Floods in Thailand struck thousands of local businesses, wiped more than 1.5% off the country’s GDP and disrupted the supply chains of global businesses. Honda’s Q3 profit forecast was slashed by over 50% when the floods forced the temporary closure of a car factory outside Bangkok and reduced the availability of components for its facilities across North America and Europe. Analysts at JPMorgan have now estimated that these floods could cost Japan’s three largest carmakers more than US$450 million this year.

Africa, on the other hand, is establishing how best to adapt to water scarcity. The Horn of Africa this year experienced the worst drought in 60 years, leading to a food crisis, high levels of malnutrition and pre-famine conditions. During a speech at COP17 the South African Minister of Environmental Affairs warned that many African countries will suffer the same fate as Kenya, where water scarcity, poor rainfall, mismanaged urban development, community displacement and deforestation have all conspired to create a national water crisis. This creates a gloomy forecast for growth in Kenya’s economy, which is heavily dependent on livestock and agriculture.

These are not isolated examples of water shortage or excess: there are implications for business globally. Of the global organisations that reported to CDP Water Disclosure this year, part of the Carbon Disclosure Project, 59% report that water poses a substantial risk to their business. The majority of these risks are recognized as occurring between now and 2016 and over a third of the 190 companies reporting to CDP from the Global 500 have already experienced detrimental water- related business impacts such as disruption to operations from water shortages and severe weather events.

Speaking at the Water, Climate and Development Day, Nigel Topping CDP CIO emphasised that water is one of the biggest factors for consideration by companies and governments in any discussion around adaptation to climate change and stated that, 'It is important to create dialogue around environmental issues so that water is placed firmly on the discussion agenda Too many businesses still view water as simply a cheap resource. This is an oversight that could cost them and the communities in which they operate dearly. This past year alone has seen national economies shaken by the force of water, and individual organisations have not escaped the often devastating impacts of these events. of how much and what to invest in'. But how do companies build resilience to water issues?

Water presents complex challenges that require local solutions. There is no single easy resolution to tackling water scarcity and other water-related pressures. However, smart companies, instead of simply cutting profit forecasts or raising product prices, are thinking longer-term and putting water stewardship at the heart of their business strategy. Molson Coors work with local stakeholders and has conducted watershed assessments for all their breweries to protect future water supplies. Puma has set water use reduction targets that go beyond its operations to include its suppliers’ water use as well.

To rely on the action of leading companies is not enough, national and international policy support must guide a coordinated effort for better water management among the entire business community. CDP encourages mandatory corporate disclosure of water use and water management strategies introduced by all countries. Mandatory reporting of this nature is necessary to create comparable data sets, without which the global risks posed by water to business cannot be fully understood or comprehensively managed.

Businesses must engage with policy-makers to ensure successful action and international policy on water but those companies should be transparent and disclose their lobbying practices publicly as part of wider disclosure on sustainability issues. Those governments and corporations that are able to build transparency and awareness of water effectively in the short term will be the winners in a world where extremes of weather and urbanising populations are quickly changing the rules of the game.