{"id":11429,"date":"2016-11-04T12:59:48","date_gmt":"2016-11-04T16:59:48","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nestle-conserving-water-as-a-strategy-to-sell-more-water\/"},"modified":"2016-11-04T13:03:16","modified_gmt":"2016-11-04T17:03:16","slug":"nestle-conserving-water-as-a-strategy-to-sell-more-water","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nestle-conserving-water-as-a-strategy-to-sell-more-water\/","title":{"rendered":"Nestl\u00e9: Conserving Water as a Strategy to Sell More Water"},"content":{"rendered":"

Nestl\u00e9 is one of the world\u2019s largest suppliers of bottled water, with sales of CHF 7.6 billion in 2015 for their Nestl\u00e9 Waters business.\u00a0 The company sells bottled water under its flagship brand Nestl\u00e9 Pure Life and through local brands such as Poland Spring in the U.S., Buxton in the United Kingdom and Sta.Maria in Mexico1<\/sup>.\u00a0 Nestl\u00e9 extracts water from the ground, which it then typically transports via pipeline to its water bottling factories before selling it on to consumers.\u00a0 However, this reliance on groundwater makes Nestl\u00e9\u2019s business highly likely to be affected by climate change.<\/p>\n

One of the primary impacts of climate change has been depleted water supply and concern for future water shortages around the world, due to melting glaciers and snowpack and changing patterns in rainfall2<\/sup>.\u00a0 A depleted water supply goes directly to the heart of Nestl\u00e9\u2019s business, as lower levels of ground water mean there is less raw material available for Nestl\u00e9 to produce its bottled water.\u00a0 Nestl\u00e9 needs to make sure that its water supplies are sustainable and that it can adequately measure and manage the water it is taking out of the ground to sell compared to what is being replenished.\u00a0 According to the company\u2019s projections, global withdrawals of water are expected to exceed the available supply of water by 40% in 20303<\/sup>.\u00a0 In order to manage this risk, Nestl\u00e9 has implemented several initiatives to try to improve water efficiency across its entire business, not just the Nestl\u00e9 Water business.\u00a0 Examples of these initiatives include introducing zero water technology at factories to reduce use of groundwater in operations, treating and recycling waste water, and instituting Water Resource Reviews.\u00a0 As a result, as of 2015, Nestl\u00e9 had reduced their direct water withdrawal per product ton by 41% compared to 20054<\/sup>.<\/p>\n

Another risk that could impact Nestl\u00e9 in the short-term is the growing opposition to having corporations control water supply.\u00a0 Nestl\u00e9 has already stirred up controversy in places around the world where local populations and environmental activists view Nestl\u00e9 as appropriating natural resources that belong to local populations and then selling their own water back to them for a profit.\u00a0 During the drought in California in 2015, Nestl\u00e9 extracted 36 million gallons of water from a national forest while only paying $524 annually to the government for the pipeline permit that transports the water from the source to their plant.\u00a0 Environmentalists are pushing for the government to prevent Nestl\u00e9 from accessing the water until a study can be done to assess the water levels and how much can sustainably be removed from the ecosystem, as government officials acknowledge that \u201cthey have no idea how much water is too much to remove, because it\u2019s never been studied\u201d5<\/sup>.\u00a0 Issues such as these not only bring negative publicity to Nestl\u00e9 and harm its brand, but also increase the likelihood of new potential regulations that restrict Nestl\u00e9\u2019s access to water sources as governments either raise the price of allowing Nestl\u00e9 access to land with large water reserves or limit Nestl\u00e9\u2019s ability to buy rights to the water in the first place.\u00a0 As climate change continues to impact water supply, governments and the public will turn a more critical view to what entities are controlling the water supply and act against those they feel do not work in the best interest of the local population.<\/p>\n

Nestl\u00e9 does address climate change not only internally to make its operations more efficient but also externally to increase awareness and drive change outside of its own organization.\u00a0 The firm chairs the 2030 Water Resources group, which aims to address water supply issues by 2030, and is a signatory to the UNGC CEO Water Mandate, working on issues such as policy engagement and the idea of a human right to water6<\/sup>.\u00a0 These initiatives are a way for Nestl\u00e9 to generate positive press and demonstrate to the public and the government that it does take climate change seriously and is as concerned as the public is about the depleting water supply.\u00a0 If Nestl\u00e9 can be seen as a partner and collaborator in combatting the negative implications of climate change, rather than an exploitative actor that competes for these scarce resources, they can more easily protect their business interests and protect their own access to the water supply.<\/p>\n

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Word Count: (710)<\/p>\n

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Sources:<\/p>\n

1<\/sup>Nestl\u00e9, 2015 Annual Review, p. 48, http:\/\/www.nestle.com\/asset-library\/documents\/library\/documents\/annual_reports\/2015-annual-review-en.pdf<\/a>, accessed November 2016.<\/p>\n

2<\/sup>Rebecca M. Henderson, Sophus A. Reinert, Polina Dekhtyar and Amram Midgal, \u201cClimate Change in 2016: Implications for Business\u201d, HBS N2-317-032 (Boston: 性视界 Business School Publishing, 2016), p. 4.<\/p>\n

3<\/sup> Nestl\u00e9, Nestl\u00e9 in society, p. 26, http:\/\/www.nestle.com\/asset-library\/documents\/library\/documents\/corporate_social_responsibility\/nestle-in-society-summary-report-2015-en.pdf<\/a>, accessed November 2016.<\/p>\n

4<\/sup>Ibid., p. 27.<\/p>\n

5<\/sup>Regan Morris, \u201cNestle: Bottling water in drought-hit California,\u201d BBC News, May 3 2016, http:\/\/www.bbc.com\/news\/business-36161580<\/a>, accessed November 2016.<\/p>\n

6<\/sup> Nestl\u00e9, Nestl\u00e9 in society, p. 28, http:\/\/www.nestle.com\/asset-library\/documents\/library\/documents\/corporate_social_responsibility\/nestle-in-society-summary-report-2015-en.pdf<\/a>, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

Nestl\u00e9’s struggle to balance conserving water with maintaining a necessary level of control and access to water supply<\/p>\n","protected":false},"author":2006,"featured_media":11441,"comment_status":"open","ping_status":"closed","template":"","categories":[1330,1535,1381,1447,1480],"class_list":["post-11429","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-nestle","category-water-resources","category-water-scarcity","category-water-supply","category-water-use-reduction"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nNestl\u00e9: Conserving Water as a Strategy to Sell More Water - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nestle-conserving-water-as-a-strategy-to-sell-more-water\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nestl\u00e9: Conserving Water as a Strategy to Sell More Water - 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