As the global water crisis escalates, procurement is increasingly recognised as a pivotal force in corporate water stewardship. Traditionally viewed as a function centred on cost and compliance, it is now being redefined in water-intensive sectors such as fashion, agriculture and technology, where sourcing decisions directly influence watershed health and resource resilience. With water scarcity identified by the United Nations as one of the most urgent global risks, companies are being forced to rethink how and where they source their materials, how much water is embedded in their products, and whether their supply chains are contributing to depletion or regeneration.
The stakes are high. According to the UN World Water Development Report 2024, global freshwater demand is expected to exceed supply by 40 percent by 2030. Industrial water use, which currently accounts for 20 percent of global withdrawals, is set to rise significantly if procurement and production practices remain unchanged. The question is no longer whether companies should respond to water risk, but how fast and how radically they can do so.
Procurement and the Hidden Cost of Water
Water is often invisible on a balance sheet. Known as “embedded” or “virtual” water, it refers to the volume of water used to produce goods and services throughout the supply chain. A single pair of jeans can require up to 10,000 litres of water to produce, from cotton cultivation to dyeing and finishing. While most of this water is consumed upstream, the impact extends into the use phase as well. Denim garments typically require more frequent washing and retain more water per wash than lighter textiles, adding significantly to their overall water footprint over time.
In agriculture, which accounts for around 70 percent of global freshwater withdrawals, procurement choices directly affect watershed health and the livelihoods of farming communities. For example, procuring almonds from water-scarce California or sourcing avocados from regions facing severe drought can exacerbate local water stress, creating environmental and social risks that ripple back to brands.
Fashion: From Runway to Riverbank
The fashion industry has emerged as one of the most water-intensive sectors globally. In response, leading brands are beginning to integrate water criteria into their procurement frameworks. Levi Strauss & Co. has implemented its “Water<Less” programme, which uses up to 96 percent less water in finishing processes. More importantly, the company has revised supplier contracts to reward water stewardship and penalise wasteful practices.
Meanwhile, the Sustainable Apparel Coalition has updated its Higg Index to include more robust water use and pollution indicators, allowing procurement teams to compare suppliers not just by price or speed, but by water performance. Some companies have also begun prioritising materials like organic cotton, recycled fibres and low-water dyes that can reduce water footprints at the sourcing stage.
Agriculture: Procurement Meets Regenerative Practices
In agriculture, the focus is shifting from efficiency to regeneration. Nestlé, for instance, has committed to sourcing 20 key ingredients through regenerative agricultural methods by 2025. This includes practices that improve soil health, increase water retention and reduce irrigation needs. Procurement teams are now co-designing contracts with farmers that include shared water management goals and provide financial incentives for sustainable practices.
Another example is Unilever’s Sustainable Agriculture Code, which sets out specific water management requirements for suppliers. The company uses satellite data and on-ground assessments to monitor compliance, integrating this data into procurement decisions to prioritise suppliers who invest in water-saving technologies such as drip irrigation and rainwater harvesting.
Tech Industry: Dry Chips, Wet Footprints
The technology sector presents a paradox. While the digital economy seems immaterial, the manufacturing of semiconductors is extremely water-intensive. A single chip can require thousands of litres of ultra-pure water to produce. With major fabrication plants located in water-stressed regions such as Taiwan and Arizona, procurement strategies are under scrutiny.
Intel, which operates some of the world’s largest chip fabs, has committed to achieving net positive water use by 2030. This includes investing in on-site water recycling and supporting local watershed restoration. Procurement teams now evaluate suppliers not only for cost or capacity, but also for their ability to recover and reuse water.
Microsoft has also restructured its procurement strategy to meet its ambitious water-positive goal by 2030. The company demands that suppliers disclose water usage data and contribute to local water replenishment projects, especially in high-risk regions.
Emerging Tools: Water Risk Mapping and Data Disclosure
New technologies are helping procurement teams identify and manage water risks across complex supply chains. Tools such as the WWF Water Risk Filter and WRI’s Aqueduct help map water stress, pollution and regulatory risk at the basin level. These insights can be linked with procurement software to automatically flag high-risk suppliers or regions, enabling buyers to diversify sourcing or invest in mitigation.
Mandatory water disclosure is also on the rise. The Carbon Disclosure Project (CDP) now collects corporate water data from over 3,300 companies, allowing procurement teams to benchmark suppliers and integrate water metrics into supplier scorecards. Companies failing to report or acting irresponsibly are increasingly subject to investor pressure and consumer backlash.
From Compliance to Stewardship
This shift represents a profound evolution in the role of procurement. It is no longer sufficient to tick boxes or comply with local laws. True water stewardship means recognising that water is a shared resource, not a private commodity, and acting accordingly. That requires procurement leaders to collaborate with suppliers, governments and NGOs to protect watersheds, restore ecosystems and support community resilience.
This is beginning to take shape in initiatives like the Alliance for Water Stewardship (AWS), whose certification is now used by companies such as Diageo and Ecolab to verify responsible water practices across sites and suppliers. Procurement teams use AWS standards to guide supplier onboarding, performance review and contract renewal.
Why Now: The Risk of Inaction
The UN has made it clear that inaction is no longer an option. As water scarcity becomes more acute, companies that fail to adapt risk operational disruptions, reputational damage and regulatory penalties. In March 2023, for instance, French authorities ordered the closure of several water-intensive industrial operations in response to unprecedented droughts. Similar actions could follow elsewhere.
There is also growing momentum around climate litigation and human rights due diligence. With the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) expected to enter into force soon, procurement decisions that contribute to water stress may lead to legal exposure. Companies will be required to demonstrate that their supply chains do not infringe on the right to water, now formally recognised by the United Nations.
Blue is the New Green
The future of sustainable procurement lies in embracing water not as an afterthought, but as a central consideration in how and where goods are sourced. From cotton fields in India to chip plants in Arizona, procurement has the power to shape the future of water. If climate change is the fire, water scarcity is the fuel. And unless procurement strategies are restructured, the next great conflict may not be fought over oil or land, but over something far more elemental: water.
Sources:
UN Water (2024). World Water Development Report 2024. https://www.unwater.org/publications/un-world-water-development-report-2024
Sustainable Apparel Coalition. The Higg Index. https://cascale.org/tools-programs/higg-index-tools/https://cascale.org/tools-programs/higg-index-tools/
Microsoft. Water Positive by 2030. https://www.microsoft.com/en-us/corporate-responsibility/sustainability/water-replenishment?msockid=17bbcb7c53bd69f53a3bdd6352f0684d
WWF Water Risk Filter. https://riskfilter.org/
WRI Aqueduct. https://www.wri.org/aqueduct
CDP Water Security. https://cdp.net/en/disclose/question-bank/water-security
European Commission. Corporate Sustainability Due Diligence. https://commission.europa.eu/publications/proposal-directive-corporate-sustainability-due-diligence-and-annex_en
