In the last few years, the concept of “shared value creation” has been a persistent catch phrase used by many progressive businesses indicating a shift away from water risk mitigation to creating value for the companies themselves but also communities, catchments, and nature as a whole.
Photo: Selim Arda Eryilmaz on Unsplash
There is good reason for this shift. Water stewardship was never intended simply to make factories more water efficient. The underlying proposition is broader: companies depend on shared water resources, affect those resources, and therefore have an interest and a responsibility in contributing to their sustainable management. The Alliance for Water Stewardship definition captures this well, combining socially equitable, environmentally sustainable and economically beneficial water use through stakeholder-inclusive site and catchment action.
But the concept of “shared value creation” needs much more unpacking.
Value for whom? What kind of value? Shared in which way? Over what period of time? Compared with what alternative? And, perhaps most importantly, how do we know it was actually created?
Balancing water’s multiple values
Photo Credit: Lumin Osity on Unsplash
Corporate water stewardship can generate several fundamentally different forms of value.
There is business value: reduced operating costs, more reliable production, greater supply-chain resilience, reduced regulatory exposure, improved relationships with customers and investors, and a stronger social licence to operate.
There is social value: improved access to water for local communities and economies, improved livelihoods, better health, reduced vulnerability to climate change and other environmental stressors, and greater participation in decisions over shared water resources.
There is environmental value: healthier rivers, wetlands and aquifers, improved water quality, restored flows, improved land health and productivity, biodiversity benefits and more resilient catchments.
And there is system value: better information, stronger water institutions, improved allocation, greater trust between users, and collective capacity to respond to drought, pollution or competing demands.
Shared value assumes the creation of a virtuous cycle where these forms of value reinforce each other. But balance is key.
A company may reduce its operating costs through water efficiency while total abstraction from an already stressed catchment continues to increase. A wetland restoration project may generate considerable benefits for biodiversity and downstream communities while producing no measurable financial return to the company funding it. A new allocation may increase water security for one business while reducing it for farmers or ecosystems.
Sometimes stewardship creates value. Sometimes it protects existing value, avoids future losses, redistributes value between users, or generates public goods whose financial benefits cannot easily be captured by the company paying for them.
Calling all of this “shared value creation” hides important differences.
Moving from risk to shared value requires time
In the short-term, the emphasis will be on risk mitigation actions and operational efficiency, which ultimately improve business value. Reduced water consumption can lower pumping, treatment and energy costs. Reuse can reduce wastewater charges. Compliance can avoid penalties. These can be measured over normal investment cycles.
But establishing a balance between multiple values and hence reaping the most important benefits of stewardship requires a much longer period of time.
Restoring catchments, improving groundwater management, strengthening basin institutions or changing agricultural production systems may take years or decades to affect water security. The business value may eventually be substantial, but it rarely fits neatly into an annual sustainability budget or a three-year capital planning cycle.
Climate change makes that distinction considerably more important.
Metrics matter to prove shared value creation
Photo: Viktor Hesse on Unsplash
Much of corporate water stewardship remains better at measuring activities rather than outcomes.
Money invested is not impact. Hectares restored are not necessarily improved water security.
A calculated volume of water “replenished” does not in itself show that the ecological condition improved or that water availability improved to other users.
This is not an argument against these metrics. They can be useful. But we need to be precise about what they demonstrate.
Previous work on volumetric water benefit accounting has made exactly this point: a water volume alone cannot demonstrate that a shared water challenge has been resolved. Social, economic and environmental benefits need additional evidence.
We therefore need a clearer hierarchy of claims:
An intervention might demonstrate that money was spent, an activity was implemented, an estimated benefit was generated, catchment conditions changed, water risk declined, and ultimately societal value increased.
Those are six different propositions requiring six different levels of evidence.
Certification and independent assurance matter here. The AWS Standard provides an increasingly robust framework for understanding catchment context, engaging stakeholders, implementing actions and evaluating performance. Version 3.0 explicitly requires evaluation of costs, savings and the social, environmental and economic value associated with stewardship plans at higher levels of performance.
But even certification should not be interpreted as proof that one site has somehow made an entire basin water secure. Good stewardship contributes to basin outcomes but shared value requires concerted efforts by basin stakeholders.
Shifting the focus outward
Much of the current “value” narrative is ultimately aimed inside companies themselves.
Sustainability teams compete for management attention and investment. “This project improves watershed health” can be difficult to place alongside investments in production, logistics or new markets. “This protects a strategically important facility and reduces future supply risk” speaks more directly to the language of corporate decision-making.
Investors want evidence that material dependencies and risks are understood. Customers increasingly want credible supply chains. Governments and communities want confidence that companies are contributing to, rather than undermining, local water security. NGOs and standards organisations are concerned with credibility, additionality and public benefit.
Each group is asking a different question and expecting a different answer.
That is why a single aggregated measure of “water value” is unlikely to be enough.
All that glitters is not gold
Photo: Nick Fewings on Unsplash
Rather than investing time and money packaging stewardship as shared value, businesses should pivot to understanding and measuring:
What changed because of the intervention, who benefited, who carried the cost, over what geography and timeframe, and what evidence connects that change to business resilience, public benefit and the condition of the catchment?
This evidence will provide a more useful distinction between value created, value protected, losses avoided, value redistributed and public value generated.
And we should add one more category: value claimed.
The future credibility of corporate water stewardship may depend increasingly on the distance between value claimed, and shared value attained.
The objective should not be to find a new headline number to replace cubic metres with dollars. Water is too local, contested and socially embedded for that. The stronger approach is to anchor catchment collaboration on balancing trade-offs and realising gains in the component parts of value creation: business value, social value, environmental value and system value.
That would make “shared value creation” considerably more useful than a corporate slogan. It would make it something that can actually be measured.
Authors:
Dr. James Dalton, Maria Ana Borges, Isabel Wallnöfer
