WATERPROOF INVESTMENTS Analysis of water-related risks within South African companies Author and on-the-ground researcher: Kata Molnár
This report was published in March 2019 by Nordea. Designed by András Kovács. Proofread by Bálint Pinczés. Cover, p8, p16 photos by Johnny Miller, unequalscenes.com Other photos by the Author. Printed on FSC certifed paper. Acknowledgments
Extended acknowledgment for their insights and comments: Alliance for Global Water Adaptation (AGWA) network, Dr. Ana Elisa Cascão (GIZ), Dr. Mark Dent (Alliance for Water Stewardship), Anton Earle (African Regional Center, SIWI), Dr. Marian J. Neal (Australian Water Partnership), Claire Pengelly (Green Cape), Dr. Antony Turton (University of Free State), Dr. Kevin Winter (University of Cape Town).
Companies visited:
Aspen Pharmacare Holdings Limited: Jeanette Englund, Francois Joubert, Diana Sibanda, Andre van der Walt
Distell Group: Eric Leong Son, Cecil Everson, Frank Ford, Jacques Rossouw
Netcare: Lynelle Bagwandeen, Andre Nortje, Chris Tilney, Milton Benjamin, Michelle Norris, Tony Eekers, Dirk Truter
Shoprite Holdings Limited: Tamsyn Pinn, Jennifer van der Westhuizen, Willa Lotz, Candice Muller
Standard Bank: Cathryn le Roux, Nigel Beck, Rochelle Chetty, Brent Smit, Wally van de Venter, Andre Villiers, Ellen Mthombeni
Woolworths Holdings Limited: Feroz Koor, Ralph Buddle, Les Hall
Langa and Langrug township residents.
3 Sustainable Finance at Nordea
Nordea is the largest wealth manager in the Nordics with approximately EUR 312 Markets Foundation and Ecostorm prepared reports on the impacts of Indian billion in asset under management in 2017, and approximately 11 million customers Pharmaceutical companies in 20162 and in 2018.3 across the Group. Nordea is the third largest corporation in the Nordic region and one of the top 10 fnancial services companies in Europe based on market capitalization. As the historic drought unfolded in 2018 in South Africa, we decided to take a closer look into causes and efects of the water crisis. We intend to move the investor and Nordea’s Sustainable Finance approach is about integrating sustainability into banking communities towards better visibility of their water risks and water-related all our business activities and products. Nordea works with companies and other risks and to protect our customers’ long-term assets. In this context, this study aims stakeholders, including policymakers, on diferent themes, individually or through to uncover the level of awareness of selected South African companies and assess collaborative initiatives. We believe that company engagement is key in order for us to their exposure to any potential water risks, and the impacts and responses to them. be a responsible owner and drive change within an industry or market. The report also draws conclusions for the future and explore how the risks can be transformed into opportunities. Water risk is one of our focus areas within stewardship and engagement. In 2016 the World Economic Forum identifed water crises as one of the top fve global risks of The information in this document has been obtained from sources believed highest concern over the next 10 years. The water issue is not only a present challenge reliable and in good faith, but any potential interpretation of this report as for countries, but also a risk and opportunity for the entities in which we invest, and making an allegation against a specifc company or companies named would be ultimately the assets we manage. misleading and incorrect. The author accept no liability whatsoever for any direct or consequential loss arising from the use of this document or its contents. Nordea has contracted various reports over the past years related to water risk: a scoping study from the Swedish Water House and the Stockholm International Water Institute to better understand water risks for Swedish businesses in 2014.1 Changing For more information visit: http://sustainablefnance.nordea.com/
4 Table of Contents
Acknowledgments 3 Setting the Scene 11 Assessing Water Risks 1 Global Outlook 11 4 in Companies 25 Drivers 12 Research Method 26 Sustainable Finance at Nordea 4 Opportunities 13 Location of Visited Sites 27 Exposure of the Financial Sector 14 Company Assessments 28 Aspen 29 List of Boxes 6 Distell 32 List of Figures 6 De fning Water Risks 15 Netcare 35 Abbreviations 6 2 Defnitions 16 Shoprite 38 How Do Companies Use Water? 16 Woolworths 41 Executive Summary 7 Business at Risk 17 Key Findings 9 Sectors at Risk 17 Conclusions 44 Messages 9 5 Findings 45 Companies 45 Day Zero in Context 19 General Observations 45 3 South Africa’s Water Resources Management 19 References 46 Managing the Drought 21 6 Macroeconomic Impacts 22 Resilience Building 23
5 List of Boxes List of Figures BOX 1: Water Stress and Shrinking Reservoirs Figure 1: Water Stress by Country BOX 2: An Analysis of Decision under Risk Figure 2: W ater Use by Type for the Two Main BOX 3: Risks Afecting Corporate Financial Western Cape Water Management Areas Performance BOX 4: Constitution of South Africa BOX 5: Townships BOX 6: Financing Monwabisi and Strandfontein Desalination Plants
Abbreviations BCI: Better Cotton Initiative CBI: Climate Bonds Initiative CDP: Carbon Disclosure Project DGP: Gross Domestic Product ESG: Environmental, Social, and Governance FY: Financial Year GHG: Greenhouse Gas GRI: Global Reporting Initiative IPCC: Intergovernmental Panel on Climate Change IPW: Integrated Production of Wine SDG: Sustainable Development Goals WASH: Water, Sanitation, and Hygiene
6 Executive Summary
nvironmental risks are becoming more and At the beginning of 2018, Cape Town was facing 'Day more tangible. In a vicious cycle, businesses Zero' – the day when taps run almost completely dry. Eimpact the environment, but the environment What was happening in Cape Town cannot be treated also afects the ability of businesses to operate. From as a unique case. Water is a fundamental necessity for China to California, there are multiple types of risks lives and livelihoods yet it is known that already a billion and drivers to consider, such as climate change and people around the world live in water-scarce regions. It inadequate public water management practices that is also known that unsustainable consumption habits can, when extreme weather events occur, pose threats and lifestyles are spreading, and the world faces a to industrial, agricultural, and domestic water provision. paradox of inequalities with poverty and hunger in the These pertain to the allocation of water to ensure era of immense food waste generated. While the biggest national water, energy, food, and economic security, existing water resource management challenges have not only to keep the ecosystem intact, but also to avoid more to do with economics and politics than physical already emerging competitions and conflicts among availability, changes in climate (such as extreme multiple stakeholders. droughts and floods) have the potential to seriously afect water and all systems depending on it.
7 More than 75% of the world‘s extracted fresh water is water supply and demand. As most of the economically used up in corporate value chains, yet the prices of the available yield from surface water resources over fuel, food, and materials we consume do not reflect their large parts of the country has been fully developed environmental damage. Valuing water, various fnancial and utilized, challenges remain to solve issues of non- instruments, water infrastructure, and target setting revenue water, leakages, and the already mentioned are among the handful of strategies that can provide gap between demand and supply. Furthermore, as solutions for the challenges. Exposure of the fnancial macroeconomic impacts of the drought indicate, as an sector can be measured in the lists of top global risks, agricultural exporter, a water-scarce country like South yet it is also known that we need the economic players Africa trading away water virtually through the food to meet the targets of the Paris Agreement and the and beverage products may further add to the risks for Sustainable Development Goals. both its local food and water security.
Growth rates and company disclosures are proving As a region defned by deep racial and economic more and more that fnancial returns are driving green disparities, the Western and Eastern Cape provinces fnance mechanisms. Reliable supplies of water to be of South Africa went through a 3-year consecutive available anytime, anywhere, at the same cost can no drought, culminating in a situation of crisis. Cape Town longer be guaranteed. The concept of risk helps to came close to the day when the taps would go dry understand and cope with uncertainty. Risks related and residents would need to queue for water. While to water, including physical, regulatory, reputational, managing the escalating drought, the city also strives as well as fnancial implications mobilize businesses to learn the lessons and become a resilient city through and sectors to wake up to their growing exposure. better water conservation and demand management, Agriculture as the biggest water user is at the top of as well as diversifying its water mix. the list. Nordea invests approx. €90 million into South African South Africa is a water-stressed country, allocating companies. This report explores examples of companies most of its water to agriculture through irrigation. from various sectors in South Africa, including It is also true for the Western Cape region that was beverage, retail, healthcare, or pharmaceuticals that predominantly in the limelight of the water crisis. A have been experiencing this historic drought. The constitutional right in South Africa, water is supplied by report demonstrates their dependence, exposure, and the national government and is distributed by the local response to the water challenges and contextualizes municipalities, calling for clear policy and institutional water-related risks. Managing these risks is proven to capacities along with political collaboration. It is most become a critical priority for those seeking to deliver astounding that based on South Africa’s growing strong fnancial returns and the health of billions. This population, economic growth projections, and current is the number one message to ensure waterproof efciency levels, the country could have a water defcit businesses and investments. of up to 3.8 billion m3 by 2030 – a 17% gap between
8 KEY FINDINGS » MESSAGES
• The crisis has made companies more aware of • Companies may not assess their entire value chain CONSIDER their water dependencies and exposures. All against risks. Consider risks within your entire value ENTIRE companies were impacted at various degrees, chain, and make sure that none of it remains VALUE drought emergency plans in case of a ‘Day Zero’ a blind spot. CHAINS scenario was put in place. PREPARE • Earl y identifcation and assessment of potential and water risks are crucial to capacitate a company ASSESS • Strategies can include relocating sites to areas DIVERSIFY to respond in time and appropriately. An extreme less exposed to water risk, outsourcing operations to other service providers, utilizing new sources RISK event such as a drought brings awareness and MITIGATION of water such as groundwater, or long-term water often leads to changing the way companies think STRATEGIES and manage water. saving and efciency initiatives.
• Water risk assessments help prepare for crisis • Iden tify and assess how water risks can impact and ensure business continuity. your business. Do not wait for a crisis to come. BUILD • Ther e is more awareness that in a changing PLAN Start to strengthen your resilience to water- RESILIENCE environment adaptation is inevitable and related challenges and risks. LONG-TERM planning more flexibility into the system is ADAPTATION necessary. • F or long-term adaptation, build flexibility into your system. • Once companies established emergency business continuity plans, they recognized the longer- SHIFT FROM RISK TO term value on water risk mitigation savings and OPPORTUNITY • A water crisis situation can encourage companies decided to keep measures as a ‘new norm’. to start disclosing water-related information. This will not only create transparency within the company but also towards investors: weighing companies in their index as it is done for carbon ENCOURAGE DISCLOSURE • The provision of water includes costs that are footprint – whereby investment is increased in required to be integrated into tarifs, taxes, and VALUE companies with low water risk and decreased in infrastructure. With increased price for water, WATER companies with high levels of water risk. businesses are getting more exposed.
9 REPORT STRUCTURE: KEY FINDINGS » MESSAGES
1. The frst section provides a brief overview of the • Scienc e-based water targets are available and already global drivers of water resources availability and being applied by various sectors and across many why they matter to fnance. SET TARGETS geographies. Adopting science-based targets can help long-term planning. 2. Risks related to water are analyzed by their defnition, how companies use water, and which sectors are at high or lower exposure to the risks. • C ompanies heavily rely on their water meters. Behavioral change programs were introduced to 3. The focus is shifted to the context of Day Zero engage staf to reduce water consumption. that was expected to happen in South Africa. • Ins talling water meters and ensuring full coverage of As a background South Africa’s Water Resources sites, as well as tracking water consumption against TRACK Management is presented, the evolution of the the relevant municipal water restrictions imposed WATER USE drought and what was the response of the city is important. Water meters enable companies to of Cape Town. Macroeconomic impacts are also promptly identify and repair leaks as well as high included. water usage at sites. 4. In the following chapter, the report presents a selected list of cases on various companies’ • Engage multiple stakeholders. It is never too late to dependency, exposure, and response to the start a collaboration, but reducing risks is likely to be drought and the emergency situation posed by more efective and cost efcient this way, given that the threat of Day Zero. water is a shared resource. Think about your clients, ENGAGE AND COLLABORATE staf members, local communities, water authorities, 5. C onclusions are summarized, including concrete competitors, local governments. fndings for each company and some general observations.
• Risk mitigation projects’ can be viewed with a potential for a return on investment. Consider that payback periods can vary: it might take several CALCULATE years, or in some cases, no return can be anticipated. RETURN ON Some actions might not be executed on a return-on- INVESTMENT investment principle, others may lead to a reduced monthly water bill.
10 BOX1 1 Setting the Scene Water Stress and Shrinking Reservoirs GLOBAL OUTLOOK
At the beginning of 2018, Cape Town was facing a unique case. Nearly a dozen more major urban areas Morocco’s second-largest reservoir, the Al Massira 'Day Zero' - the day when the city government of 4 face water-related crisis events all around the world, dam shrunk by more than 60% over the last 3 years, million would have stopped providing potable water including London, Mumbai, Sao Paolo, or California. more than 700,000 Moroccans were afected by for homes and businesses, and residents would have Although they are characterized by diferences in drought and grain production fell by 50%. Drought been required to queue for water at communal water geography, demography, rainfall patterns, level of in Central India leaves two provinces in conflict over points. After 3 consecutive years of unprecedented wealth, they all share high levels of population density dwindling water supplies. These dry spells have levels of low rainfalls, the 6 dams that provide most (nearly 60% of the global population will reside in cities devastated farmers, even driving some to commit of the water supplying the city of Cape Town and by 2030)4 and exposure to water-related risk events. suicide. The surface area of Iraq’s Mosul Dam has agricultural activities hit unprecedented low levels. The Water is a fundamental necessity for lives and shrunk by 60% from the late 1990s to present day. drought could have made the Western Cape, and the livelihoods. Access to safe, sufcient water and The surface area of the Buendia Dam in Spain city of Cape Town, the frst major city to go dry. The sanitation and sound management of freshwater shrunk by 60% over the last 5 years, drying up rivers, scale of impact would have been devastating: social ecosystems are essential to economic prosperity, health ruining crops, and sparking lethal wildfres. Spain’s unrest, public health concerns, infrastructure collapse. and development outcomes, and to environmental largest power company, Iberdrola, experienced What was happening in Cape Town cannot be treated as sustainability. a 58% drop in hydroelectric power production in 2017, pushing up electricity prices. Source: World Resources Institute5
11 DRIVERS WATER STRESS BY Water Scarcity – Of the waters covering 70% of COUNTRY the Earth’s surface, (as 97.5% is salty, 1.75% is frozen, and 0.45% is under the ground) only 0.3% is surface ratio of withdrawals to water that provides most of our fresh water needs. supply Already a billion people around the world live in water- Low stress (<10%) scarce regions, while global demand for fresh water is projected to exceed the supply by 40% in 2030.6 Low to medium stress (10-20%) Furthermore, the Global Wetland Outlook estimates that Medium to high stress (20-40%) we have lost 35% of our natural wetlands7 over the last High stress (40-80%) century, which will greatly hinder our capacity to meet Extremly high stress (>80%) this growing demand. Competition is set to increase for This map shows the avarage exposure water resources unless more cooperation takes place of water users in each country to water from the local to the regional and global levels. stress, the ratio of total withdrawals to total renewable supply in a given area. A higher percentage means more water users Consumption – With the uninterrupted growth of are competing for limited supplies. Source: cities and increasing populations, environmental goods WRI Aqueduct, Gassert et al. 2013 and services are provided through ever-increasing Figure 1: Water Stress by Country; Source: World Resources Institute. CC BY 4.0 supply chains covering longer and longer distances. As living standards rise, consumption habits and lifestyles challenges have more to do with economics and politics transition: over half of companies (53%) which report change (attributed to the growing middle class). than physical availability. In a historical context it is to the Carbon Disclosure Project (CDP) state that nevertheless the case that more cooperation happened better water management is delivering greenhouse gas Inequality – The world is facing a paradox: the over shared waters than did violent conflicts.10 (GHG) reductions. The latest Special Report by IPCC need to produce 55-70% more food by 2050 while proclaims that: the absolute number of undernourished people keeps Climate Change – The Intergovernmental Panel increasing, reaching approximately 821 million in 2017 on Climate Change (IPCC) states that changes in ‘Risks to water scarcity are greater at 2°C than at from around 804 million in 2016.8 Due to the massive climate (such as extreme droughts and floods) have 1.5°C of global warming in some regions (medium misuse of resources, global food waste amounts to 1.6 the potential to seriously afect water management confdence). Limiting global warming to 1.5°C billion tons worth about US$1.2 trillion, which is one- systems.11 Given that the majority of climate risks would approximately halve the fraction of world third of the globe’s total food production.9 Over 80% happen through the changes within the water cycle, population expected to sufer water scarcity as of untreated sewage is discharged into water bodies in and impacts are already felt around the world, the compared to 2°C. Socioeconomic drivers, however, are expected to have a greater influence on these developing countries. implementation of the Paris Agreement, including risks than the changes in climate.' 12 its goals to de-carbonize the economy and adapt to Hydropolitics – Given that 151 countries and roughly the new climate reality, will greatly depend on water 2.8 billion people share transboundary river basins, resource management plans. Energy footprint of water the biggest existing water resource management shows that water can make or break the low-carbon
12 OPPORTUNITIES
Valuing Water - Water provision includes societal costs (such as environmental damages) as well as fnancial costs (for supplying water for agriculture, households, and industries). In order to ensure afordability of access to water for all, these costs have to be internalized into the tarifs, taxes, and investment planning of water infrastructure. Water needs to be sourced, treated, and distributed – all of which require infrastructure and maintenance.
Financing Water Infrastructure - The developing world needs new infrastructure; the developed world has infrastructure nearing the end of its life span. According to a new Global Water Intelligence report, the total worldwide investments into water infrastructure must reach US$449 billion each year between 2018 and 2030 if the planet is to meet the UN’s Sustainable Development Goals (SDGs).13 This is also important because it will lock in emissions outcomes for the next 50 to 100 years.14 Financing still comes predominantly from public sources for water, energy, and transport so the funding gap for the annual water infrastructure in Africa alone is over US$11 billion mostly due to market failure on a continental scale. Infrastructure development is of decisive importance for economic growth and poverty eradication, especially in African countries.15
Target Setting - Leading companies are seizing the opportunities of this new approach: over 450 companies across all major sectors have committed to setting science-based targets in line with the Paris Agreement, with more than 120 targets already established.16 133 companies have approved science-based targets, among them several from South Africa.17
13 Financial Instruments - There are many instruments, positive returns on investment, and engagement can FACTS & FIGURES such as green bonds and climate bonds supporting mitigate Environmental, Social, and Governance (ESG) low carbon and climate resilient solutions. Green bond risks and, in some cases, generate positive impacts.23 issuance in 2018 is expected to reach US$250 billion.18 Financial frms responsible for over US$86 trillion in Global demand for fresh water is projected A new Climate Bonds Initiative (CBI) standard on assets have committed to disclosing climate-related to exceed supply by 40% in 2030. water exists in green bonds, into which Cape Town, fnancial risks. In total, 4,653 companies were asked to as recovering from its worst drought in 100 years, has report to CDP on their water activities in 201724, with a Nearly 60% of the global population invested US$76 million. 46% response rate. 2,000 companies who are disclosing will reside in cities by 2030 to them reported US$14 billion in water-related impacts in 2017, a fve-fold increase from the year before. EXPOSURE OF THE FINANCIAL We have lost 35% of our natural SECTOR Value Chains and WASH - More than 75% of the wetlands over the last century world‘s abstracted fresh water is used in corporate A Top Global Risk - The World Economic Forum’s value chains. 1 in 5 people work in globalized supply Global Risk reports19 in the past years put water among chains, very often in countries where Water, Sanitation, 55-70% more food by 2050 the top risks, defning water crises as “A signifcant and Hygiene (WASH) access is not ensured. Only 20% decline in the available quality and quantity of fresh of all countries have sufcient fnances to meet their water, resulting in harmful efects on human health national WASH targets.25 How companies manage risks Increasing number of and/or economic activity.”20 Water is a growing (e.g., water or climate-related risks) associated with undernourished people: material risk regardless of the industry and asset class, their supply chain is of vital importance. 821 million in 2017 that investors are elevating in their corporate and other engagement strategies. However, despite the Externalities - The prices of the fuel, food, and Global food waste amounts to emerging sustainability lens of some fnancial actors, materials we use do not reflect their environmental 1.6 billion tons worth about project bankability and risk-adjusted fnancial return environmental damage or social impact. Many US$1.2 trillion remain the fundamental criteria of the sector. initiatives and policy-makers are currently seeking to fnd ways to internalize these externalities through Growth and Disclosure - Financial data are no regulations, taxes and other methods, so it is in a Over 80% of untreated sewage longer sufcient as indicators of success. According company’s own interest to understand and adapt and to CDP21 companies have also started to become become those progressive businesses that start looking increasingly aware of the fact that their growth is at their externalities. 151 countries and roughly 2.8 billion people share transboundary river basins not disconnected from water security. A recent HSBC research found22 that fnancial return was the No.1 driver among those who choose emerging green fnance mechanisms (including environmental, social, and governance, or ESG criteria) in their investment strategy. This means that sustainability can bring 2 Defning Water Risks
reshwater availability is changing worldwide26, Defning what does and what does not pose a risk can and roughly half the industries in our economy be misleading and viewed as an ‘exercise in power’. face signifcant risks related to water according For example, infrastructure today often fails to act as F 27 to the American organization, Ceres. In many parts of a bufer against extreme weather events because it is the world, uncertainty has already replaced the belief built with the risk of such events to happen every 20-40 that reliable supplies of water are available anytime, years, not more. Cape Town’s infrastructure system was anywhere, at the same cost – this can no longer be built with a 1-in-50-years drought in mind. This drought guaranteed. happened to be a 1-in-300-years drought30, according In fact, the concept of risk helps to understand to climate scientists. and cope with uncertainty.28 The concept of risk often suggests a perception and a likelihood of an event in the future that has not yet materialized.
15 DEFINITIONS
• W ater risk implies both perceived risk and real risk drought, lack of adequate human resources capacity). BOX2 for water to be physically limited in its availability, To determine long-term solutions for how to mitigate defned as: “the probability of an entity experiencing such risks, it is key to identify the root causes. An Analysis a deleterious water-related event (…) create risk of Decision under Risk for many diferent sectors and organizations simultaneously.”31 A complete assessment of water HOW DO COMPANIES USE WATER? risk requires an understanding of biophysical conditions (rainfall, water quality, underground Directly, because they need it for their operations, for water resources) as well as exploring public water example, within a product. Companies may also depend management including the impact of water utilities on water indirectly, as a result of water reliance within and local governments. While the former has their value chain. Many products have upstream supplier ‘The simplifcation of prospects can lead to discard increasingly been studied and understood, the latter dependencies on water, e.g., a food manufacturer’s events of extremely low probability and to treat has not, which may lead to incomplete assessments use of crops and a clothing manufacturer’s use of events of extremely high probability as if they were of risk and suboptimal risk mitigation activities.32 cotton, both highly dependent on water. In addition, certain. Because people are limited in their ability • W ater-related risk, on the other hand, can downstream consumer dependencies on water exist to comprehend and evaluate extreme probabilities, materialize from the above-mentioned water risks: too, such as cleaning or maintaining products like highly unlikely events are either ignored or the problem of too much, too little, or inadequate washing. overweighed, and the diference between high quality of water due to physical or governance Some companies provide water to others as part of probability and certainty is either neglected or related circumstances. their business. This may either be by extracting water exaggerated.’ from rivers, lakes, reservoirs or groundwater, or by It is also important to know the reasons behind such treating wastewater, or both. Companies that use and/ Source: Prospect Theory29 risks to potentially emerge, and at what degree diferent or provide water may also impact water and water stakeholders are exposed to risks in the event of them bodies downstream directly through extraction, which materializing. depletes water quantity, or by discharging efluents, Response to such events can further create risks for which may reduce water quality. Companies may other stakeholders. The materialization of such risks also depend on certain habitats (ecosystems) such can happen because of physical nature (i.e. posed by as forests and uplands that help to regulate the flow climate change or biophysical circumstances), but also (causing or reducing floods) and quality of water (e.g., due to governance related policy decisions (i.e. upstream towards those industries located downstream). infrastructure development limiting downstream access to water, the lack of adaptation measures to flooding or
16 BUSINESS AT RISK SECTORS AT RISK
Water-related business risk can be examined from If a corporation has high water-related risk exposure, then a heightened response to risk can lower the overall a number of closely related perspectives: physical, materiality of that risk; and conversely, if a corporation faces medium water-related risk exposure, and there is a regulatory, and reputational risks. According to the CEO lack of corporate response to lower these risks, then overall materiality may be higher. Although risks may not be Water Mandate33, they can ultimately lead to increased present at the beginning stages of a project, they may grow over time. costs or lost revenue because of diminished supply or The following sectors (although it may vary by location) are exposed at high to medium degrees according to quality of water or mismanagement of water resources the Pacifc Institute and CEO Water Mandate34: (i.e., fnancial risks):
• Ph ysical risks: Too little water (scarcity); too much water (flooding); or water that is unft for use (pollution). They can be caused by drought or long- High risk exposure to water Medium risk exposure to water term water scarcity, over-allocation among users, flooding, etc. • R egulatory risks: This includes permits, prices, or both to control consumption and discharge. Regulation has become dramatically more Agriculture (Food and beverage companies in particular Construction & materials, Gas distribution & multi- important in the water sector in recent years as face water-related risks in their agriculture commodity utilities, Manufacturing of industrial household goods, water resources have been fully committed and supply chains as 70% of freshwater use goes to growing home construction, leisure goods, Media (printed), Real engineering solutions no longer ofer easy ways to crops, feeding livestock and processing ingredients), the estate (asset owners), Transportation, Travel & leisure increase supply. This not only raises costs but may risk from lack of water available for irrigation or animal services. also result in less predictable supply. consumption, and risk from changing precipitation • Reputation risks: Reputational risks stem from patterns afecting current crop production areas35). changes in how stakeholders view companies’ real Biomass power production, Chemicals, Cloth & or perceived negative impacts on the quantity and apparel, Electric power production, Food producers, quality of water resources, the health and wellbeing Food retailers, Forestry & paper, Freshwater fsh & of workers, aquatic ecosystems, and communities. aquaculture, Hydropower production, Mining, Oil & Reputational concerns lead to decreased brand gas, Pharmaceuticals & biotech, Technology hardware value or consumer loyalty or changes in regulatory & equipment, semiconductors, Water utilities and posture, and can ultimately threaten a company’s services. legal and social license to operate. This is particularly true in developing countries where multinational companies source inputs, as the associated water use or discharge directly afects the livelihoods of people who may themselves not have sufcient access to clean water.
17 BOX3 Risks Afecting Corporate Financial Performance
• Financial losses in the form of foregone revenues due to disruption of the production process.
• Higher costs related to supply chain disruptions; changes in production processes; capital expenditures to secure, save, recycle, or treat water; regulatory compliance; and the increased price of consuming or discharging water.
• Delayed or suppressed growth due to intensifying competition.
18 3 Day Zero BOX4 Constitution in Context of South Africa
South Africa enshrines the basic right to sufcient water in its Constitution, stating that “Everyone has SOUTH AFRICA’S WATER the right to have access to (...) sufcient food and RESOURCES MANAGEMENT water ...” – Constitution, Section 27 (1) (b).39
Water Stress - Despite being a water-scarce country Governance - In South Africa, water is a constitutional with extreme climate and rainfall fluctuations36, South right, under which the national government (the Africa’s per capita water consumption is around 233 Department of Water and Sanitation, currently under liter/day, compared to the international benchmark of the rule of the leading party, the African National around 180 liter/day37. Front) is responsible for the supply of water, while the local government (the municipalities) are in charge of Water Use by Sectors - In line with global trends, the delivery of water. In the case of the Western Cape the agricultural sector consumes 63% of water in South region and the city of Cape Town, it is important to Africa, the municipal sector uses about 27%, and the note that the local government is led by the opposition industrial sector accounted for 10% of consumption. party, the Democratic Alliance. The Water Services Act The Western Cape Province, in the south-west corner states that municipalities are required to provide water of South Africa, falls predominantly within two water of potable standard. Communication and collaboration management areas where irrigated agriculture is the between the diferent levels of government can be major water user, followed by urban water use, as challenging for various reasons, including their position shown in Figure 2. and political power.
19 Water Management Areas were established, and Challenges - An estimated 37% of the water in South hydrological catchment borders administered by Africa’s municipal systems is non-revenue water.42 Berg-Olifants WMA Catchment Management Agencies.38 This means it is “lost” – through leaks, theft, or metering Water demand is expected to rise over the next 20 inaccuracies – before it reaches customers. This water years while its supply is likely to decline. Based on is worth more than ZAR7 billion annually. Building new South Africa’s growing population, economic growth dams through increasing the overall level of surface projections, and current efciency levels, water will not address the challenges, as they would be insufcient to meet South Africa’s growing water the country could have a water defcit of up to 3.8 needs in the absence of demand constraints. The billion m3 by 2030 – a 17% gap between water reason for this is that most of the economically available supply and demand.40 yield from surface water resources over large parts 61% Irrigation of the country has been fully developed and utilized. 36.8 Urban 1.9% Rural Exporting Virtual Water- Signifcant changes Collaboration - In late 2011, the 2030 WRG helped 0.3% Bulk Industry happened in agriculture since the government increased establish the Strategic Water Partners Network43, a 0.1% Aforestation irrigated farmland. This has enabled farmers to decrease multi-stakeholder platform that brings together the the area under production for staple low-value crops government, major water users from the private sector Breede-Gouritz WMA such as wheat and maize, and successfully grow high- and civil society to identify and develop joint solutions value crops for export such as fruit, grapes, and citrus. to the country’s water challenges. The agricultural sector contributed around 10% to South Africa’s total export earnings in 2017.41 Citrus, wine, table grapes, and apples and pears accounted for the largest exports by value, while the country also exports nuts, corn, wool, sugar – most products have a large water footprint. In a water-scarce country like South Africa, this can pose a major risk in terms of both food and water security,
87.7% Irrigation and perhaps importing water-intensive products could 7.9% Urban provide a more economically viable route. 2% Rural 0.5% Bulk Industry 1.9% Aforestation
Figure 2: Water use by type for the two main Western Cape water management areas
Source: Green Cape, 2018
20 MANAGING THE DROUGHT
In 2007, the national Department of Water and Sanitation • Each week the City takes the previous week’s daily • Managing the remaining water in the dams, e.g., issued a warning about Cape Town’s water supply, water consumption into account to project when by stopping releases to irrigation boards once saying the city would need new water sources by 2015. the taps will run dry. The projected Day Zero date allocations were reached late in January. The city implemented a water demand management was publicized weekly, based on the previous • A sizeable transfer was made by an adjacent strategy involving water meter replacements, pressure weeks’ average volume extracted from the system, catchment area in February, also reducing the management, and leak detection. About 14-15% of extrapolated into the future to the intersection point drop in dam level. These two aspects, as well as water is lost through leaks, which is a global average. of 13.5% dam level without adjusting for potential a reduction in urban demand, led to the Day Zero The strategy was so efective that the city met its 2015- rainfall, reduction in demand etc. date moving well beyond the anticipated start of the 2016 water saving target 3 years early. This pushed the • T o overcome the drought, the city introduced Level rainy season in 2018.44 deadline back to 2019, based on normal rainfall and 6B Restrictions from 1 February 2018, where the • Managing demand down as much as possible normal water use. daily individual consumption must be limited to a and bringing on-stream water from other sources In response to low winter rainfalls in 2015, the maximum of 50 liters, and a more drought-resilient (ground, re-used and desalinated45) and through Western Cape provincial government took pre-emptive punitive tarif system where more is charged for communication campaigns, behavior change action to increase water supplies by drilling boreholes water use at higher volumes applied to anyone information campaigns, pressure reduction, and recycling water, but dams were still 75% full. The using over that amount. household flow regulations. following year, the national government recognized some Western Cape municipalities as drought disaster areas. As Cape Town was not included, the Mayor of Cape Town appealed directly to the Department of Water and Sanitation for disaster relief funding. The Western Cape is the only province in the country run by the ofcial opposition party, the Democratic Alliance. South Africa’s ruling African National Congress runs the rest. This means that the relationship between the national government and the Western Cape is complicated. Provinces don’t have the power to make water allocations to agriculture, as that is done by the national government. Local authorities, the Western Cape Province and the City of Cape Town municipality had to work together with the Department of Water and Sanitation to set priority actions to get through to the rainy season without Day Zero to happen as the following:
21 the population of Cape Town stands at just over 3.7 MACROECONOMIC IMPACTS BOX5 million, 47% households live below the poverty line of Townships ZAR3,200 and there are approximately 130,000 According to Standard Bank’s analysis46, the Western structures in informal “shack” settlements. Cape constitutes around 14% of national GDP of From water supply perspective, no toilets, taps, or which food-related products constitute around 48% showers are installed inside the homes, residents have of total goods exports and around 5.4% of South Although not companies, informal settlements – known to use public facilities. Townships like Khayelitsha, Africa’s total exports. The impact of the drought may as townships - are located around South Africa, the Gugulethu, or Langa rely on scarce communal taps weigh on fruit prices and on export as volumes may most vulnerable as urban poor exposed to such crisis serving water at basic minimum standards – stand not meet the export standards in terms of size and situations as Day Zero. pipes are available within certain proxy that residents quality of the crop. The Western Cape government Under the apartheid system, Cape Town was can access within 100-200 meters. Townships use less expected an average 14% decline in major progressively segregated. Forced removals left 200,000 than 5% of the city’s water, where the population is agricultural produce, including fruit production people and informal settlements exploded in number roughly third of all Capetonians. Most often women volumes, 20% in vegetables, and 37% in grains in the as Black Africans in-migrated towards the end of and children carry water home. Water bills are sent to 2017-2018 fnancial year (FY) from the previous one apartheid. These under-resourced communities, where all consumers based on a fxed monthly tarif which in as a result of the drought. Fruits that will likely be they continue to live still today, are mostly marginalized turn is calculated on the basis of an estimated average the worst afected include grapes, apples, and pears. from the urban economy. According to the 2011 census, monthly use. The drought has also had a negative impact on wine grape production, with the estimated production of only 1.43 million tons of wine grapes in 2017, a fall by around 20%. It shall be kept in mind that exporting water- intensive products equals exporting water virtually (virtual water trade). A further downside risk consists in the noticeable slowdown in total and international tourist arrivals (by air) in the Western Cape which could pose a risk to the estimated impact on GDP and the current account. This has been raised as an issue connected with the government’s crisis communication.
22 RESILIENCE BUILDING
Cape Town is committed to becoming a resilient city and is part of the 100 Resilient Cities Initiative, pioneered by The Rockefeller Foundation. Through that, it will be part of a new global City Water Resilience Framework47 being developed by the multinational engineering frm Arup, in collaboration with The Rockefeller Foundation, World Bank and others. Pilot projects have been launched in Cape Town, Mexico City, Amman, Greater Miami and Hull in England – cities that face a range of water challenges, from shortages to coastal floods. In line with international best practice thinking for coastal cities, Cape Town’s resilience will need to be increased through the diversifcation of water supplies away from dependence on surface water only towards a situation where the city also obtains a share of its water through integrated management of 4 sources of water: Surface water from rainwater (including urban stormwater runof) managed in dams and wetlands; groundwater (with recharge); reused wastewater; and desalinated seawater. The 2 key focus areas of action for the city going forward are:
1. W ater conservation/demand management through increased water use efciency (in agriculture, industry, and households), leakage reduction from distribution networks (municipal and others, including irrigation); two-thirds of South Africa’s water is allocated. 2. Div ersifying the water mix by reusing efluent, Within the twin focus on demand management and desalination (sea water and acid mine drainage), water mix diversifcation, a specifc subcomponent and the use of groundwater (development is wastewater treatment facilities. About 40% of and sustainable management of groundwater South Africa’s wastewater is untreated. Improving resources, in particular for rural areas), which is wastewater treatment could increase the quantity particularly important for agriculture, where nearly and improve the quality of water in the country.
23 BOX6 Financing Monwabisi and Strandfontein Desalination Plants
The Municipality of Cape Town urgently The fnancing mechanism was established required an alternative feedstock for the via a project related corporate loan. production of potable water to its citizens. Proxa is responsible to develop the asset, Given the city’s proximity to the Atlantic pump the water to the city, they get paid per and Indian Oceans, seawater desalination liter of water by the municipality, and that is technology was selected. Speed of plant how they generate revenue to repay the loan. delivery was crucial. PROXA, in joint venture The risk of the plant being unused (for with Water Solutions SA, designed and example because it starts to rain and there is installed two temporary seawater desalination no need for desalinated water) was mitigated plants for the City of Cape Town: Monwabisi by a fxed tarif per liter stipulated in the and Strandfontein. The two plants should contract for the 24-month project provision. provide the “Mother City” with approximately This means that even if the rains come, the 14 million liters of potable water per day. The city would still continue the payment for the projects make only a small contribution to purifed water. its daily water requirements, but form part of eforts to make additional water available Source: Interviews during site visit and without relying on rainfall to fll dams. Proxa info sheet 48 Standard Bank approved fnancing for the construction - The provision of ‘On-balance Sheet’ fnancing for the desalination plant over a contractual period of 24 months, with revenue collected from the supply of water into the city’s grid, helped the city in meeting its emergency needs. The plants provide a temporary solution before the mega size plants are built by 2021, so once the contractual period is concluded, the plants will be demobilized and the area will be rehabilitated.
24 4 Assessing Water Risks in Companies
ordea invests approx. €90 million into South use appliances, clean products, maintain products. African companies that are exposed to Other key sectors include Retailing, Energy, Forestry, N increased risks in worsening water security. Manufacturing, Extractive/Mining, Pharmaceuticals, Among these, more than 50 companies and various Technology, Transport and Construction, Real estate, sectors are represented. Industrial, Financial Services, Healthcare products and Several companies were represented in the services, Telecommunications, among others. Most of Agriculture sector (Food and Beverage Processing), these are among those sectors with high water-related which is the primary user of water in both South Africa risks exposure. and the Western Cape region, where water may be used within the product; direct use through cleaning, indirect use through upstream suppliers through using crops, indirect use through upstream suppliers through use of cotton, downstream dependencies to
25 RESEARCH METHOD
The analysis and company visits were established with Three factors have been evaluated in each case, the aim of gaining an insight into direct impacts of following the guidelines Investor Water Toolkit49 by the drought in those facilities that are located within Ceres. The Toolkit was developed to be able to better the Western Cape region, where the risk of municipal integrate ‘externalities’ such as water scarcity, pollution water supply suspension was high, acknowledging the or flooding risks (and the associated investment fact that this is not the only part of the country that opportunities) into the investment process: was experiencing extreme weather events, including drought. DEPENDENCY: The possible fnancial risk exposure from where 3 key criteria for company selection from NORDEA’s water-related risks lie in a company’s value chain, South African portfolio: usually sector-specifc (e.g., sourcing of inputs, • A higher level of investment in the company; wastewater management in direct operations, product • W ater-intensive sectors with high or middle water impacts), what related fnancial risks are (e.g., exposure were prioritized; potential loss of revenue, increase in costs). • Willingness in participating in the analysis. EXPOSURE: Involves understanding a company’s geographic The procedure of the analysis: dependencies and the environmental, regulatory • Initial contact was made with shortlisted companies and social conditions on the ground in regions. This to build connection, and establishing a platform of context-based analysis frames corporate water needs mutual trust, awareness, and understanding; and water-management policies and goals against a • Prior to the feld visit, a discussion took place with region’s reality. the companies to explain the aims of the analysis, RESPONSE: share interview questions prior to the meeting, and It refers to assessing the company’s resilience amid jointly determine the location of the site(s) for a half water-related risks and how these risks are being day or full day visit; mitigated by corporate management, water-resource • C onducting research: ensuring that the right managers or others. Mitigation strategies can range participants are in the room (beyond IR staf); from short to longer-term strategies of working with • Observations, interviews, documentation during the stakeholders to improve watershed resilience. site visit.
26 3.
Location of Visited Sites 4. 7.
5. 3. 1. 2.
6b. 6a.
1. Aspen - Fine Chemicals Corporation 2. Distell - Adam Tas and J.C. Le Roux site in Stellenbosch 3. Netcare - Christian Bernard Hospital and Blaauwberg Hospital 4. Shoprite - Cilmor Distribution Centre 5. Woolworths HQ, CapeTown
6a. Strandfontein 6b. Monwabisi - Desalination Plants 7. Langa - Township
27 Company Assessments
28 Company Snapshot Aspen Pharmacare Holdings Limited is a leading specialty and branded multinational pharmaceutical company. Operating 25 manufacturing facilities across 17 sites, the Group has a presence in over 50 countries, ofering a wide variety of product types. Fine Chemicals Corporation (Pty) Ltd, situated in Cape Town, South Africa, is a wholly owned subsidiary of Aspen since 2004. Specialized API manufacturer for domestic (35% of its sales) and export markets (65% of its sales). On-site activities include materials handling, solid waste handling, etc.
Site visited: Fine Chemicals Corporation based in Epping, Cape Town.
Durban, since 10,676 people ‘We want to be responsible corporate citizens. South Africa 1850 (2018) If we do not use our resources responsibly, we would be exposed to reputational impact.’
– Jeanette Englund, Aspen Group Risk & Sustainability Manager ZAR42.6 billion www.aspenpharma.com (2018) 29 DEPENDENCY
• W ater utilization includes input within operations, • Water footprint measured by volume of water steam production processes, cooling, cleaning, and used per kg of product manufactured: reduced sanitation. by approximately 51%, from 0.7 to 0.34 kiloliter/ • Early identifcation of increased risk to operational kilogramm (kl/kg). sustainability due to low rainfall in Cape Town.
EXPOSURE
• Physical Risk: In South Africa, aging infrastructure The rationalization of domestic supply could is a risk for both water and energy provision, potentially result in absenteeism as a result of potentially leading to operational interruptions. employees queuing for water and illness due to Elsewhere in the Group, limited business disruptions poor sanitation. have occurred due to extreme weather events • Financial Risk: Increased cost to secure reliable (snow, tropical cyclone, and earthquake). During the water supply as the site has spent approximately recent drought in Cape Town, the site experienced ZAR6 million to-date on water conservation projects decreased water pressure which marginally and anticipates spending a total of ZAR20 million impacted fre protection systems and production. to reach the end state. As the risk profles changed, • Regulatory Risk: Reduced water pressure the budget was diverted from other projects to applied initially as restrictions were imposed by water projects within the existing budget and so no the municipality. In the event of Day Zero, the additional funds were required. local authorities had confrmed that services to the Epping area would not be terminated.
51% ZAR6 million ZAR20 million
Water consumption measured Spent to -date on water Anticipated total spending on water by volume of water/kg conservation projects on site conservation Capex over of product manufactured the next 3 years
30 RESPONSE
Drought Management (Response to Physical Risks) Water Governance Data, Disclosure and Performance Tracking • W ater conservation projects took place from • The overall objective of the FCC water management • Aspen is a signatory to the UN Global Compact November 2016 and an overall 63% reduction in plan is to reduce site-wide consumption by at least and therefore publicly reports progress on these water consumption was achieved by the end of 40% and to reach an “of the grid” capability on principles each year. April 2018, equating to 34 million liter/year. water supply for the site via ability to source and use • Ther e is a clear governance structure for managing underground water for 100% of FCC’s water needs and measuring water specifc KPIs. Actions at the Site level as an alternative to municipal supply, should Day • Further documents related to sustainability are • W ater conservation and sustainability projects Zero ever arise. available.50 were planned between 2016 – 2019 in 2 phases, • Sit es are managed as independent business units, an estimated water of 150 kl/day was saved in with their own strategic leadership, budgeting, Return on Investments phase 1. and risk assessment processes. This allowed • Bas ed on the monetary value of the net savings • The site’s future water use has transformed to the site to act quickly and reprioritize budgeted on water consumption over a two-year period, be supplied by more diversifed sources. The spending to address the increasing water risk. Re- the project payback period on the initial capital municipal water supply of 120-150 kl/day can be prioritization of sustainability projects related to investment of ZAR6 million is 6 years. reduced by using underground water from the water management happens through the Group newly installed borehole, with supply from the Executive Risk Forum. It is driven by a bottom-up borehole rated at 2,5 times of the site’s daily need approach: each site does its own enterprise risk fed into 80kl of pretreatment storage and then into assessment quarterly report through a standardized, 120kl of post-treatment site bufer storage. consistent, predominantly qualitative methodology. Phase 1 includes a desalination and treatment plant Risks are aggregated and captured as group-level that can supply 70kl of water a day out of 100kl top risks, then communicated through the Group consumption estimate. Risk Sustainability Manager to the Group Executive Risk Forum. While the strategy and budget remain Management of Stakeholder- and Social Risks at the site level, if a water risk escalates into a group • Meetings and discussions were held with Cape Town risk (such as disruption of supply became a top 10 city ofcials about the impact that reduced pressure group risk), the Group Executive Risk Forum will was having on the site and they immediately monitor that appropriate risk mitigations are being responded by increasing and maintaining normal implemented at the site. pressure on water loops to the site. • A baseline water risk assessment is in the process • C ompany reputation: sustainable strategies were of being completed for the manufacturing sites identifed as key to demonstrate positive corporate across the whole Group (including domestic and responsibility, which received exposure in both local international sites), using the WWF Water Risk and global media. Filter in order to inform the development of a water strategy for the Group.
31 Company Snapshot Distell Group produces and markets a diverse portfolio of alcoholic brands, including Amarula, Savanna, Hunter's Dry, Durbanville Hills, and Nederburg. As of 2017, 672 million liters were sold from over more than 20 product categories. The Manufacturing and Distribution Network in South Africa consists of production facilities around the world, including Wineries, Cider Production Plants, Bottling Facilities, Distilleries, Brandy Maturation sites, Bottle wash facilities, as well as Distribution Centers and Export Warehouses.
Sites visited: HQ, Adam Tas and J.C. LeRoux facilities in Stellenbosch
Stellenbosch, since 4,600 people South Africa 2000 (2018) ‘We believe that the communities where we operate must be better of because we are there.’
– Eric Leong Son, Group Manager Sustainability ZAR22.3 billion www.distell.co.za (2017) 32 DEPENDENCY
• As a beverage producer, Distell has relatively high • 90% of the wine comes from cooperatives, the rest water needs in their supply chains, especially in its is produced at Distell farms by own grapes or grapes manufacturing operations. Brexit, the weakness of sold for them. the local currency and climate change (extreme • F ootprint measured by liters of water used per liter weather events) are referenced in the latest of packaged product. Sustainability Report (2017) as the main impacts on the South African grape and apple production. Water crisis mentioned as a cause for disrupting production operations.
EXPOSURE
• Ph ysical Risk: Through its presence in the Western apply to both the surface and groundwater sources: Cape region, they expect a shortage of rainfall permits are required, metering is mandatory, and in the longer term, due to its high water footprint costs increase with volume. and irrigation practices the company is exposed to • Financial Risk: the reduction in the volumes of physical water risks. Overall volumes of wine were wine resulted in higher prices for the grapes and reduced by 15-20% in hectoliter/hectare (hl/ha). consequently for the wine. Crisis risk mitigation • R egulatory Risk: reliance on municipal water actions had to be put in place. supply, and the rising cost of energy. The water • V alue-chain related Risk: The physical risks led to sources used at the facility: Delivered water (supplied operational, and supply-chain related risks. No direct by a water service provider) and planned self- impact was reported in employment for workers or abstracted groundwater. Water access regulations farmers.
15-20% hl/ha 38.1% ZAR66 million
Overall volumes of wine Water usage as of June 2018 Total amount will be spent to mitigate the risk of municipal water supply suspension by end of 2019 FY
33 RESPONSE
Drought Management (Response to Physical Risks) and will rely on groundwater, and if required, water Filter, and numerous engineering studies were • 38 .1% reduction was reached in water usage as of can be transported between facilities. completed. June 2018 in the Western Cape by accelerating the • Ofces would be supplied from outside the afected • F urther documents related to sustainability are water management program. area with bottled water. Their suppliers are being available.51 • In case of a Day Zero scenario, water demand and risk assessed with mitigation actions. supply for all the sites in the Western Cape has been Future Plans provided with plans. Management of Regulatory Risks • In the longer term, Distell will look for other provinces • Demand reduction management and new water- Following the water restriction guidelines (level 6B) with better precipitation forecast and relocate saving initiatives were calculated for the worst water consumption reductions were put in place by on- certain water-intensive production activities to the case scenario. (Distell made sure they prepare site water meters. Distell sites located there. as if Stellenbosch was exposed to the same level • F urthermore, the Group aims to increase of water risk as Cape Town, where Day Zero was Management of Stakeholder- and Social Risks manufacturing in countries of production and projected to happen.) To ensure supply-chain sustainability, all farmers sell locally rather than fully exporting. This would contracted by Distell must be certifed by the Integrated not only reduce long supply chains, pollution, but Actions at the Site level Production of Wine (IPW) standard, a voluntary it would create local jobs and support the local • A total of ZAR18 million was invested in the 2018 environmental sustainability scheme established by the communities in places like Nigeria or Angola. fnancial year (FY) for wastewater treatment and South African wine industry in 1998. Compliance with re-use programs to mitigate water supply risks the standard grants a seal to individual wine bottles, Return on Investments to reduce 50-60% of its water consumption at covering the grapes, the vineyards, the bottling facilities, • The number of risk mitigation projects have their Adam Tas site through new water recovery ensuring the necessary sustainability measures such as diferent costs and potential savings. Following the technologies. Additional ZAR8 million spent on water or soil management. recent rainfalls the reduction in the severity of water other sites in the 2018 FY, with further ZAR40 million restrictions led to a decrease in the water prices investments planned in 2019 FY. Data, Disclosure and Performance Tracking payable to the Municipality. Some of the projects • Behavioral change program has been put in place at • CDP water report and sustainability reports are were also developed with a longer water resilience all manufacturing, distribution, and ofce facilities prepared on an annual basis, but they do not cover view and not specifcally based on a quick return on across the Western and Eastern Cape. For example, site level. However, site level detail is available but investment. bathroom taps got closed down and hand sanitizer combined in the corporate reports to give company • In general terms, all projects will have a payback provided (except for manufacturing and distribution view. period of 2-4 years. sites to ensure occupational health and safety • A climate risk assessment was conducted for requirements). agricultural supply chain in 2013 in order to identify • Thos e manufacturing and distribution facilities sites what risks were stemming from the water supply. like Adam Tas will be in a position to go of the • A water risk assessment was conducted by the municipality water supply in a drought scenario only World Wildlife Fund in 2017 using their Water Risk
34 Company Snapshot Netcare Limited, an investment holding company, operates through various subsidiaries in South Africa. Its core business is private acute hospital care. Their acute care hospital portfolio in South Africa is delivered through 57 facilities (5 in Cape Town, a total of 6 in the Western Cape, a total of 18 in the Coastal region). In total, facilities comprise over 10,000 registered beds, of which about 1,700 are intensive or high care beds, over 350 theatres, 16 cancer care centers, 43 emergency departments, and 7 transplant units.
Sites visited: Netcare Christiaan Barnard Memorial Hospital and Netcare Blaauwberg Hospital
‘The City of Cape Town increased the tarifs to discourage unneces - sary water consumption. Our contingency plans gave us the peace of Johannesburg, since 22,000 people mind that, although it appears that Cape Town will avoid a Day Zero South Africa 1996 (2018) situation, Netcare’s hospitals in the bigger Cape Town area would have sufcient water supply to continue operating should a Day Zero situa- tion become a reality.’
– Chris Tilney, ZAR34.125 million www.netcare.co.za General Manager of Netcare Christiaan Barnard Memorial Hospital
35 DEPENDENCY
• As an organization that operates 24 hours a day, 365 • Lit er of water used per bed (calculated by the size days a year to care for patients, operations depend of the hospital, number of beds, divided by the total on a secure and stable water supply, and water water consumption), tracked on a monthly basis. security is regarded as a top business risk in South Average: 450 liter/bed, Regional target was set at Africa for Netcare. below 350 liter/bed that Netcare reached.
EXPOSURE
• Ph ysical Risk: 2016 audit indicates that 39% of our • Regulatory Risk: increased water prices constituted facilities are located in areas where water defcits an exposure for businesses specifcally for Cape can be expected, and it is estimated that this will Town. increase to 49%.The drought did not only afect the • Financial Risk: Diferent rate applied for the big Western Cape but also the Eastern Cape and other water consumers due to massive tarif increase. coastal areas. Facilities near the shore in Cape Town It resulted in increased costs, which were hoped to has groundwater, which consists of a mix of seawater be compensated by the volumes saved. and runof from the mountains. With reduced runof due to the lack of rainfall, this water became less of a mix and more solely seawater, with a higher saline concentration because the groundwater level dropped from the mountainside and could not mix with the salty seaside groundwater. This was a challenge as desalination was one of the key risk mitigation plans.
6 30-35% 350 liter/bed Exposed to the risk of Water usage Company’s water footprint reached municipal water supply as of June 2018 suspension 450 liter/bed Average regional water footprint
36 RESPONSE
Drought Management (Response to Physical Risks) (since resolved), and the crisis measures were about • Ener gy saving natural cooling by the ’Double skin • A new drought management system and risk to be lifted, so the plant was not turned on yet. windows and walls’, LED lighting, functioning mitigation action plans were put in place for each Netcare is considering using it on a full-time basis in elevators generating electricity that adds to the grid. level of emergency (the higher the level, the higher the future. About 400,000 liters of desalinated water Extraction of hot air used to warm the air coming the reduction of water, and more bottled water use). can be produced if the plant is run on full capacity. into the building – as heating measure reducing Staf along the whole value chain (nurses, the HR, In case of a water shortage crisis presenting itself electricity use. including housekeeping, cleaning, technical people again in Cape Town, this would generate enough • Expl oring new technological options to make water etc.) were engaged. Even menus were changed to water to supply other Netcare hospitals in the Cape from air or rain harvesting for use in service facilities. cut of water intensive meals. Town area too, as a supply system is constructed: • R egular weekly meetings with hospital managers trucks can carry water from here to other hospitals Management of Stakeholder- and Social Risks and Head Ofce included: awareness raising, in the Cape Town area. Truck logistics were tested • The Netcare Foundation delivers Corporate Social tracking water consumption, creating action plans, through an exercise to know how long it would Investments, which spent ZAR26 million in 2017 setting targets, allocating investments, disaster take to carry water through the system in case of a on for example emergency medical services to protocols. Status updates through a special Water disaster. indigent patients; healthcare accessibility initiatives; Challenge Committee. • Ins talling boreholes and water fltration plants at community health and welfare sponsorships; • A Forum called Western Cape Hospitals Water four hospitals in the Western Cape, including visited academic sponsorships and bursaries. Conservation Group was established by the site Netcare Blaauwberg Hospital. Department of Health by the local provincial • Ins talled 13 bulk potable water facilities in the Data, Disclosure and Performance Tracking government to create a platform where (public Hospital division, and a schedule of implementation • Net care participates in the CDP disclosures as and private) hospitals can connect. The aim was to is in place for remaining hospitals. well as the Global Reporting Initiative (GRI) and is assess drought impacts, responses, and a reporting • A back-up plan in case of a Day Zero scenario was included in the FTSE/JSE Responsible Investment structure. This Forum agreed that hospitals would put in place to ensure the necessary supply of Index Series. not be cut of their water supply even in case of Day water for the hospitals. The media campaign was • F urther documents related to sustainability are Zero scenario. organized to communicate the plan of actions. New available.52 fre protocol, strengthened security, metering, and Actions at the Site Level water reading twice a day was organized. Return on Investments • Net care Christiaan Barnard Memorial Hospital - • W ater saving: lowered shower flow (from 9 to 3 • The work done in the Western Cape to ensure The hospital uses about 100,000 liters of water a liter/minute), grey water recycling, buying 20 liters continuity of water supply in the event of a Day day, which was reduced by 30-35%. Completed bottled water for drinking, reduced volumes when Zero scenario was regarded as a risk driven project installation of a desalination plant at Netcare flushing toilets, outsourced laundry services to and hence not executed on a return on investment Christiaan Barnard Memorial Hospital, which is places where borehole water is used, using wet principle. located on reclaimed land. During the time of the wipes for cleaning, antimicrobial curtains. visit in June 2018, a technical issue was still pending
37 Company Snapshot Shoprite Holdings Limited is an investment holding company whose combined subsidiaries constitute the largest fast moving consumer goods retail operation in 15 countries on the African continent and the Indian Ocean Islands. While the Group’s primary business is food retailing, it also ofers various goods and services including household products, furniture, pharmaceuticals, and fnancial services. Shoprite is dedicated to providing the lowest prices in a world-class shopping environment to people of all income levels across Africa.
Site visited: Shoprite Cilmor Distribution Centre (Brackengate Business Park, Brackenfell, Western Cape)
Brackenfell, since 147,478 ‘Shoprite shall continue to monitor crises that may afect its business as usual Cape Town, 1979 people and develop plans to build resilience against it.’ South Africa – Willa Lotz, Engineering Services Manager
ZAR145.3 billion www. (2018) shopriteholdings.co.za 38 DEPENDENCY
• The recent drought in several South African hygiene standards in stores, distribution centers, provinces highlighted the extent to which shopping centers, and ofces to provide drinking communities and businesses across all sectors water for its extensive staf complement as well rely on water for drinking, hygiene and, where as for production in its bakeries and fresh food applicable, production. South Africa is a water departments. We have invested signifcantly scarce country and the price of water is likely in making our business more resilient to water to rise in coming years to curb consumption. shortages and outages. • Shoprit e depends on a minimum quantity and reliable supply of municipal water to maintain its
EXPOSURE
• Ph ysical Risk: As a result of drought-like conditions • V alue-chain related Risk: Shoprite maintains a in the Western Cape, afected municipalities large and diversifed set of suppliers for sourcing, implemented water restrictions, which limited the amongst others, fresh produce, located in diferent use of water for commercial users, where Shoprite climates and diferent microclimates. As a result, was required to reduce its water consumption by the risk is mitigated by shifting procurement, as 45% compared to its 2017 consumption fgures. required, to meet customers buying patterns. • Financial Risk: The risk of municipal water supply suspension posed a business continuity risk for operations and, in order to mitigate the risk, there was an increase in capital- and operating expenditures.
271 ZAR28.5 million 45%
Exposed to the risk Spent to mitigate Water consumption of municipal water the risk of municipal during 2018 compared to 2017 supply suspension water supply suspension
39 RESPONSE
Drought Management (Response to Physical Risks) Management of Stakeholder- and Social Risks Data, Disclosure and Performance Tracking Shoprite developed and implemented risk mitigation • Dis tributed over 100 water meters to schools located • Shoprit e, for the frst time in 2018, reported to the plans, valued at ZAR28.5 million, to timeously mitigate within the Western Cape in an efort to help schools Carbon Disclosure Project Water Program53, where the risk of municipal water supply suspension at stores, save water by making water consumption and leaks the reporting boundary was restricted to Western distribution centres, shopping centres and ofces in visible. Cape operations. order to continue with business as usual. The emergency • Suspended irrigation, for reputational purposes, • Shoprite is planning on introducing water targets in plan included, amongst others, the following: utilizing borehole water. the next 2 years. • The installation of backup water storage tanks • Incl uded suppliers afected by the drought- • Further documents related to sustainability are and water booster pumps at all afected stores, like conditions in risk assessments, specifcally available.54 distribution centers, shopping centers, and ofces; agricultural commodities as well as water-related • Applica tion for water service intermediary licenses, and hygiene products such as bottled water and Future plans from the relevant municipalities, in order to legally wet wipes. • Shoprit e is currently expanding on the risk transport potable water from outside the drought- • Sold bottled water, sourced from outside the water assessment to account for all provisions. afected area to stores, distribution centers, restricted areas, at cost. shopping centers, and ofces to fll up the backup Return on Investments water storage tank infrastructure. Water Governance Of all the risk mitigation plans valued at ZAR28.5 • De veloped a company-wide water strategy million: Actions at the Site level document covering approximately 40 initiatives such • ZAR27 .5 million was spent on installing back-up • Shoprit e have adopted a strategy of reducing water as limiting irrigation, reducing water consumption, water storage tanks and water booster pumps, but consumption to be less reliant on municipal water eliminating owned properties’ dependency on since municipal water supply was not suspended, such as installing water-saving devices at Western municipal water supply, storing drinking water, no return on investment is anticipated. Cape sites to reduced flow rates (liter/minute) of developing alternative drinking water sources, • ZAR1 million was spent on installing water use taps and showers and flush volumes (liter/flush) of obtaining licenses to transport water from reduction devices which has reduced monthly toilets; restricting unauthorized access to taps on alternative drinking water sources and monitoring water consumption by 8,000 kl and reduced the the outside of buildings and disabling automatic water reduction target defcits. associated monthly water bill by ZAR400,000 (i.e. flushing of urinals. • The Board delegates its oversight duties with payback of less than 3 months). • An investment was made to start installing water respect to environmental-related issues to the Social meters to track accurately water consumption. and Ethics Committee.
40 Company Snapshot Woolworths Holdings Limited is a South Africa-based multinational retail company that owns the South African retail chain Woolworths, along with Australian retailers David Jones and Country Road Group. Woolworths SA, however, has no association with Australia's Woolworths supermarket chain. The South African Woolworths business consists of food, fashion, beauty, and home products and operates 282 fashion, beauty, and home stores, and 430 food standalone stores in South Africa, including 67 stores throughout the rest of Africa.
Sites visited: Headquarter in Cape Town and various stores
Cape Town, since 46,099 people ‘We always understood the importance and the value of water. South Africa 1931 (2018) It’s part of our DNA.’
– Feroz Koor, Head of Sustainability
ZAR70.572 million www. (2018) woolworthsholdings.co.za 41 DEPENDENCY
• Oper ation of stores, ofces. 500 to 7,000 m3: food stalls and inserts in petrol license from the city does not allow this water to • Almos t all clothing is manufactured from imported stations through a central distribution from these 2 be used for human consumption although they fabrics, with only 51% of Fashion, Beauty and hubs). maintain it to that standard (tested, drinkable). Home products locally sourced. The local weaving • Groundwater + rainwater harvesting. 6 storage tanks hold about 15 000 liters of water, industry collapsed about 10 years ago as it could not • 91% of stores have online water and energy metering. other buildings can store about double. The HQ is compete with China, Bangladesh, Madagascar, and Store managers have access to the system, detect crucial for running the computer network, which is Mauritius. water leaks and excess of water use, changed to air- water-cooled. Live metering is installed to track grey cooled condensers (air or water cooling). and municipal water. • Ins talled back-up supply tanks for all stores in the • As a result of this, water consumption in the Western EXPOSURE Western Cape. Cape was reduced by 36%, 42% and 53% for stores, • R eviewed cleaning processes and maintenance head ofce, and distribution centers respectively in • Ph ysical Risk: The biggest water footprint was scheduling. 2017 compared to 2015. identifed within the cooling system. • Upgr ading of heavy water-use machinery, • V alue-chain related Risks: 331 primary farmers investment in improved infrastructure. Management of Regulatory Risks within the Farming for the Future program rely on • S witching of all non-essential water-uses, e.g. • P art of the local Responsible Cotton Industry sustainable water supply. fountains. initiative in South Africa, as big local procuring • Upda ting processes in stores to reduce and reuse company. RESPONSE water, e.g. water for cut flowers, ice at fsh-counters. • Under ground water (coming from Table Mountain) Management of Stakeholder, Social Risks Drought Management (Response to Physical Risks) is pumped and after a cleaning process, it is stored • In response to the South African government’s • Major investment was made to transform the and distributed through the HQ buildings (4 in total) declaration this year that the drought in South cooling/air-conditioning system. More than 90% of which are about 60% self-sufcient by using this Africa is a national disaster, Woolworths announced the whole network is now not based on air cooling: source of water. Although there is no permission to a ZAR1.5 million investment in water infrastructure including HQ (4-5 buildings), 2 hub distribution go completely of the grid, this is already a money for under-resourced schools and the launch of centers and 4-500 stores (at various sizes from saving measure. Water is used for sanitation (the an ongoing MySchool fundraising platform, the LOVEH2O WATER FUND. • W ater educational program reached 410 schools over the last 4 years, 4,500 water conservation lessons, 1,559 educators, 190,000 learners. 54% 89% 500 billion liters • All farms get audited annually, they are well prepared and so the impact on them was not signifcant. Relative water use Real-time water metering Aspirational goal of saved • W oolworths engaged extensively with the National in stores since 2007 water by 2020 Business Initiative this year in a multi-stakeholder
42 drought taskforce aimed at fnding solutions South Africa and other key stakeholders in the Ceres the company either works with the Better Cotton to address the drought and threat of Day Zero. valley, they develop the necessary baseline for geo- Initiative (BCI) (60%) and their target is to have In 2018, Woolworths sponsored the National hydrological conditions and irrigation consumption. 100% BCI or Organic Cotton. Business Initiative and the CEO Water Mandate in a The intention is to create a groundwater monitoring • Stanford evaluated the ’Farming For the Future’ process which seeks to unpack context-based water network to enable long-term sustainability of program and published a peer-reviewed scientifc targets for South African business. groundwater use in the catchment. report: farmers on the program are more efcient • As part of addressing the issue of food security, than they previously and better prepared for the Woolworths have established a system of diverting Data, Disclosure and Performance Tracking drought than those who were not on the program. surplus food from stores from going to waste and • Working on context based water targets with the • Know their suppliers who report directly to them. donate this food to needy communities via structured CEO Water Mandate. • Further documents related to sustainability are charity organizations. • Procuring the right way. Group target is to have available.56 all fbers sourced responsibly by 2020. For cotton, Water Governance • The Good Business Journey by 2020 consists of 8 focus areas – the main drivers of value creation and the material aspects to address sustainability in the Group. These eight areas include transformation, social development, health and wellness, ethical sourcing, sustainable farming, waste, water, as well as energy and climate change. It consists of over 200 targets. • ’F arming For the Future’ is an environmental management program developed by Woolworths. A system to ensure that farmers grow in an environmentally sustainable manner. Mostly covering soil health. Energy carbon impact, use of pesticides, biological diversity, and water-related footprint. Water efciency and interventions provided. There are 8 criteria. They observed massive water reductions. A peer-reviewed scientifc report was conducted by Stanford University55 to assess the success of this program which supported the fact that farmers are more efcient than previously. • Water stewardship: Through a partnership with WWF
43 5 Conclusions
he companies analyzed were all impacted by the Once water risks are incorporated into the long-term water crisis to various degrees. Although their strategy, impacts are less severe in a crisis situation. T dependency on water resources and exposure Water consumption can and should be transparent, to the risks emerging from the water crisis difered, the measured, and managed sustainable across the whole assessment found that each company was aware of its value chain to minimize risks and vulnerability to any Physical, Regulatory, Financial, and Value-chain related shocks. risks. The interviews and in-depth assessments proved that each company responded fast and in an efcient manner, with useful lessons to be shared within the region and beyond, not only in South Africa but also other regions prone to water risks.
44 FINDINGS
Companies • Aspen - the pharmaceutical company’s water 3 months. Since municipal water supply was not and shifting buying patterns. footprint was reduced by 51% (measured by volume suspended, no return is anticipated on the other • C ompanies develop strategies to become more of water used per kg of product manufactured). ZAR27.5 million investment spent on back-up water independent from the municipal water supply in The site in the Western Cape anticipates spending storage strategies. case provision of water were cut. Strategies include a total of ZAR26 million on water conservation • Woolworths - the retailer reduced 54% on its relocating sites, outsourcing operations to other projects. The project payback period on the initial relative water use in South African stores since 2007 service providers, utilizing new sources of water capital investment of ZAR6 million is calculated to and conducts 89% real-time water metering across such as groundwater, or initiating long-term water take 6 years. all South African store locations. Their transparency saving and efciency initiatives. • Distell - the beverage company’s overall volumes and target oriented sustainability initiatives are long- • In an era of increased uncertainty, managing of wine were reduced by 15-20% in hl/ha; 38.1% term and ambitious. Their community engagement change, and various scenarios, is key. Households, reduction was reached in water usage as of June programs were accelerated. business, and the government all need to realize 2018. Total of ZAR66 million will be spent to mitigate that all stakeholders need to adapt and cooperate the risk of municipal water supply suspension by the General observations in a changing environment. end of this fnancial year (2019). In general terms, • Thos e companies who had conducted water • Companies heavily rely on their water meters to all projects will have a payback period of 2-4 years. risk assessments prior to the drought were more know their water use. Some need to install more • Netcare - the private acute hospital care provider’s 6 prepared to ensure business continuity. The crisis and ensure live metering. Collection and monitoring sites in the Western Cape region were exposed to the has made companies more aware of their water of water use data are important. risk of municipal water supply suspension, therefore dependencies, exposures, and encouraged them • Beha vioral change programs were introduced to these hospitals reduced their water footprint from to conduct water risk assessments if they have not engage staf to reduce water consumption, besides the average of 450 liter/bed to its regional target of done them yet, or expand the scope to cover their ensure occupational health and safety requirements. 350 liter/bed. It led to a total water use reduction of entire business network to determine responses if a 30-35%. Drought mitigation actions were regarded future event arises. as a risk-driven project and hence not executed by a • Onc e companies established emergency business return on investment principle. continuity plans, they recognized the longer-term • Shoprite - the retailer’s 271 sites (incl. stores, value on water risk mitigation savings and decided distribution centers, shopping centers, and ofces) to keep measures as a ‘new norm’. were exposed to the drought in the Western Cape, • Incr eased water prices presented an exposure for they overall reduced their water consumption in businesses specifcally for Cape Town. For big water 2018 by 45% compared to 2017, and launched consumers, a 100% tarif increase applied. It resulted drought emergency plans worth ZAR28.5 million in increased costs, which could be compensated if to mitigate the risks of municipal water supply volumes were saved. suspension. Out of that investment, ZAR1 million • Companies often limit their water exposure was spent to reduce the monthly water bill by depending on their own risks, diversifed sources, ZAR400,000 with a payback period of less than possibility to import into their distribution centers
45 6 References
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46 28 D . Kahneman, A. Tversky. Prospect Theory: An Analysis of Decision under Risk. 1979. Available at: https://www.arup.com/news-and-events/news/fve-cities-selected-to-develop-global-water- http://www.its.caltech.edu/~camerer/Ec101/ProspectTheory.pdf resilience-framework 29 Ibid. 48 City Of Cape Town, South Africa. Seawater Desalination Plant. Available at: https://www. 30 Wolski, P. 2018. How severe is the drought? An analysis of the latest data. Available at: https:// proxawater.com/wp-content/uploads/2018/07/ATB2059-Monwabisi-seawater-desalination- www.groundup.org.za/article/how-severe-drought-detailed-look-data/ Plant.pdf 31 CE O Water Mandate. 2014. Driving Harmonization of Water Stress, Scarcity, and Risk 49 C eres. Investor Water Toolkit. Available at: https://www.ceres.org/resources/toolkits/investor- Terminology. Available at: https://ceowatermandate.org/fles/Driving_Harmonization_of_Water_ water-toolkit?toolkit=view Terminology_draft.pdf 50 Aspen. Sustainability Documents. https://www.aspenpharma.com/supplementary-sustainability- 32 K lbel, J., Strong, C., Noe, C., Reig, P. 2018. “Mapping Public Water Management by Harmonizing documents/ and Sharing Corporate Water Risk Information.” Available at: www.wri.org/publication/mapping- 51 Distell. Sustainability Documents. https://www.distell.co.za/corporate-responsibility/ public-water 52 Net care. Sustainability Documents. http://www.netcare.co.za/Netcare-Investor-Relations/ 33 CE O Water Mandate. Understanding Water Risks. Available at: https://ceowatermandate.org/ Reports/-Annual-reports policyengagement/understanding-water-policy/understanding-water-risks/ 53 Shoprit e CDP Water Program Submission. 2018. Available at: https://www.shopriteholdings. 34 The Pacifc Institute. 2018. Risk Assessment 101: Understanding Your Unique Water Stewardship co.za/content/dam/MediaPortal/documents/shoprite-holdings/Carbon-Disclosure/2018/ Challenges. Available at: https://ceowatermandate.org/academy/risk-assessment-101- Shoprite_Carbon_Disclosure_Project-Water_Programme_Submission_2018.pdf understanding-your-unique-challenges 54 Shoprit e. Sustainability Documents. https://www.shopriteholdings.co.za/search-results/ 35 MSCI. 2017. Food Products Industry Report. February 2017. sustainability-documents.html 36 World Resources Institute (WRI) 2015. Aqueduct projected water stress country rankings. 55 T. Thorlakson, J. Hainmueller, E. F. Lambin. 2018. Improving environmental practices in Available at: https://goo.gl/o4UrqN agricultural supply chains: The role of company-led standards. Global Environmental Change. 37 Gr een Cape. 2018. Water – 2018 Market Intelligence Report. Available at: https://www. Volume 48, January 2018, p32-42. Available at: https://www.sciencedirect.com/science/article/ westerncape.gov.za/110green/fles/atoms/fles/GreenCape-Water-MIR%202018.pdf pii/S0959378017301589 38 WWF South Africa. 2016. Water Facts & Futures: Rethinking South Africa’s Water Future. 56 Woolworths. Sustainability Documents. https://www.woolworthsholdings.co.za/sustainability/ Available at: http://awsassets.wwf.org.za/downloads/wwf009_waterfactsandfutures_report_ reports/ web__lowres_.pdf 39 C onstitution Of The Republic Of South Africa No. 108 Of 1996. Available at: https://www.gov.za/ sites/default/fles/images/a108-96.pdf 40 2030 WRG. 2017. Water for Growth, People and Environment South Africa. August 2017. Available at: https://www.2030wrg.org/wp-content/uploads/2017/11/WRG_s-Africa-Fact- Sheet_08_22.pdf 41 South Africa - Agricultural Sector. 2018. Available at: https://www.export.gov/article?id=South- Africa-agricultural-equipment 42 Gr een Cape. 2018. Water – 2018 Market Intelligence Report. Available at: https://www. westerncape.gov.za/110green/fles/atoms/fles/GreenCape-Water-MIR%202018.pdf 43 Ibid. 2018. 44 Depar tment of Water and Sanitation City of Cape Town. WATER OUTLOOK 2018 REPORT. Revision 25 - updated 20 May 2018. Available at: https://resource.capetown.gov.za/ documentcentre/Documents/City%20research%20reports%20and%20review/Water%20 Outlook%202018%20-%20Summary.pdf 45 Ibid. 2018. 46 St andard Bank. 2018. Western Cape water crisis - The macroeconomic impact of the drought. Available at: https://bizconnect.standardbank.co.za/media/8096597/western_cape_drought_ macro_economic_impacts.pdf 47 ARUP. Five cities selected to develop global water resilience framework. 2018. Available at:
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