With two-thirds of the world to experience water shortages by 2025, a new report from global management consultancy Arthur D Little warns businesses that a reactive response regarding water management could damage business performance.

The report provides several illustrations of how water affects the financial performance of many businesses. These include Électricité de France (EDF), which was hit by losses of approximately €300 million when it had to close a quarter of its 58 plants due to water shortages and Anheuser-Busch, which suffered increased production costs due to water shortages in the supply chain.

'Dealing with the challenges of water management will be a top priority for businesses and global policy makers over the next ten to 20 years.  However, it will only be possible to make meaningful changes through a whole-business approach starting at the board level,' says Melissa Barrett, a manager in Arthur D Little's Sustainability & Risk practice.

With the media already branding it 'the next carbon', water management is being acknowledged increasingly as a key area for business. However, the report highlights that water and carbon have quite different characteristics and impacts. Addressing a company's water and carbon issues requires a balancing act, recognising the differences but also the synergies that can be derived from addressing both in a strategic, coordinated way.