The business impact of climate change and water scarcity

The recent dry spell exposed Ireland’s growing vulnerability to water scarcity, highlighting the importance of water resilience planning in business, writes Michelle O’Donnell

Following Ireland’s recent prolonged spell of dry weather, many welcomed the rain—a much-needed relief for our landscapes and water supplies.

The early onset of warm weather lifted spirits across the country and brought joy to many, with beach trips, picnics and barbeques filling our days.

This dry period also highlighted the threat posed by water scarcity, however, an increasingly pressing issue that can no longer be ignored.

While dry spells may seem like mere seasonal fluctuations, their increasing frequency and severity is, in fact, a symptom of climate change.

In Ireland’s Climate Change Assessment, published in 2023, the Environmental Protection Agency reported a noticeable rise in Ireland’s winter rainfall since rainfall records commenced in 1850.

Conversely, summer rainfall has continued to fall since 1850, the report found.

Ireland’s recent dry spell meant that most of the country was placed on a watch or drought warning by the European Drought Observatory.

For households, this extended to water conservation orders via hosepipe bans in some areas.

For businesses, however, issues relating to water scarcity are becoming more challenging.

There is now an urgent need for Irish businesses, particularly those that rely heavily on water, to take immediate action to future-proof their operations.

The illusion of abundance

Ireland has long enjoyed a reputation as a water-rich country. This perception is, however, outdated.

The eastern part of the country, especially the Greater Dublin Area (now classified as a water-stressed region), is facing a challenging water landscape with outdated infrastructure, a growing population and increasingly unpredictable climate.

Seasonal variability also plays a significant role as rainfall in Ireland is not evenly distributed throughout the year, with much falling in the west despite higher demand in the east.

The combination of lower rainfall and storage capacity, coupled with higher population-driven demand in the east, puts severe pressure on already fragile water systems.

To ensure long-term water security, Uisce Éireann is in the process of implementing the National Water Resources Plan (NWRP), a 25-year strategy aimed at establishing safe, secure and sustainable water supplies.

The NWRP incorporates a drought management plan and provisions for the development of regional plans to address local needs and advance infrastructure projects.

Many of these planned activities will take several years to come to fruition, however.

According to the Environmental Protection Agency, Climate Ireland and Uisce Éireann, the Greater Dublin Area has very limited capacity in its water supply system—in the face of drought, there is little buffer.

For households, this means water conservation will be essential to counter the effects of prolonged dry spells and water shortages or restrictions.

For households and rural farms using private water supplies, the impact of drought could be much more significant, resulting in loss of water supply, health risks posed by potential contamination from backflow events, or damage to appliances if groundwater pumps burn out, leading to costly repairs.

For companies, future droughts could translate to operational risk, reputational risk and supply chain disruption.

Many companies have rightly identified water as a material environmental, social and governance (ESG) issue. There is a gap between identifying materiality and acting on it, however.

The latest dry spell is a wake-up call for businesses who should now ask themselves these critical questions:

  • Have we completed a water audit?
  • What is the redundancy in our water supply systems?
  • Have we evaluated our site-level water risks—both direct and indirect?
  • Is there a water resiliency or drought management plan in place?
  • Do we have supplier engagement and contingencies for water disruptions?
  • Are we investing in water efficiency, reuse or rainwater capture?

If the answer to these questions is unclear, now is the time to act.

With the duration of dry spells expected to increase, companies must evaluate their approach to climate risk, bearing in mind that resilient companies will treat water as a finite, strategic resource.

Water consumption and conservation are no longer compliance issues. They have become real and material concerns for businesses reliant on water to sustain operations.

Resilience planning considerations

Forward-thinking companies are moving beyond compliance and reporting and adopting a more proactive approach, incorporating scenario planning, resiliency investments and community engagement. Some key next steps businesses should consider here include:

  1. Assessing water dependency—Evaluate your operations to understand the extent of your reliance on water and identify critical points of vulnerability.
  2. Developing a water conservation and drought management plan—Establish protocols to conserve water during normal operations and manage water use during periods of scarcity, ensuring business continuity.
  3. Engage with stakeholders—Collaborate with local authorities, suppliers and the community to develop integrated water management strategies.
  4. Monitor and report—Regularly track and report your water usage aligned with your ESG goals.

As the impact of climate change becomes more pronounced, the time for complacency is over.

Businesses must prioritise water resilience as a core component of their strategic planning.

By taking proactive steps now, companies can safeguard their operations and contribute to a sustainable future for our communities and the environment.

Michelle O’Donnell is Climate Change and Sustainability Services Director at EY