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Claire Carlson ’23 was a 2022-23 Environmental Ethics Fellow with the Markkula Center for Applied Ethics. Views are her own.
Improper dumping and waste disposal from corporations impacts the availability and quality of the water supply in the United States. The EPA regulates 94 chemicals in drinking water sources, but does not set standards for many others that still could be dangerous and harmful to consumers living near these sources [1]. The drinking water of more than 244 million people in the U.S. contains contaminants that can be linked to industrial practices that are not currently regulated [1]. Furthermore, industrial sites that cause increased water pollution are more likely to be located near low-income and minority communities generally due to a lack of political clout or financial means to fight back against the creation of such sites [1].
This article will use the ethical lens of the common good to explore the responsibility of corporations to address and mitigate their water pollution so as to ensure clean water for all communities. It will analyze how corporations in the U.S. have profited at the expense of the environment and local communities, why corporations have a responsibility to decrease their water pollution and mitigate damages, how responsible water management can benefit corporations as well as all other stakeholders, and specific ways corporations can effectively decrease their pollution and preserve water resources.
The ethical lens of the common good is useful for analyzing the obligation of corporations to adopt sustainable water practices. According to the Markkula Center’s six ethical lens, the Common Good lens emphasizes the mutual concern for the shared interest of all members of a community. The lens consists primarily of having the social systems, institutions, and environments on which we all depend to work in a manner that benefits all people[2]. The welfare of all can be achieved by caring for our shared environment and honoring the concerns and wellbeing of all members of a community and not just a corporations’ profits. Potential complications that may arise from pursuing the Common Good are the free-rider problem and the unequal sharing of burdens.
The free-rider problem arises because the benefits of a common good are available to everyone, even those who do not do their part to maintain the common good[2]. For example, an adequate water supply is a good from which all people benefit, but everyone must conserve water to ensure this adequate supply. The free-rider problem explains that some people may be reluctant to do their share of conservation since they know that as long as other people conserve they can enjoy the benefits without changing their own consumption habits.
The unequal sharing of burdens explains that a common good often requires that particular individuals or groups bear costs that are greater than those borne by others. Maintaining unpolluted water might require that firms install costly pollution control devices which could undercut profits and make firms less likely to adopt conservation measures. The free-rider problem and unequal sharing of burdens can hinder the adoption of common good practices. These issues can be seen in corporations’ lack of responsibility for the environmental problems they are creating.
Corporate profits often grow at the expense of the environment, natural resources, and neighborhoods in close proximity to their operations. Profitability is not sustainable when business growth exceeds the natural capacity of the environment to fuel growth. When formulating strategies for long-term viability, businesses should consider profitability, the health of local communities, and sustainability; and understand the relationship between the three on a global scale[3].
Properly designed environmental regulations can motivate firms to innovate while reducing their consumption and negative environmental impact. However, we cannot rely completely on government regulations, so companies should act from their own volition. Corporations have a responsibility to support policies that protect water as well as address water issues within their own operations. A key challenge when addressing the water crisis is that corporations may be blind to the business risks posed by water scarcity and pollution[4]. All businesses rely on water to sustain their operations, so they should be proactive in developing plans to conserve water. These plans can help a corporation’s supply chain while also promoting common good ethics principles.
Aside from their responsibility, corporations should pursue sustainable water practices because it can be beneficial for their bottom line and longevity as a company. The common good includes the well-being of the corporation, its employees, and other stakeholders. Two-thirds of businesses have substantial risk in their direct operations or in their value chain which will continue to grow as water stress increases[5].
Business threats related to water can be: operational resulting in increased production costs, product-related when consumers change their preferences to more sustainable products, financial due to investor preferences, reputational when businesses lose favor with the local communities they are polluting, and regulatory due to costs from fines[5]. Aside from the threat to supply chain efficiency, there are opportunities for businesses to make money from managing water risk and pollution which should make conservation an attractive option.
These opportunities include new revenue streams and increased access to capital and profits as investors want to see that the companies they invest in are managing water risks[4]. Consumers have repeatedly spoken and shown through their purchasing habits that they prefer companies that respect the environment and have sustainability initiatives[5]. And a study from the Journal of Business Ethics found that shareholders react more positively to responsible water actions from firms, and react negatively to poor CSR performance, or water actions[6]. While corporations do have a responsibility to conserve water throughout their supply chain and mitigate water pollution for the sake of the common good, there is financial incentive that can help motivate them to take action. The common good is common to everyone, including the corporation, so the corporation will benefit from its own good actions.
As corporations respond to their responsibility in protecting the water and communities around them, there are many potential solutions they can implement to clean up their supply chain. The first solution is to reduce water consumption in general. There are technologies (such as AI and remote sensing) that can be used to precisely measure water consumption throughout a supply chain[7]. Companies can also estimate their current and future operational risk based on climate forecasting, population growth, increased water demand, and natural disasters which can help them make better informed decisions about water consumption[7].
Another solution is for businesses to avoid clean water waste and leakages. Companies can invest in machine-learning technologies that help predict pipe bursts, pressure changes in distribution lines, sewage clogging, and storm overflows which can reduce the losses associated with accidents, spills, and pipe bursts[7]. Investment in water infrastructure and other interventions can help secure long-term productivity while also helping companies preserve their reputation[7]. Comprehensive plans for improving sustainable practices should include concrete ways to promote the common good of all stakeholders.
Corporations should also focus on preventing future risk through strategic planning initiatives. It is imperative that businesses navigate risks related to water and have a better understanding of the impact of water on their operations, products, and services. In strategic planning, corporations should make sure their plan is data driven, internalized and dispersed throughout the organization, and engages external stakeholders to provide a space for creating community-based solutions for water management[3]. Furthermore, water management plans should promote public discourse by being transparent because public pressure and negative publicity created by information disclosure can force negligent companies to change their policies and operations[3]. Creating comprehensive plans for water pollution prevention is of the utmost importance for corporations and can lead to a safer water source for surrounding communities impacted by corporate actions.
Much of the pollution to water streams is a result of corporate negligence or business practices and it is, therefore, the responsibility of corporations to take measures to alleviate the damage to waterways. Corporations have an increased incentive to conserve water because it is vital for the success of their supply chain, operations, and overall profitability. Furthermore, consumer demand favors companies that have demonstrated commitment to conserving natural resources and being environmentally friendly.
There are many ways for companies to conserve water and limit pollution that will help them as well as support the common good of surrounding communities. Corporations ignore the common good when they place more importance on profits and disregard the communities, employees, and environment that they are harming. By conserving water and mitigating pollution to water streams, corporations will be helping those around them while also making a profit as shareholders and consumers begin to prefer companies that invest in environmental initiatives. As companies begin to take action, it is imperative that they involve the input of all stakeholders in their decision making to ensure all needs are addressed. By keeping the common good at the forefront of their operations, corporations will be able to provide value for their shareholders, employees, surrounding communities, and the environment.
Works Cited
[1] News21 Staff, Jasmine Spearing-Bowen and Karl Schneider. “Industrial Waste Pollutes America's Drinking Water.” Center for Public Integrity, 21 Dec. 2021. .
[2] Santa Clara University. “The Common Good.” Markkula Center for Applied Ethics.
[3] “Water and Corporate Responsibility: What Can Companies Do?” ADEC ESG.
[4] Sarda, Bruno. “Companies Blind to Risks of Water Pollution and Scarcity, and the Untapped Opportunity to Address It.” GreenBiz, 11 May 2020.
[5] Hundertmark, Thomas, et al. “Water: A Human and Business Priority.” McKinsey & Company, McKinsey & Company, 5 May 2020.
[6] Afrin, Peng, et al. “The Wealth Effect of Corporate Water Actions: How Past Corporate Responsibility and Irresponsibility Influence Stock Market Reactions” Springer. 21 June 2021.
[7] Pupo, Marilia. “Cognizant Brandvoice: How Businesses Can Address the Water Scarcity Crisis.” Forbes, Forbes Magazine, 25 Feb. 2022.