February 12, 2025 • 44 mins
Water scarcity is one of the most pressing challenges of our time, with demand for fresh water expected to outpace supply by 40% by 2030, as highlighted in BI ESG’s recent report, Scarcity Rising: How Water Shapes Sectors and Investments. In this episode of Bloomberg Intelligence’s ESG Currents podcast, Ecolab Chief Sustainability Officer Emilio Tenuta joins BI director of ESG research Eric Kane and senior ESG research associate, Melanie Rua to discuss the critical issue of water scarcity and its implications for businesses and investors. They explore the importance of understanding water as both a business risk and a growth opportunity, the role of AI in water stewardship and the impact of policy and financing trends on water management. This episode was recorded on Jan. 30.
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Speaker 1 (00:09):
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory tension, and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords
(00:30):
and lingo, and we aim to break these down with
industry experts. Welcome to ESG Currents, your guide to navigating
the evolving ESG space, one topic at a time, Brought
to you by Bloomberg Intelligence, part of Bloomberg's Research department
with five hundred analysts and strategists working across all major
(00:51):
world markets. I am Ercaine, Director of ESG Research for
Bloomberg Intelligence.
Speaker 2 (00:56):
And I am Melanie Rua, senior ESG research associates, and
we are your hosts for today's episode. Our recently published
Water Deep Dive Report sheds light on water scarcity being
one of the most pressing challenges of our time, with
demand for fresh water expected to outpace supply by forty
percent by twenty thirty. According to the World Resources Institute,
(01:18):
up to seventy trillion dollars in global GDP could be
exposed to high water stress by twenty fifty, underscoring the
far reaching risks to industries and economies from agriculture and
manufacturing to tech and services. Operational disruptions, rising costs, and
supply chain vulnerabilities tied to water stress are growing concerns.
(01:40):
Yet this challenge also presents opportunities. Water solutions like the
desalination market could double by twenty thirty two to fifty
billion dollars, and investor interest is increasing, as reflected by
the rise in water focused funds and sustainable debt issuance
tied to water resilience. Today, we're joined by Emilio Tanuda,
(02:00):
chief Sustainability Officer at Ecolab, a global leader in water
hygiene and infection prevention technologies. Ecolab helps companies improve their
resource efficiency and operational performance by addressing water challenges with
innovative solutions like advanced monitoring systems and water treatment technologies.
In this episode, we'll dive into how Ecolab is enabling
(02:22):
businesses to navigate water related risks while seizing opportunities for
long term resilience, insights that are increasingly critical for investors
focused on operational performance. Thank you for joining us Amiliel.
Speaker 3 (02:36):
Thanks for having us mel So Emilio.
Speaker 2 (02:39):
Your role at ECOLAB sits at the intersection of business
strategy and sustainability, with water scarcity intensifying an investor awareness
still lagging behind other EH issues like carbon How does
ECOLAB frame water as both a risk and a growth
opportunity for its clients and stakeholders.
Speaker 3 (02:58):
So at the heart of the climate crisis that we
all are aware of is water. The way we experience
the effects of climate change is through water. So if
you think of the broad implications not only to business,
but also for communities where we live, and so water
is at the center of the climate crisis, and sometimes
(03:20):
that gets forgotten. And the challenge, of course is that
we see the effects and impact of water in very
complex ways droughts, floods, extreme weather events. So water is
a critical resource and a dependency for business. Every part
of our global economy requires water to produce the goods
(03:41):
and services we enjoy every day, and so for eco AB,
we emphasize the importance of water stewardship as a central
mitigating risk strategy that not only enhances the importance of
water stewardship, but also how we can look at the
impact of the way water and managing water as a
(04:07):
water steward can effectively improve your bottom line, help you
become more resilient in the face of these of the
changing climate and the work that we do really helps
companies in a water constrained world.
Speaker 1 (04:21):
Really interesting. So, you know, I think one thing that's
always been a challenge with water versus climate, and obviously, Emilio,
as you said, you know, they're very interlinked, is this
idea that you know, water tends to be thought of
as more of a local issue, whereas climate that tends
to be thought of more of a global issue. With
(04:43):
that said, as Melanie mentioned in the intro, you know,
we have stats, you know, suggesting that an estimated seventy
trillion in global GDP will be exposed to water stress
by twenty fifty. I'm curious ultimately how you and equal
kind of overcome this idea of geography and the fact
(05:04):
that water can be valued very differently in different geographies
or not valued at all than some geographies.
Speaker 3 (05:13):
So you're right, Eric, water is hyperlocalized. We're at the
rim of Lake Michigan right now. In the Great Lakes,
twenty percent of the fresh water use on the planet.
And so the way we view water here in Chicago
or Naperville, which is where our water hub is for
ECOAB very differently than let's say someone in Arizona, like
(05:37):
a semiconductor plant. Very different. So that's one big AHA moment.
The second is how we value water. No surprise, water
is undervalued in many parts of the world, and so
what we see on our monthly water bill isn't necessarily
(05:57):
the full value of water that we need to understand
and leverage as a business, let alone a community in
terms of how water is put to work to serve
our needs. And so one of the things that Ecolab
was a leader and a founder in was this concept
(06:19):
of understanding that full value of water through tools publicly
available tools like the Smart Water Navigator formerly referred to
as the Water Risk Monetizer. And what was unique about
it was it absolutely the tool enabled us to understand
the risk at a local basin level where you operate
(06:42):
anywhere in the world. And it's a tool that enabled
a operational water user to monetize the risks that they
see in their business, depending on the industry that they
are in, to understand and contectualize how they need to
(07:03):
value water and importantly take action by investing in solutions
that can address the water challenge in their local area.
And so we often talk about the tool enables not
only to understand and assess the water risk at each location,
but it also enables us through underlying data sets from
(07:25):
the World Resource Institute and other industry leaders that sets
the context based water goals for a site based on
how much water is considered sustainable when it comes to
water withdrawals, but also more importantly is how do you
implement solutions to support reaching that sustainable water withdrawal goal
(07:50):
that you should have at a site level. And so
this becomes a very impactful and very user friendly tool
that enable businesses to really understand the strategy, but also
the geographic differences that they'll see, especially for a multinational
(08:12):
who's operating with multiple sites in multiple regions, how they
can value water to really develop end to end solutions
that can help them conserve and reuse water so that
they could become more resilient but also grow to meet
the growing demand for their products.
Speaker 1 (08:33):
That makes great sense. So you're you're ultimately helping the
client understand, as you said, risk at a local level
or facility level, helping them kind of monetize that, and
then helping them think through strategies. Could you tell us
a little bit about what some of those strategies or
solutions are that you ultimately, you know, provide to your clients.
Speaker 3 (08:53):
Absolutely, one of the things that ecolab is a big
believer in is in order to be a good water stewed,
you really need to think about helping industry really manage
three types of risk. We call it physical risk, the
water stress you know, when it comes to quantity and quality,
(09:14):
regulatory risk, you know, so the water quantity and quality
restrictions that become more prominent as water becomes scarcer. And
then the third is reputational risks. Obviously, we have you know,
big brands that are out there and they're leveraging water
as a critical resource to making the products that they
(09:34):
need as a as a standard practice, and so oftentimes
what we're after is really looking at as climate change
takes effect, how do we develop the solutions that lead
to smart water management that are designed to customize to
the local challenges. Eric to your point about water being
(09:55):
hyper localized that enables us to do things like you know,
water filtration and pre treatment systems that are going to
give you a water quality that's fit for use for
the products that you're trying to make. When it comes
to water quality standards, think of a semiconductor plant that
needs ultrapure water to develop their chips. We've also been
(10:21):
a leader in digital and data driven insights when it
comes to water management, and so I for smart water management,
I often think about leveraging tools like the smart water Navigator,
which we're excited by the way. We're coming out with
an AI enabled smart water Navigator in September of this year.
(10:42):
So that's exciting in terms of how AI is helping
us to really enable the tool to be a lot
more predictive when it comes to water risk and water resilience,
and then we use technology. One of the biggest challenges
that we see across all industries is the ability if
(11:02):
you're going to manage or improve your operations when it
comes to water use, you have to do one big thing.
You have to measure water. And so one of the
big things we see is the ability to measure and
submeter water at a within a facility. People know, users
know how water comes into the facility. That usually have
(11:22):
that meter, they know the discharge because you're paying for
that discharge to be treated. But we don't know how
water is being put to use in the critical water
circuits within a facility. So we developed the technology called
waterflow Intelligence that enables us to put smart sensors and
(11:43):
meters in places, so we can actually do a water
map in real time and give the visibility to how
water is being put to use, so you understand where
the leagues are happening, where the opportunities to run your
operations at specification. So these are some of the things
that enable us to help our customers and industry be
(12:06):
better being a water steward.
Speaker 2 (12:10):
Thank you, Milia. And continuing on the conversation of technology
and innovations that equal At provides. The company's three D
trace are technology was described as a breakthrough in industrial
water efficiency, and so I'm curious if you can elaborate
on how this technology functions. You know, what the measurable
(12:30):
benefits are that it delivers and how you know innovations
like the water reuse and cooling systems really position the
company as a leader in addressing water stress across industries
like data centers and manufacturing.
Speaker 3 (12:46):
Absolutely three D tracear is a platform technology for us.
And by the way, the three D is detect, determine, deliver,
and we developed that because we really feel that that,
you know, when three D trace hour was developed over
a decade ago, that the idea of developing a technology
(13:12):
that could monitor in real time twenty four to seven
for any water system within a facility and then be
able to you know, control some of the aspects of
the water chemistry that typically leads water quality and impaired
water quality usually leads to increase water use or quantity.
(13:35):
And so the tool enables us to really have our
finger on the pulse by using connected chemistry, our expertise,
the actionable insights that we get from the digital and
the data that we derive from the different sensors that
are within an operation. Often like to think about, you know,
(13:56):
putting this into a practical example. So we have over
fifty thousand systems connected systems in place around the world,
which is just amazing to think about. And the ability
for us to take say a brewery in the manufacturing
of beer and there's a pat there's a pasteurizer that
(14:21):
typically enables us to pasteurize beer when it comes to
the challenges with bacteria and the pathogens that exist. So
pasteurization is a critical process to delivering the quality of
beer that some of the major brands look to to delivering,
and so we developed a three D tracear for pasteurizers
(14:46):
that enables us to monitor the water quality and also
the beer out temperature. So that beer temperature is a
term used to say in order to get that quality,
we have to hit a desired temperature gradient throughout the process.
So when you bring together the connected chemistry, the water
(15:09):
quality monitoring, the control of the water system, you deliver
a better product for our customers. You deliver optimized cost
because you're saving water and you're saving energy, and you're
actually delivering more productivity because you have less downtime throughout
(15:33):
the process. So I feel that three D tracear has
really opened the doors for us across multiple unit applications
from pre treatment systems to cooling systems, heating system steam systems.
You have meted pasteurizers membrane technology. So we have leveraged
(15:54):
ThReD tracer as really that monitoring control twenty four or
seven real time data platform that really enables the world
to not only save water but also drive business performance
in lower costs. Super interesting.
Speaker 1 (16:12):
So, Amelia, it makes me think, you know, about kind
of where we stand currently in the E s G space,
And obviously here in the States there's a lot of
pushback you know to es G. Some of that is
of course coming from you know, policy makers, but what
we see from kind of investors is increasing demand for
(16:37):
us as researchers and you know other you know es
G practitioners to really kind of make the link between
ESG outcomes and financial returns. So you mentioned some ideas
you know in general about you know, how three D
trace are for example, can can help efficiency and everything
(16:58):
in a brewery. I'm wondering if you could give us
a specific example ultimately of a company that you worked
with and how you know, your services, your products were
able to you know result for that company and improved
you know ESG performance, so you know, probably decreased water use,
decrease energy use, things like that, but then also increase
(17:21):
shareholder value you know, for that company.
Speaker 3 (17:24):
Absolutely. One core principle and philosophy of our company at
Ecolab is to prioritize business and operational performance for the company, right,
And so yeah, I got to share this little bit
of history. Economics Laboratory was the founder's name for our
company over a century ago. Of course, many today associate
(17:47):
ECOLAB with ecological benefits, right, And we learned from a
very the very start that to be successful that you
need to help companies really make the business case to
your point arc to understand the value created by taking
what we often talk about at ECOLAB, helping companies really
(18:10):
make that business case by looking at holistic value in
a way that shows the tangible and non tangible benefits
in investing in sustainability that can positively impact your bottom line.
So we developed over a decade ago this term called
e ROI, which stands for exponential return on investment, and
(18:35):
the output of that framework really has this total value delivered,
this holistic value that we talked about that's monetized in
dollars and cents, because we know we need to speak
the business language for the companies that we serve and
the businesses that we serve, and so TVD really has
(19:00):
three dimensions. It's it's about delivering business outcomes. If you're
a food plant, it's about food safety is paramount, right.
If you're a hotel, it's about guest satisfaction. The second
is operational efficiency. Can you do that by doing more
with less? So for a hotel, it would be you know,
(19:21):
labor is a big cost. How do you drive you
more ways to reduce your labor costs by leveraging digital
solutions for example. A third dimension is environmental impact. Can
I drive business outcomes, operational efficiency and reduce water energy,
greenhouse gas waste. When you monetize those value drivers, you
(19:47):
lead to this total value delivered and we typically talk
about that is the numerator over the investment in the
solutions that you use to drive that benefit. So to us,
that is at the core, it's a core value of
our company. And you mentioned Erica an example, So let's
(20:08):
take a food company. Obviously we mentioned food safety as
paramount for food products. We worked with, you know, you know,
an organization like craft Hinds for instance, where craft Higns
are leading brand that is really focused on not only
delivering high quality processed foods, but also doing that while
(20:33):
achieving their net zero goals right from a carbon perspective,
as well as being you know, viewed as water stewards.
And what they found is that by working with ecoab
ways to really drive and optimize water and energy efficiency.
So examples of technologies I mentioned the three day tracear platform.
(20:58):
There's also something called three D trace our CIP, which
stands for clean in Place, so you can imagine the
cleaning and sanitizing that's needed within a food plant, especially
as you change over from product to product. One of
the things that we know is about somewhere between twenty
five to thirty five percent of the water and energy
(21:19):
that's used in a food plant goes to cleaning and sanitizing,
so CIP is really important. So we developed a digital
automated platform that optimizes the cleaning and sanitization of a
food plant. That supports organizations like craft Hnes, where they
(21:42):
saw benefits not only in terms of water conservation by
actually understanding when they reach their their cleaning surfaces and
how much rinse water you actually need, but also the
amount of hot water or steam that's the to clean.
That led to significant water and energy benefits, which also
(22:06):
helped them reduce their greenouse gas emissions. And the best
part of all, they were able to really get significant
savings along the way because as you know, you save water,
you save energy and you actually reduce your cost because
energy obviously is a very you know, it's it's the
lifeblood of a food plant, but also industry and that
(22:31):
obviously has a significant cost to it. So that's an example,
Eric of how we helped a food plant leverage technology
like three D tracer.
Speaker 2 (22:41):
And you've been sharing so many different products and offerings
that Eco app has, which you've also expanded to quite
a number of industries where it would be quite relevant
and valuable, such as expanding your footprint to high growth
sectors like life sciences, data centers you just mentioned, like food.
(23:01):
What's driving this growth? You know, how is Eco Labs
scaling its presence in these critical industries to capture both
the environmental but also growth opportunities.
Speaker 3 (23:16):
Yeah, no doubt we're seeing the growth in these sectors
you mentioned. I just got back from the World Economic
Forum and the annual meeting in Davos last week, and
without a doubt, if there was one central theme, it
was AI AI AI right, and so artificial intelligence, you know,
(23:36):
which was introduced a year ago, was was still being
you know, people were still getting their heads around it
as business leaders. But this year it was more about
how do we harness the power of AI to really
drive our business performance but also our impact when it
comes to water and energy, and so we saw that
(23:58):
as a central theme this year at DAVO, and without doubt,
you know, the growth of AI and the growth of
power that's needed to support the growth of AI. As
you probably have seen, we're going to see three to
four x the growth in AI, but also the growth
(24:18):
in the power demand and the water needed to support
that power demand, but also the cooling of these data centers.
You mentioned. Life sciences another obviously hyper growth industry as
well when it comes to all the different vaccines and
the different pharmaceutical and cancer saving drugs that we all
(24:42):
are seeing more and more of. So I feel that
this is something that we continue ecolab is at the forefront.
We serve over a million customer locations every day. These
industries are industries that really support the need to really
(25:03):
help businesses today understand how we can help them be
more water resilient. And the reason I say that because
if you think of the complexity that we talked about
at the very beginning around the water crisis going on
to now, we're going to exacerbate that with the demands
of increased AI in the world and how that's going
(25:26):
to then layer on more challenges around water demand that
is basically not available today in areas that businesses and
most of the GDP in the world that are operating
in and so this is a real big challenge for
the world. But we equilab is well positioned to support
(25:50):
the demand with our core business and increasing the efficiency
and productivity that these industries need by saving resources but
also very importantly, you know, saving water, which is obviously
becoming more and more scarce. And so for us, I
think there's you know, I'll use an example for a
data center that we've worked with. You know, co located
(26:13):
data centers are data centers that are outsourced data center
services that are served by companies. So if you think
of the hyper scale data centers like you know, Amazon
Web Services, and you think of Microsoft, and you think
of all these other salesforce, they outsource a lot of
that at times to co located data center companies. We
(26:37):
worked with one big global co located data center where
we're able to support and empower their strategy for growth
of AI by helping them and only can serve but
we use water that enabled them to reduce their water
use by fifteen percent in their data centers. So this
(27:01):
is a real example of how smart water management can
enable life sciences, data centers, food processing facilities really not
only drive their focus on growth, but also resilience. And
this is the key word that came out of Davos reliability.
(27:21):
We need to make sure that obviously the cloud, which
as you know, is very you know, the cost of
the cloud going down is so significant for every minute,
and so reliability of power and water is critical. And
so that's why I often talk about it is about resilience,
(27:43):
but it's also about the reliability that these hyper growth
industries need to really thrive in a water constrained world.
Speaker 1 (27:52):
It's really interesting to hear that water was a central
theme at of VOTs because I think in our world,
you know, water continues and our world being kind of
the issue research space continues to be not necessarily an afterthought,
but climate and carbon uh, you know, energy, a lot
(28:14):
of other topics tend to get a lot more attention. Obviously,
Davos is a very you know, select group of people.
But I'm I'm curious to hear your thoughts Amilio on
whether you ultimately think water is now getting the amount
of attention that it needs given the severity of the problem.
And if it's not, or even if it's not in
(28:34):
certain industries, what role do you think investors can play
in kind of accelerating the shift and getting more attention
to you know, the importance of this topic.
Speaker 3 (28:47):
Wow, that's it. That's a great question. So I often
speak to to shareholders in eco Lab about this very topic,
which is you know, for eco Lab, it's core to
our business strategy and it's awesome. So we're also we serve,
you know, or manufacture in over one hundred facilities manufacturing
facilities around the world, and so we're we operate in
(29:09):
one hundred and seventy countries. So for us, this is
an area that I often talk about as an opportunity
and why water stewardship and I often think about water
stewardship this way. The concept that's really around stewardship being
you know, it's taking care of something we don't own. Right.
(29:33):
Water is a shared resource. And I often talk about
this with investors to say it's incumbenty on Ecolab as
the water leader for industry to also be walking to
talk within our own facilities, and so we do that.
We've established a net positive water impact goal for ourselves,
just like we are advocating and helping our customers with
(29:57):
this concept of net positive water impact. What is net
pods of water impact is saying, how do we give
back to the watershed we're operating more than we're taking
from it? In simple terms, and so that involves, you know,
understanding the shared water challenges and we help our customers
do that. We also do that in our own facilities.
(30:18):
It's also about developing water stewardship principles, so we have
we're a founder in the Alliance for Water Stewardship by
the Way, and that's a standard and certification out there
for industries that takes it down to the local site level.
The third area is areas of how do we do
more with less? Right, it's using the smart management solutions
(30:43):
that I spoke of from ecolab to reduce our demand
for water. And then the last point is how do we,
you know, for basins that are so water stressed, how
do we increase supply? So we are working with organizations
like the California Water Resilience Initiative in the state of California,
(31:05):
for instance, to develop public private partnerships and projects that
enable us to deliver nature based solutions that can improve
the water quality and quantity, so things like reforestation or
regenerate agriculture that are co located when we're operating. This
(31:28):
is a formula for us to really drive what I
consider this net positive water impact that we need to
see in the world because it really enables us to
not only impact our business for the future when it
comes to growth and resilience, but also enables our communities
to thrive in those areas as well. And so investors
(31:49):
really align with that strategy because they understand that it's
going to minimize disrupted assets, which is obviously which keeps
CEOs up night as you know.
Speaker 1 (32:02):
That's interesting you mentioned the internal goal that Eco LEB
has set to be that positive water. I know you've
also set a target of saving three hundred billion gallons
of water annually by twenty thirty. I'm curious to hear
how you're tracking progress towards that goal and how close
(32:25):
you are to achieving that ultimately.
Speaker 3 (32:27):
Yeah, So one of the things that we did in
this next set of the current goals that we're in
but One of the things that we did in twenty
nineteen is we're embarking on what is that long term
ambition for us that ultimately became our twenty thirty impact goals.
At the heart of the of that of that set
(32:49):
of goals, we really developed two tracks. One is to
focus on the customer impact that we're going to have
through the unique business model that ecoleb has developed to
help our customers around water, climate, food and health. And
then we also have our second track of goals, which
(33:11):
is around our leadership within our own operations and enterprise
toward driving water net positive water impact, but also a
net zero strategy. We're in a one point five degree
pathway by twenty fifty and then halfway there by twenty thirty.
So one of the things that we embarked on was
(33:35):
setting up a water impact goal that was really relevant
back in twenty twenty as we were starting a new decade,
and back then we realized that the growth of the
mega trends, specifically the population was growing where we would
(33:55):
see an additional one billion people on the planet by
twenty thirty. Well, when you look at the three hundred
billion gallons of water that we work with our customers
to conserve as an ambition was really centered on the
equivalents of the drinking water needs of a billion people.
(34:16):
So that really became kind of our rally cry right
and so we're proud to say that today we're over
two hundred and twenty six billion gallons saved through twenty
twenty four, and so we're really excited about the fact
that we're, you know, over seven hundred and fifty million
people when it comes to the equivalence of drinking water needs.
(34:37):
And so we're on our way, and the goal is
really centered on the solutions that we help our customers
with around the world, serving one million customer locations, and
we've developed a model that enables us to quantify those
water conservation benefits we help our customers with. And so
(35:02):
our goals really have these three principles. One, how does
it drive our business strategy? Number two, how does that
then have an impact on the planet. Number three, how
does that also have implications to society in terms of
moving society forward. So if we could do those three things,
then we've achieved our.
Speaker 2 (35:23):
Goals and continuing on some of the goals. So I
do think there is a global trend in the growing
Focus and Action towards Water water efficiency. You mentioned your
goal in net positive impact, having a net positive impact
on water, but you're not alone. So two companies you
(35:43):
already mentioned, Microsoft and Amazon Web Services, which obviously used
plenty of water for cooling for their data centers, also
committed to becoming water positive, which for the audience like
that means replenishing more water than you use. But there's
also so like a financing trend, and I alluded to
this earlier in the opening, but in our Water Report
(36:07):
we do talk about how sustainable financing, including green bonds
for water infrastructure, is becoming a key enabler for addressing
some of these water challenges. So wondering, you know, are
their key policies or perhaps incentive structures that have or
will further drive demand for ecolabs products.
Speaker 3 (36:27):
Well, we see that that is a really important element
as we look at where the world is going when
it comes to help its industry has a leading role,
but it needs to be enabled by policy, right, And
I often say that. I mentioned the California Water Resilience
(36:49):
Initiative that was really born from the Water Resilience Coalition,
which is thirty nine companies that came together. The CEOs
have pledged to a net positive water impact and mail.
Some of the companies that you mentioned are as part
of the water resilience collisions like Microsoft, Ecolab. You have
(37:11):
organizations like you know, doal ABMBAV, the Agio, and a
host of other Starbucks and so in many ways, the
work that we have to do is really cascaded down
to the priority basins. And so the Water Resilience Coalition
identified one hundred priority basins around the world that impact
(37:35):
three billion people living in water stress conditions some of
the things that Eric talked about. So for us, the
cascading down to the priority basins. California being what the
number one economy in the US, number five globally, pretty
important economy, right, guess what, it's water stressed. And the governor,
(37:57):
Governor Newsom has put together a plan in twenty twenty
two that it keeps updating year after year that says
the science and climate change tells us that there's going
to be a ten percent deficit when it comes to
water supply in the state of California by twenty forty.
So the California Water Resilience Initiative was born from that
(38:18):
call to action. How does the industry work together to
develop those public private partnerships and the policy but also
the nature based solutions that we need to drive those projects.
But mel I want to get to your point about
what are some examples of those policies. One that wethink
is really really important, think of the urban areas like
(38:39):
La San Francisco and other places Sacramento is the ability
for us to really leverage what it's just so ironic,
but the concept of what they call in California the
purple pipe. Purple pipe is a is a label for
what is essentially graywater, non potable wa water that can
(39:01):
be used where it's fit for purpose, meaning that you
know not you know, when it comes to water and
golf courses, you may not need Christine clean drinking water,
you know, powdable water for you know, water and golf courses.
Why not use non poddable water. And so developing the
infrastructure that we need to support the reuse of that
(39:24):
water is huge. It enables us to really help businesses
with another source that doesn't compete with the fresh water
that the local community is dependent on. So that to
me is a really big policy opportunity for us now
not just in California, but all over the world.
Speaker 1 (39:46):
That's really interesting. Maybe just one final question to me
kind of taking a look ahead. Obviously we've talked about
the fact that you know, water risk is intensifying. We talked,
of course in respect to you know Davos, that AI
and the associated energy demand and the you know, water
demand associated with energy is really kind of driving a
(40:07):
lot of the conversation. I'm curious to hear your thoughts
kind of looking ahead as to where you ultimately see
you know, the most interest going forward from an eco
lab perspective, What are you know, some of the emerging
technologies that you might be working on, and what are
some of the other industries that you are really targeting
(40:27):
in terms of helping them improve you know, water efficiency.
Speaker 3 (40:33):
Wow, I As you know, the demand for energy increases
and so does the demand for water, and so this
is obviously true for AI and and these you know,
what I call water and energy intensive industries that require
technology to help us really manage but also build the
(40:56):
resilience and the and the growth that they need to
see in the future. And so our investment is really twofold.
One is we feel that AI does have you know, this, this,
this this impact when it comes to increased demand for
water and energy, but it's also an opportunity. It can
(41:19):
transform the way we manage water and so eco app
has been a leader in developing digital solutions that lead
to smart water management. We talked about three D tras
as an example. Water flow intelligence is another example. So
for us, it's how do we use that and harness
that so we can be more predictive, And it's at
(41:41):
two levels. One operationally, how do we find ways to
make water go from linear to more circular? Right because
right now we live in a world where it's flush
and forget and that that's not sustainable. So we need
to think about how we close the loop within industry
(42:06):
to really reduce reuse and reclaim water that enables us
to reduce the freshwater demand. The second is to use
AI to become more predictive within the basin that that
site operates in. And that is important because today, up
to now, it's been very static. We have you know,
(42:28):
fifty year old data and historical data that's very static.
What we need to do is take all the satellite data,
all the weather patterns, all the data sets from NASA
and other you know, the European Base program, to understand
how we can leverage this data to be more predictive
(42:50):
with the help of AI. That enables us to understand
what the water demand will look like and supply over one, two,
three years from now. That's where it becomes. And that
includes water quality, by the way, because we know that
water quality is a driver toward water quantity and demand,
(43:12):
so that to me is a Those are some of
the things that we see coming ahead of us as
an opportunity for ECOLAB to really differentiate ourselves in the market,
to help the world really manage the scarce resource which
is often forgotten while we deal with the climate crisis
in the world.
Speaker 1 (43:31):
That makes great sense, and certainly the idea of making
water taking it from linear to circular, it makes sense. Emelio,
thank you so much for taking the time to join us.
I think the conversation was fascinating. I certainly learned a lot.
Speaker 3 (43:46):
Thank you, Eric, and thanks Mel. We really appreciate you
having ECOLAB and myself on this call today. Wonderful.
Speaker 1 (43:55):
So you can find more information on water, including the
deep Tive report that we recently published and other key
ESG topics by going to the Environmental Research section on
the ESG team dashboard, by entering BI Space ESG go
on the Bloomberg terminal, and as always, if you have
an ESG quandary or burnie question you would like to
(44:15):
ask bi's expert analysts, send us an email at ESG
Currents at Bloomberg dot net. Thank you so much, and
we look forward to the next episode.
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory tension, and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords
(00:30):
and lingo, and we aim to break these down with
industry experts. Welcome to ESG Currents, your guide to navigating
the evolving ESG space, one topic at a time, Brought
to you by Bloomberg Intelligence, part of Bloomberg's Research department
with five hundred analysts and strategists working across all major
(00:51):
world markets. I am Ercaine, Director of ESG Research for
Bloomberg Intelligence.
Speaker 2 (00:56):
And I am Melanie Rua, senior ESG research associates, and
we are your hosts for today's episode. Our recently published
Water Deep Dive Report sheds light on water scarcity being
one of the most pressing challenges of our time, with
demand for fresh water expected to outpace supply by forty
percent by twenty thirty. According to the World Resources Institute,
(01:18):
up to seventy trillion dollars in global GDP could be
exposed to high water stress by twenty fifty, underscoring the
far reaching risks to industries and economies from agriculture and
manufacturing to tech and services. Operational disruptions, rising costs, and
supply chain vulnerabilities tied to water stress are growing concerns.
(01:40):
Yet this challenge also presents opportunities. Water solutions like the
desalination market could double by twenty thirty two to fifty
billion dollars, and investor interest is increasing, as reflected by
the rise in water focused funds and sustainable debt issuance
tied to water resilience. Today, we're joined by Emilio Tanuda,
(02:00):
chief Sustainability Officer at Ecolab, a global leader in water
hygiene and infection prevention technologies. Ecolab helps companies improve their
resource efficiency and operational performance by addressing water challenges with
innovative solutions like advanced monitoring systems and water treatment technologies.
In this episode, we'll dive into how Ecolab is enabling
(02:22):
businesses to navigate water related risks while seizing opportunities for
long term resilience, insights that are increasingly critical for investors
focused on operational performance. Thank you for joining us Amiliel.
Speaker 3 (02:36):
Thanks for having us mel So Emilio.
Speaker 2 (02:39):
Your role at ECOLAB sits at the intersection of business
strategy and sustainability, with water scarcity intensifying an investor awareness
still lagging behind other EH issues like carbon How does
ECOLAB frame water as both a risk and a growth
opportunity for its clients and stakeholders.
Speaker 3 (02:58):
So at the heart of the climate crisis that we
all are aware of is water. The way we experience
the effects of climate change is through water. So if
you think of the broad implications not only to business,
but also for communities where we live, and so water
is at the center of the climate crisis, and sometimes
(03:20):
that gets forgotten. And the challenge, of course is that
we see the effects and impact of water in very
complex ways droughts, floods, extreme weather events. So water is
a critical resource and a dependency for business. Every part
of our global economy requires water to produce the goods
(03:41):
and services we enjoy every day, and so for eco AB,
we emphasize the importance of water stewardship as a central
mitigating risk strategy that not only enhances the importance of
water stewardship, but also how we can look at the
impact of the way water and managing water as a
(04:07):
water steward can effectively improve your bottom line, help you
become more resilient in the face of these of the
changing climate and the work that we do really helps
companies in a water constrained world.
Speaker 1 (04:21):
Really interesting. So, you know, I think one thing that's
always been a challenge with water versus climate, and obviously, Emilio,
as you said, you know, they're very interlinked, is this
idea that you know, water tends to be thought of
as more of a local issue, whereas climate that tends
to be thought of more of a global issue. With
(04:43):
that said, as Melanie mentioned in the intro, you know,
we have stats, you know, suggesting that an estimated seventy
trillion in global GDP will be exposed to water stress
by twenty fifty. I'm curious ultimately how you and equal
kind of overcome this idea of geography and the fact
(05:04):
that water can be valued very differently in different geographies
or not valued at all than some geographies.
Speaker 3 (05:13):
So you're right, Eric, water is hyperlocalized. We're at the
rim of Lake Michigan right now. In the Great Lakes,
twenty percent of the fresh water use on the planet.
And so the way we view water here in Chicago
or Naperville, which is where our water hub is for
ECOAB very differently than let's say someone in Arizona, like
(05:37):
a semiconductor plant. Very different. So that's one big AHA moment.
The second is how we value water. No surprise, water
is undervalued in many parts of the world, and so
what we see on our monthly water bill isn't necessarily
(05:57):
the full value of water that we need to understand
and leverage as a business, let alone a community in
terms of how water is put to work to serve
our needs. And so one of the things that Ecolab
was a leader and a founder in was this concept
(06:19):
of understanding that full value of water through tools publicly
available tools like the Smart Water Navigator formerly referred to
as the Water Risk Monetizer. And what was unique about
it was it absolutely the tool enabled us to understand
the risk at a local basin level where you operate
(06:42):
anywhere in the world. And it's a tool that enabled
a operational water user to monetize the risks that they
see in their business, depending on the industry that they
are in, to understand and contectualize how they need to
(07:03):
value water and importantly take action by investing in solutions
that can address the water challenge in their local area.
And so we often talk about the tool enables not
only to understand and assess the water risk at each location,
but it also enables us through underlying data sets from
(07:25):
the World Resource Institute and other industry leaders that sets
the context based water goals for a site based on
how much water is considered sustainable when it comes to
water withdrawals, but also more importantly is how do you
implement solutions to support reaching that sustainable water withdrawal goal
(07:50):
that you should have at a site level. And so
this becomes a very impactful and very user friendly tool
that enable businesses to really understand the strategy, but also
the geographic differences that they'll see, especially for a multinational
(08:12):
who's operating with multiple sites in multiple regions, how they
can value water to really develop end to end solutions
that can help them conserve and reuse water so that
they could become more resilient but also grow to meet
the growing demand for their products.
Speaker 1 (08:33):
That makes great sense. So you're you're ultimately helping the
client understand, as you said, risk at a local level
or facility level, helping them kind of monetize that, and
then helping them think through strategies. Could you tell us
a little bit about what some of those strategies or
solutions are that you ultimately, you know, provide to your clients.
Speaker 3 (08:53):
Absolutely, one of the things that ecolab is a big
believer in is in order to be a good water stewed,
you really need to think about helping industry really manage
three types of risk. We call it physical risk, the
water stress you know, when it comes to quantity and quality,
(09:14):
regulatory risk, you know, so the water quantity and quality
restrictions that become more prominent as water becomes scarcer. And
then the third is reputational risks. Obviously, we have you know,
big brands that are out there and they're leveraging water
as a critical resource to making the products that they
(09:34):
need as a as a standard practice, and so oftentimes
what we're after is really looking at as climate change
takes effect, how do we develop the solutions that lead
to smart water management that are designed to customize to
the local challenges. Eric to your point about water being
(09:55):
hyper localized that enables us to do things like you know,
water filtration and pre treatment systems that are going to
give you a water quality that's fit for use for
the products that you're trying to make. When it comes
to water quality standards, think of a semiconductor plant that
needs ultrapure water to develop their chips. We've also been
(10:21):
a leader in digital and data driven insights when it
comes to water management, and so I for smart water management,
I often think about leveraging tools like the smart water Navigator,
which we're excited by the way. We're coming out with
an AI enabled smart water Navigator in September of this year.
(10:42):
So that's exciting in terms of how AI is helping
us to really enable the tool to be a lot
more predictive when it comes to water risk and water resilience,
and then we use technology. One of the biggest challenges
that we see across all industries is the ability if
(11:02):
you're going to manage or improve your operations when it
comes to water use, you have to do one big thing.
You have to measure water. And so one of the
big things we see is the ability to measure and
submeter water at a within a facility. People know, users
know how water comes into the facility. That usually have
(11:22):
that meter, they know the discharge because you're paying for
that discharge to be treated. But we don't know how
water is being put to use in the critical water
circuits within a facility. So we developed the technology called
waterflow Intelligence that enables us to put smart sensors and
(11:43):
meters in places, so we can actually do a water
map in real time and give the visibility to how
water is being put to use, so you understand where
the leagues are happening, where the opportunities to run your
operations at specification. So these are some of the things
that enable us to help our customers and industry be
(12:06):
better being a water steward.
Speaker 2 (12:10):
Thank you, Milia. And continuing on the conversation of technology
and innovations that equal At provides. The company's three D
trace are technology was described as a breakthrough in industrial
water efficiency, and so I'm curious if you can elaborate
on how this technology functions. You know, what the measurable
(12:30):
benefits are that it delivers and how you know innovations
like the water reuse and cooling systems really position the
company as a leader in addressing water stress across industries
like data centers and manufacturing.
Speaker 3 (12:46):
Absolutely three D tracear is a platform technology for us.
And by the way, the three D is detect, determine, deliver,
and we developed that because we really feel that that,
you know, when three D trace hour was developed over
a decade ago, that the idea of developing a technology
(13:12):
that could monitor in real time twenty four to seven
for any water system within a facility and then be
able to you know, control some of the aspects of
the water chemistry that typically leads water quality and impaired
water quality usually leads to increase water use or quantity.
(13:35):
And so the tool enables us to really have our
finger on the pulse by using connected chemistry, our expertise,
the actionable insights that we get from the digital and
the data that we derive from the different sensors that
are within an operation. Often like to think about, you know,
(13:56):
putting this into a practical example. So we have over
fifty thousand systems connected systems in place around the world,
which is just amazing to think about. And the ability
for us to take say a brewery in the manufacturing
of beer and there's a pat there's a pasteurizer that
(14:21):
typically enables us to pasteurize beer when it comes to
the challenges with bacteria and the pathogens that exist. So
pasteurization is a critical process to delivering the quality of
beer that some of the major brands look to to delivering,
and so we developed a three D tracear for pasteurizers
(14:46):
that enables us to monitor the water quality and also
the beer out temperature. So that beer temperature is a
term used to say in order to get that quality,
we have to hit a desired temperature gradient throughout the process.
So when you bring together the connected chemistry, the water
(15:09):
quality monitoring, the control of the water system, you deliver
a better product for our customers. You deliver optimized cost
because you're saving water and you're saving energy, and you're
actually delivering more productivity because you have less downtime throughout
(15:33):
the process. So I feel that three D tracear has
really opened the doors for us across multiple unit applications
from pre treatment systems to cooling systems, heating system steam systems.
You have meted pasteurizers membrane technology. So we have leveraged
(15:54):
ThReD tracer as really that monitoring control twenty four or
seven real time data platform that really enables the world
to not only save water but also drive business performance
in lower costs. Super interesting.
Speaker 1 (16:12):
So, Amelia, it makes me think, you know, about kind
of where we stand currently in the E s G space,
And obviously here in the States there's a lot of
pushback you know to es G. Some of that is
of course coming from you know, policy makers, but what
we see from kind of investors is increasing demand for
(16:37):
us as researchers and you know other you know es
G practitioners to really kind of make the link between
ESG outcomes and financial returns. So you mentioned some ideas
you know in general about you know, how three D
trace are for example, can can help efficiency and everything
(16:58):
in a brewery. I'm wondering if you could give us
a specific example ultimately of a company that you worked
with and how you know, your services, your products were
able to you know result for that company and improved
you know ESG performance, so you know, probably decreased water use,
decrease energy use, things like that, but then also increase
(17:21):
shareholder value you know, for that company.
Speaker 3 (17:24):
Absolutely. One core principle and philosophy of our company at
Ecolab is to prioritize business and operational performance for the company, right,
And so yeah, I got to share this little bit
of history. Economics Laboratory was the founder's name for our
company over a century ago. Of course, many today associate
(17:47):
ECOLAB with ecological benefits, right, And we learned from a
very the very start that to be successful that you
need to help companies really make the business case to
your point arc to understand the value created by taking
what we often talk about at ECOLAB, helping companies really
(18:10):
make that business case by looking at holistic value in
a way that shows the tangible and non tangible benefits
in investing in sustainability that can positively impact your bottom line.
So we developed over a decade ago this term called
e ROI, which stands for exponential return on investment, and
(18:35):
the output of that framework really has this total value delivered,
this holistic value that we talked about that's monetized in
dollars and cents, because we know we need to speak
the business language for the companies that we serve and
the businesses that we serve, and so TVD really has
(19:00):
three dimensions. It's it's about delivering business outcomes. If you're
a food plant, it's about food safety is paramount, right.
If you're a hotel, it's about guest satisfaction. The second
is operational efficiency. Can you do that by doing more
with less? So for a hotel, it would be you know,
(19:21):
labor is a big cost. How do you drive you
more ways to reduce your labor costs by leveraging digital
solutions for example. A third dimension is environmental impact. Can
I drive business outcomes, operational efficiency and reduce water energy,
greenhouse gas waste. When you monetize those value drivers, you
(19:47):
lead to this total value delivered and we typically talk
about that is the numerator over the investment in the
solutions that you use to drive that benefit. So to us,
that is at the core, it's a core value of
our company. And you mentioned Erica an example, So let's
(20:08):
take a food company. Obviously we mentioned food safety as
paramount for food products. We worked with, you know, you know,
an organization like craft Hinds for instance, where craft Higns
are leading brand that is really focused on not only
delivering high quality processed foods, but also doing that while
(20:33):
achieving their net zero goals right from a carbon perspective,
as well as being you know, viewed as water stewards.
And what they found is that by working with ecoab
ways to really drive and optimize water and energy efficiency.
So examples of technologies I mentioned the three day tracear platform.
(20:58):
There's also something called three D trace our CIP, which
stands for clean in Place, so you can imagine the
cleaning and sanitizing that's needed within a food plant, especially
as you change over from product to product. One of
the things that we know is about somewhere between twenty
five to thirty five percent of the water and energy
(21:19):
that's used in a food plant goes to cleaning and sanitizing,
so CIP is really important. So we developed a digital
automated platform that optimizes the cleaning and sanitization of a
food plant. That supports organizations like craft Hnes, where they
(21:42):
saw benefits not only in terms of water conservation by
actually understanding when they reach their their cleaning surfaces and
how much rinse water you actually need, but also the
amount of hot water or steam that's the to clean.
That led to significant water and energy benefits, which also
(22:06):
helped them reduce their greenouse gas emissions. And the best
part of all, they were able to really get significant
savings along the way because as you know, you save water,
you save energy and you actually reduce your cost because
energy obviously is a very you know, it's it's the
lifeblood of a food plant, but also industry and that
(22:31):
obviously has a significant cost to it. So that's an example,
Eric of how we helped a food plant leverage technology
like three D tracer.
Speaker 2 (22:41):
And you've been sharing so many different products and offerings
that Eco app has, which you've also expanded to quite
a number of industries where it would be quite relevant
and valuable, such as expanding your footprint to high growth
sectors like life sciences, data centers you just mentioned, like food.
(23:01):
What's driving this growth? You know, how is Eco Labs
scaling its presence in these critical industries to capture both
the environmental but also growth opportunities.
Speaker 3 (23:16):
Yeah, no doubt we're seeing the growth in these sectors
you mentioned. I just got back from the World Economic
Forum and the annual meeting in Davos last week, and
without a doubt, if there was one central theme, it
was AI AI AI right, and so artificial intelligence, you know,
(23:36):
which was introduced a year ago, was was still being
you know, people were still getting their heads around it
as business leaders. But this year it was more about
how do we harness the power of AI to really
drive our business performance but also our impact when it
comes to water and energy, and so we saw that
(23:58):
as a central theme this year at DAVO, and without doubt,
you know, the growth of AI and the growth of
power that's needed to support the growth of AI. As
you probably have seen, we're going to see three to
four x the growth in AI, but also the growth
(24:18):
in the power demand and the water needed to support
that power demand, but also the cooling of these data centers.
You mentioned. Life sciences another obviously hyper growth industry as
well when it comes to all the different vaccines and
the different pharmaceutical and cancer saving drugs that we all
(24:42):
are seeing more and more of. So I feel that
this is something that we continue ecolab is at the forefront.
We serve over a million customer locations every day. These
industries are industries that really support the need to really
(25:03):
help businesses today understand how we can help them be
more water resilient. And the reason I say that because
if you think of the complexity that we talked about
at the very beginning around the water crisis going on
to now, we're going to exacerbate that with the demands
of increased AI in the world and how that's going
(25:26):
to then layer on more challenges around water demand that
is basically not available today in areas that businesses and
most of the GDP in the world that are operating
in and so this is a real big challenge for
the world. But we equilab is well positioned to support
(25:50):
the demand with our core business and increasing the efficiency
and productivity that these industries need by saving resources but
also very importantly, you know, saving water, which is obviously
becoming more and more scarce. And so for us, I
think there's you know, I'll use an example for a
data center that we've worked with. You know, co located
(26:13):
data centers are data centers that are outsourced data center
services that are served by companies. So if you think
of the hyper scale data centers like you know, Amazon
Web Services, and you think of Microsoft, and you think
of all these other salesforce, they outsource a lot of
that at times to co located data center companies. We
(26:37):
worked with one big global co located data center where
we're able to support and empower their strategy for growth
of AI by helping them and only can serve but
we use water that enabled them to reduce their water
use by fifteen percent in their data centers. So this
(27:01):
is a real example of how smart water management can
enable life sciences, data centers, food processing facilities really not
only drive their focus on growth, but also resilience. And
this is the key word that came out of Davos reliability.
(27:21):
We need to make sure that obviously the cloud, which
as you know, is very you know, the cost of
the cloud going down is so significant for every minute,
and so reliability of power and water is critical. And
so that's why I often talk about it is about resilience,
(27:43):
but it's also about the reliability that these hyper growth
industries need to really thrive in a water constrained world.
Speaker 1 (27:52):
It's really interesting to hear that water was a central
theme at of VOTs because I think in our world,
you know, water continues and our world being kind of
the issue research space continues to be not necessarily an afterthought,
but climate and carbon uh, you know, energy, a lot
(28:14):
of other topics tend to get a lot more attention. Obviously,
Davos is a very you know, select group of people.
But I'm I'm curious to hear your thoughts Amilio on
whether you ultimately think water is now getting the amount
of attention that it needs given the severity of the problem.
And if it's not, or even if it's not in
(28:34):
certain industries, what role do you think investors can play
in kind of accelerating the shift and getting more attention
to you know, the importance of this topic.
Speaker 3 (28:47):
Wow, that's it. That's a great question. So I often
speak to to shareholders in eco Lab about this very topic,
which is you know, for eco Lab, it's core to
our business strategy and it's awesome. So we're also we serve,
you know, or manufacture in over one hundred facilities manufacturing
facilities around the world, and so we're we operate in
(29:09):
one hundred and seventy countries. So for us, this is
an area that I often talk about as an opportunity
and why water stewardship and I often think about water
stewardship this way. The concept that's really around stewardship being
you know, it's taking care of something we don't own. Right.
(29:33):
Water is a shared resource. And I often talk about
this with investors to say it's incumbenty on Ecolab as
the water leader for industry to also be walking to
talk within our own facilities, and so we do that.
We've established a net positive water impact goal for ourselves,
just like we are advocating and helping our customers with
(29:57):
this concept of net positive water impact. What is net
pods of water impact is saying, how do we give
back to the watershed we're operating more than we're taking
from it? In simple terms, and so that involves, you know,
understanding the shared water challenges and we help our customers
do that. We also do that in our own facilities.
(30:18):
It's also about developing water stewardship principles, so we have
we're a founder in the Alliance for Water Stewardship by
the Way, and that's a standard and certification out there
for industries that takes it down to the local site level.
The third area is areas of how do we do
more with less? Right, it's using the smart management solutions
(30:43):
that I spoke of from ecolab to reduce our demand
for water. And then the last point is how do we,
you know, for basins that are so water stressed, how
do we increase supply? So we are working with organizations
like the California Water Resilience Initiative in the state of California,
(31:05):
for instance, to develop public private partnerships and projects that
enable us to deliver nature based solutions that can improve
the water quality and quantity, so things like reforestation or
regenerate agriculture that are co located when we're operating. This
(31:28):
is a formula for us to really drive what I
consider this net positive water impact that we need to
see in the world because it really enables us to
not only impact our business for the future when it
comes to growth and resilience, but also enables our communities
to thrive in those areas as well. And so investors
(31:49):
really align with that strategy because they understand that it's
going to minimize disrupted assets, which is obviously which keeps
CEOs up night as you know.
Speaker 1 (32:02):
That's interesting you mentioned the internal goal that Eco LEB
has set to be that positive water. I know you've
also set a target of saving three hundred billion gallons
of water annually by twenty thirty. I'm curious to hear
how you're tracking progress towards that goal and how close
(32:25):
you are to achieving that ultimately.
Speaker 3 (32:27):
Yeah, So one of the things that we did in
this next set of the current goals that we're in
but One of the things that we did in twenty
nineteen is we're embarking on what is that long term
ambition for us that ultimately became our twenty thirty impact goals.
At the heart of the of that of that set
(32:49):
of goals, we really developed two tracks. One is to
focus on the customer impact that we're going to have
through the unique business model that ecoleb has developed to
help our customers around water, climate, food and health. And
then we also have our second track of goals, which
(33:11):
is around our leadership within our own operations and enterprise
toward driving water net positive water impact, but also a
net zero strategy. We're in a one point five degree
pathway by twenty fifty and then halfway there by twenty thirty.
So one of the things that we embarked on was
(33:35):
setting up a water impact goal that was really relevant
back in twenty twenty as we were starting a new decade,
and back then we realized that the growth of the
mega trends, specifically the population was growing where we would
(33:55):
see an additional one billion people on the planet by
twenty thirty. Well, when you look at the three hundred
billion gallons of water that we work with our customers
to conserve as an ambition was really centered on the
equivalents of the drinking water needs of a billion people.
(34:16):
So that really became kind of our rally cry right
and so we're proud to say that today we're over
two hundred and twenty six billion gallons saved through twenty
twenty four, and so we're really excited about the fact
that we're, you know, over seven hundred and fifty million
people when it comes to the equivalence of drinking water needs.
(34:37):
And so we're on our way, and the goal is
really centered on the solutions that we help our customers
with around the world, serving one million customer locations, and
we've developed a model that enables us to quantify those
water conservation benefits we help our customers with. And so
(35:02):
our goals really have these three principles. One, how does
it drive our business strategy? Number two, how does that
then have an impact on the planet. Number three, how
does that also have implications to society in terms of
moving society forward. So if we could do those three things,
then we've achieved our.
Speaker 2 (35:23):
Goals and continuing on some of the goals. So I
do think there is a global trend in the growing
Focus and Action towards Water water efficiency. You mentioned your
goal in net positive impact, having a net positive impact
on water, but you're not alone. So two companies you
(35:43):
already mentioned, Microsoft and Amazon Web Services, which obviously used
plenty of water for cooling for their data centers, also
committed to becoming water positive, which for the audience like
that means replenishing more water than you use. But there's
also so like a financing trend, and I alluded to
this earlier in the opening, but in our Water Report
(36:07):
we do talk about how sustainable financing, including green bonds
for water infrastructure, is becoming a key enabler for addressing
some of these water challenges. So wondering, you know, are
their key policies or perhaps incentive structures that have or
will further drive demand for ecolabs products.
Speaker 3 (36:27):
Well, we see that that is a really important element
as we look at where the world is going when
it comes to help its industry has a leading role,
but it needs to be enabled by policy, right, And
I often say that. I mentioned the California Water Resilience
(36:49):
Initiative that was really born from the Water Resilience Coalition,
which is thirty nine companies that came together. The CEOs
have pledged to a net positive water impact and mail.
Some of the companies that you mentioned are as part
of the water resilience collisions like Microsoft, Ecolab. You have
(37:11):
organizations like you know, doal ABMBAV, the Agio, and a
host of other Starbucks and so in many ways, the
work that we have to do is really cascaded down
to the priority basins. And so the Water Resilience Coalition
identified one hundred priority basins around the world that impact
(37:35):
three billion people living in water stress conditions some of
the things that Eric talked about. So for us, the
cascading down to the priority basins. California being what the
number one economy in the US, number five globally, pretty
important economy, right, guess what, it's water stressed. And the governor,
(37:57):
Governor Newsom has put together a plan in twenty twenty
two that it keeps updating year after year that says
the science and climate change tells us that there's going
to be a ten percent deficit when it comes to
water supply in the state of California by twenty forty.
So the California Water Resilience Initiative was born from that
(38:18):
call to action. How does the industry work together to
develop those public private partnerships and the policy but also
the nature based solutions that we need to drive those projects.
But mel I want to get to your point about
what are some examples of those policies. One that wethink
is really really important, think of the urban areas like
(38:39):
La San Francisco and other places Sacramento is the ability
for us to really leverage what it's just so ironic,
but the concept of what they call in California the
purple pipe. Purple pipe is a is a label for
what is essentially graywater, non potable wa water that can
(39:01):
be used where it's fit for purpose, meaning that you
know not you know, when it comes to water and
golf courses, you may not need Christine clean drinking water,
you know, powdable water for you know, water and golf courses.
Why not use non poddable water. And so developing the
infrastructure that we need to support the reuse of that
(39:24):
water is huge. It enables us to really help businesses
with another source that doesn't compete with the fresh water
that the local community is dependent on. So that to
me is a really big policy opportunity for us now
not just in California, but all over the world.
Speaker 1 (39:46):
That's really interesting. Maybe just one final question to me
kind of taking a look ahead. Obviously we've talked about
the fact that you know, water risk is intensifying. We talked,
of course in respect to you know Davos, that AI
and the associated energy demand and the you know, water
demand associated with energy is really kind of driving a
(40:07):
lot of the conversation. I'm curious to hear your thoughts
kind of looking ahead as to where you ultimately see
you know, the most interest going forward from an eco
lab perspective, What are you know, some of the emerging
technologies that you might be working on, and what are
some of the other industries that you are really targeting
(40:27):
in terms of helping them improve you know, water efficiency.
Speaker 3 (40:33):
Wow, I As you know, the demand for energy increases
and so does the demand for water, and so this
is obviously true for AI and and these you know,
what I call water and energy intensive industries that require
technology to help us really manage but also build the
(40:56):
resilience and the and the growth that they need to
see in the future. And so our investment is really twofold.
One is we feel that AI does have you know, this, this,
this this impact when it comes to increased demand for
water and energy, but it's also an opportunity. It can
(41:19):
transform the way we manage water and so eco app
has been a leader in developing digital solutions that lead
to smart water management. We talked about three D tras
as an example. Water flow intelligence is another example. So
for us, it's how do we use that and harness
that so we can be more predictive, And it's at
(41:41):
two levels. One operationally, how do we find ways to
make water go from linear to more circular? Right because
right now we live in a world where it's flush
and forget and that that's not sustainable. So we need
to think about how we close the loop within industry
(42:06):
to really reduce reuse and reclaim water that enables us
to reduce the freshwater demand. The second is to use
AI to become more predictive within the basin that that
site operates in. And that is important because today, up
to now, it's been very static. We have you know,
(42:28):
fifty year old data and historical data that's very static.
What we need to do is take all the satellite data,
all the weather patterns, all the data sets from NASA
and other you know, the European Base program, to understand
how we can leverage this data to be more predictive
(42:50):
with the help of AI. That enables us to understand
what the water demand will look like and supply over one, two,
three years from now. That's where it becomes. And that
includes water quality, by the way, because we know that
water quality is a driver toward water quantity and demand,
(43:12):
so that to me is a Those are some of
the things that we see coming ahead of us as
an opportunity for ECOLAB to really differentiate ourselves in the market,
to help the world really manage the scarce resource which
is often forgotten while we deal with the climate crisis
in the world.
Speaker 1 (43:31):
That makes great sense, and certainly the idea of making
water taking it from linear to circular, it makes sense. Emelio,
thank you so much for taking the time to join us.
I think the conversation was fascinating. I certainly learned a lot.
Speaker 3 (43:46):
Thank you, Eric, and thanks Mel. We really appreciate you
having ECOLAB and myself on this call today. Wonderful.
Speaker 1 (43:55):
So you can find more information on water, including the
deep Tive report that we recently published and other key
ESG topics by going to the Environmental Research section on
the ESG team dashboard, by entering BI Space ESG go
on the Bloomberg terminal, and as always, if you have
an ESG quandary or burnie question you would like to
(44:15):
ask bi's expert analysts, send us an email at ESG
Currents at Bloomberg dot net. Thank you so much, and
we look forward to the next episode.
Host
Eric Kane
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