Water risk is business risk
Water risk is business risk
Head, BMO Climate Institute
Melissa leads BMO’s Climate Institute, a center of expertise accelerating climate solutions by bridging science, technology, policy, and finance. She is a glo…
Melissa leads BMO’s Climate Institute, a center of expertise accelerating climate solutions by bridging science, technology, policy, and finance. She is a glo…
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Water scarcity is increasingly seen by investors and stakeholders as a risk factor that can affect business operations across sectors and communities.
The critical importance of sustainable water management was the focus of the panel, “Sink or Swim: Corporate Strategies for Water Resilience,” at the Milken Institute’s Global Conference 2025. Joining me in the discussion were sustainability experts from some of the largest companies in the world:
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Kara Hurst, Chief Sustainability Officer, Amazon
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Pilar Cruz, Executive Vice President and Chief Sustainability Officer, Cargill
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Justin Worland, panel moderator and Senior Correspondent, TIME
Our conversation explored corporate strategies for addressing water resilience, including supply chain management, investing in innovative solutions across agriculture and technology, and the impact of water scarcity on local communities and businesses.
Water touches each of us so fundamentally and personally that there is an imperative for everyone – including the public and private sectors – to work together to find solutions. Whether an organization operates in agriculture, technology, procurement or another industry, the water scarcity challenge can have hyperlocal and global impacts.
Awareness of the importance of water risks is arriving as more companies implement climate action plans. The most recent BMO Climate Institute Business Leaders Survey showed that 69% of respondents in North America say they either already have a formal plan in place to address climate change or are developing one, up two percentage points from 2023.
My key takeaway from the panel discussion was that an increasing number of companies recognize water risks and are taking a more proactive approach to water management.
The need to focus on water
I shared some of the financial impacts that drought could have on U.S. agriculture by 2050 under a moderate emissions scenario. The BMO Climate Institute, in collaboration with the University of California, Berkeley, discovered that Texas could lose about $890 million annually, primarily affecting livestock; California could lose $460 million, mostly in fruit-growing crops; and grain-growing states like North Dakota and Illinois could each lose approximately $650 to $700 million, all due to drought.
Amazon and Cargill are facing these challenges head-on. Agriculture consumes about 70% of global freshwater, which is clearly a major focus for a global food and agriculture company like Cargill. Using that resource efficiently is imperative for agriculture companies, not only to ensure it has access to the water it needs, but also to respond to threats like drought and extreme weather events.
Water may not seem like a top-of-mind issue for a global tech company, but at Amazon Web Services (AWS), Amazon’s cloud computing business, water is a critical operational concern. AWS relies on the resource to cool down its data centers, which operate in communities worldwide. That’s a particular challenge when locating data centers in arid parts of the world, like Bahrain or Arizona.
From BMO’s perspective, when it comes to businesses engaging with their supply chains on sustainable water management, there are three key elements of success. The first is knowing where your suppliers are geographically so you can map out water scarcity risks along the value chain. Companies also need to partner with suppliers to identify water resilience measures they can take. It’s important to diversify your supply chain to better manage unforeseen events that will impact your suppliers, too.
Investing in changemakers and innovation
Each of the panelists said that investing in companies that support or promote improved water efficiency was critical for business operations. Amazon, for instance, is devising local water management strategies, such as building water-free cooling systems.
Since cutting out water isn’t an option for Cargill, it is trying to find innovative ways to reduce its water usage. One example is a recent investment in an Australian AgTech business that is helping it develop a precision irrigation system that allows farmers to determine when and how they should irrigate their fields.
Some innovations are more about using existing technology in new ways. For example, in California where I am based, water scarcity is one of the top challenges for farmers. Agrivoltaics, which positions solar panels above crop land, began as a land conflict solution for the state’s farmers but is being seen as a water conservation tool as well.
Proactive approaches
The panel also discussed how important it is for global organizations to be proactive in their approach to water management. To that end, in 2024 alone, Cargill helped restore 38 billion liters of water, which is the equivalent of producing food for 7 million people per year, and they are committed to helping their farmers implement restorative agriculture practices.
AWS has committed to being water-positive by 2030. This means examining how it can be more efficient and reduce water usage, then replenishing water in the communities where it operates its data centers worldwide. In places where with more intense water scarcity issues, such as India, that goal is being fast-tracked.
The challenges corporations face in building water resilience and improving water stewardship are both local and global. However, companies can address water-related risks with a focus on supply-chain management, innovation, and a commitment to reducing environmental impact.
*Photo courtesy of the Milken Institute.
