and energy might predict whether they perceive the interconnection between energy and water as a link or a trade-off. We hypothesized that assigning higher-level executives and holding more board meetings on each topic, as well as maintaining attentional balance between these two issues, is associated with an acknowledgement of connections between water and energy. We also examined whether organizations who actively engage with the nexus are more likely to reduce their carbon emissions and/or water withdrawals over time. While the analysis is still ongoing, our preliminary results suggest that the vast majority of managers are still unaware of the nexus and its business implications. Our research will hopefully enable a better understanding among both academics and practitioners of what this complex challenge involves, how to handle it and what outcomes to expect.

Miron Avidan and Dror Etzion (McGill University)

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