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When Supply Chains Shift, Water Risk Shifts With Them

When a supply chain is disrupted, companies can switch origins in days or even hours. But if water isn’t part of that decision, they may solve an immediate operational problem while shifting their exposure from one basin to another.

One in five. That’s the share of major companies that, according to CDP’s Global Water Report, have already identified water risks in their supply chain serious enough to put tens of billions of dollars in value at stake. More than 3,100 companies responded to the survey. Yet the integration of water into supplier management remains limited. Only a small fraction factors water performance into their sourcing criteria. Across much of the supply chain landscape, water still functions as background information rather than as a decision variable.

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That figure helps explain something that repeats itself every time a supply chain gets disrupted: trade restrictions, a disruption that knocks a port temporarily out of operation, a drought that leaves a harvest below expectations. Buyers don’t stop buying wheat, coffee, cotton or almonds. They switch........

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