Water Scarcity: A Business and Human Rights Risk

On September 17, 2026, the World Meteorological Organization published its annual report on the state of global water resources, confirming that global terrestrial water storage has been in continuous decline since 2014–2016, with 2025 ranking among the three driest years for the world’s rivers in thirty-five years of data. This directly affects companies, whose activities depend at every stage of their value chains on stable access to water, creating two linked risks: a supply-chain disruption and a threat to the human rights of local populations.

A decline in the resource that is now documented and measurable

The WMO report is not an isolated alarm. Since 2022, the organization has published an annual quantitative assessment of global water resources, built on satellite and hydrological data. The 2023 edition already recorded five consecutive years of below-normal river flows and reservoir inflows, along with the largest glacier mass loss in fifty years, while noting that 3.6 billion people were facing water shortages at the time — a figure the report projected to exceed 5 billion by 2050.

The 2026 edition, covering the year 2025, confirms and deepens this picture. WMO Secretary-General Celeste Saulo described a hydrological system becoming increasingly erratic and unpredictable under the effects of climate change, with glaciers retreating across every region of the globe and groundwater levels in multi-year decline in many areas. The organization distinguishes the fast-moving components of the water cycle — precipitation, river flow, soil moisture, which respond to weather within days or weeks — from the slow reserves, glaciers and groundwater, which have traditionally acted as a form of natural savings for the planet and which the report shows being depleted year after year.

This scientific diagnosis is echoed by other international institutions. According to UN-Water, only 0.5% of the water present on Earth is directly usable and available as freshwater, a share that climate change continues to erode. On the side of global economic risk, the World Economic Forum launched a dedicated initiative in 2026, the “Year of Water,” after the United Nations described a situation of “global water bankruptcy”, with cascading health, social and economic consequences. The Forum’s Global Risks Report 2026 confirms that extreme weather events rank among the most severe risks identified by more than 1,300 experts and decision-makers surveyed worldwide, with water scarcity standing as one of the most concrete manifestations of this climate instability for local economies.

This structural decline changes the nature of the issue for company leadership. Water is no longer just an operational cost line or a one-off environmental compliance matter: it is becoming a strategic resilience variable, on par with energy or critical raw materials, with direct consequences for business continuity.

A concrete business risk: the threat to supply chains

For a company, water scarcity translates very concretely into a risk of supply disruption. Three categories of activity are directly exposed: industrial and agricultural sites located in already-stressed water basins, agricultural supply chains whose yields depend on rainfall and irrigation, and international subcontracting chains, often based in areas where competition for water between industrial, agricultural and domestic uses is most intense.

This risk mapping is no longer theoretical: it is now equipped with dedicated tools. The World Resources Institute’s Aqueduct Water Risk Atlas allows companies, investors and governments to map water risks — water stress, precipitation variability, drought, flooding — at the local level, anywhere in the world, and now offers analytical features specific to agricultural supply chains. A WRI update already found that a quarter of the world’s population lived in countries facing “extremely high” water stress, and the latest version of the tool, Aqueduct 4.0, integrates thirteen water risk indicators spanning quantity, quality and reputational concerns, with projections out to 2030, 2050 and 2080. This ecosystem of resources also includes the CEO Water Mandate, an initiative under the UN Global Compact, which promotes the use of Aqueduct as a reference for measuring and reporting on geographic water risk among large international groups.

Financial markets are progressively integrating this dimension. The CDP disclosure framework has for several years included a dedicated water security score, separate from its climate and forests scores, and its 2026 edition tightens requirements around regulatory compliance, pollutant management and alignment with science-based freshwater targets. This evolution reflects a growing expectation from investors and customers alike: to precisely know a company’s exposure to water risk, both at its own sites and across its entire value chain.

Field experience confirms the scale of the challenge for international agricultural supply chains. In the coconut sector, programs combining carbon sequestration with higher incomes for smallholder farmers initially grew out of major concerns raised by industry stakeholders about the need to identify an agronomic pathway — provided by Ksapa — capable of improving production under water stress. More broadly, Ksapa argues that boards of directors today need sufficient expertise and networks to grasp water-related risks and opportunities on the same footing as climate, biodiversity or human rights, at the level of the operations they oversee. This systemic approach, linking responsible water management, decarbonization and efforts against deforestation, sits at the core of Ksapa’s sustainability consulting methodology, where water now ranks among the priority issues assessed to help companies and investors sequence their risks.

The message sent by these different frameworks converges: ignoring water risk means exposing the company to production interruptions, higher supply costs, or even the loss of access to certain production basins — with direct consequences for financial performance and reputation.

This convergence also changes how procurement and supply chain teams operate day to day. Mapping water stress by basin is only a starting point; the harder task is translating that map into supplier engagement, capital allocation and contingency planning. A site rated as facing “extremely high” baseline water stress under the Aqueduct methodology is not automatically a site to exit — but it is a site that warrants closer monitoring, contingency sourcing, and, where relevant, joint investment with suppliers and local authorities in water efficiency or shared infrastructure. Treating water risk as a checklist item rather than an operational variable is precisely what leaves companies exposed when a drought, a regulatory restriction or a community dispute disrupts a site they had assumed was secure.

A human rights risk that due diligence obligations require companies to manage

Beyond its operational dimension, water scarcity raises a responsibility that extends beyond a company’s own economic interest. When an industrial site or agricultural operation draws a significant share of the water available in an already-stressed basin, it potentially competes directly with local communities’ access to drinking water, sanitation and livelihoods — rights recognized as fundamental by the United Nations.

This link between economic activity and human rights sits at the heart of the international reference framework on the subject. The UN Guiding Principles on Business and Human Rights, unanimously endorsed by the Human Rights Council in 2011, set the global standard for preventing and addressing human rights harms linked to business activity, resting on three pillars: the state duty to protect, the corporate responsibility to respect human rights, and access to remedy for affected individuals. Access to water, as a condition of survival and dignity, falls squarely within the scope of these principles, alongside working conditions or the safety of communities living near production sites.

Applying this framework to water specifically means going beyond a general commitment to human rights and identifying, basin by basin, where a company’s own withdrawals or those of its suppliers could plausibly reduce the water available to nearby households, farms or ecosystems. That assessment cannot be outsourced entirely to a physical risk tool: Aqueduct and similar atlases describe hydrological stress, but they do not on their own reveal whether a specific community depends on the same aquifer as a nearby factory, or whether a planned expansion would tip a shared resource into scarcity. Closing that gap requires direct engagement with local stakeholders, a step the UN Guiding Principles treat as inseparable from the corporate responsibility to respect human rights.

In Europe, this voluntary framework is now reinforced by binding legal obligations. Ksapa has tracked the recalibration of the EU’s corporate sustainability due diligence directive (CSDDD), noting that translating the provisional agreement’s requirements into effective programs demands specialized expertise, deep value chain knowledge and proven stakeholder engagement methodologies, as companies are required to identify, prevent and remedy human rights and environmental harms across their entire value chain — not only their own operations. Water management, whenever it affects local communities through excessive withdrawals, groundwater pollution or competing uses, falls directly within the scope of this due diligence obligation.

This obligation is not a documentary compliance exercise. As Ksapa argues in its work on stakeholder dialogue, effective due diligence requires companies to move beyond audits and codes of conduct, engaging directly with the workers, communities and suppliers affected by their operations to build legitimate, credible remediation processes, rather than relying solely on defensive, reputational risk management. This logic of active remediation echoes the priorities Ksapa identified as early as 2021 for the sustainable transformation of business and finance, which already placed water and biodiversity stewardship among the priority areas alongside climate and the circular economy.

For companies exposed to water-stressed basins — whether at their own production sites or through tier-1, tier-2 or tier-3 suppliers — managing water risk therefore requires a dual approach: precisely mapping the physical water-stress exposure of each site and each critical supplier, and assessing the potential impact of these withdrawals on the human rights of neighboring communities, particularly their access to drinking water and sanitation. This is the logic behind Ksapa’s business and human rights consulting practice, which supports clients in developing robust due diligence processes designed to protect people while preserving business competitiveness, through compliance programs aligned with fast-evolving regulatory landscapes and sector benchmarks.

Conclusion

The WMO’s 2026 report confirms a long-term trajectory: the planet’s freshwater reserves are declining, and this trend is accelerating under the effects of climate change. For companies, this is no longer a distant environmental responsibility issue: it already translates into a concrete risk of supply disruption at production sites and across agricultural supply chains, and into a growing due diligence obligation toward the human rights of communities that share access to the same resource. Companies that map their exposure today, that integrate water into their due diligence plans, and that build concrete solutions with their suppliers and local communities will gain a head start — both in operational resilience and in meeting their legal obligations.

Water risk combines three timeframes that leadership teams must now manage together: the scientific urgency revealed year after year by WMO reports, the economic urgency reflected in mapping tools like Aqueduct and disclosure frameworks like CDP, and the accountability urgency set out by the UN Guiding Principles and European due diligence regulation. Ignoring any one of these three dimensions leaves the company exposed to a residual risk that neither of the other two can fully cover. Conversely, an integrated water strategy — combining the mapping of critical basins, dialogue with local communities and concrete remediation plans on the ground — turns a systemic risk into a lasting resilience advantage, both for the company and for the territories where it operates.

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