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GE program helps firms figure out water risk

Marketplace Staff Dec 21, 2010

GE program helps firms figure out water risk

Marketplace Staff Dec 21, 2010


STEVE CHIOTAKIS: The United Nations says over the next decade, water demand on the planet will exceed supply big time. With a profound effect on business. This year, environmental and corporate think tank the World Resources Institute, along with General Electric and investment bank giant Goldman Sachs have teamed together to offer a Water Index.

Jeffrey Fulgham is Chief Sustainability Officer for GE Water and Process Technologies. And he’s with us now. Good morning sir.

JEFF FULGHAM: Good morning, Steve.

CHIOTAKIS: What kind of information would go into this so-called water index?

FULGHAM: What we look at is water risk across the board, and it’s the physical risks of enough water available to run your operation or to meet the needs of the population. There’s water quality risks, regulatory risks, financial risks to your operation. So what we do is take into account all of these broad factors and try to bring those all together to try to determine what is the risk in a given geography.

CHIOTAKIS: Why haven’t we done this before?

FULGHAM: Up until recently, water has been pretty much ignored. And I think what’s been happening over the last decade or so, we’re reaching a point where the demand for water is exceeding the supply. So it’s really finally raising into the public’s consciousness.

CHIOTAKIS: So how might water risk play out for a company?

FULGHAM: So, for instance, a beverage manufacturer that might have 1,000 plants around the world wouldn’t necessarily have water risk issues at every one of those sites. But if you’re going to site a new soft-drink plant in the north of China, major water risk there. There isn’t enough water, so severe water scarcity issues, and the quality of the water that is available is pretty tough shape.

CHIOTAKIS: You know what, Goldman Sachs is one of the partners in this endeavor. It’s a really big bank, made a lot of money during the financial crisis. Does that, you think, diminish the credibility here? That maybe, I don’t know, greed could get in the way?

FULGHAM: I certainly hope not. I think Goldman has been a big supporter from the beginning. So I hope that it’s not looked as greed or any other motivator, other than to try to better understand what are the risks, in a given geography, of an investment in that area.

CHIOTAKIS: Well their objective is to make some money too, right?

FULGHAM: Absolutely.

CHIOTAKIS: How do you budget for this? Companies are already trying to come out of a Great Recession. Wouldn’t this just add new costs?

FULGHAM: Well, yes and no. The good news is that for many companies that are proactive around managing their water risk, it actually has a pretty strong payback. We truly believe that green is green. Doing the right thing for the environment also provides a strong economic return.

CHIOTAKIS: Jeff Fulgham over at GE Water & Process Technologies. Jeff, thanks.

FULGHAM: Thank you very much, Steve.

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