Water responsibility as corporate due diligence?

Water is a key resource. In many countries and regions of the world, water is scarce and/or polluted. Global warming will exacerbate water shortages in many places.

This research project investigated how the negative impacts of global supply chains on water resources can be addressed through corporate due diligence. To this end, a literature review and eight expert interviews with stakeholders from business, civil society and the public sector in Germany were conducted. The focus was on the legal framework for corporate due diligence, in particular the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) and the Corporate Sustainability Due Diligence Directive (CSDDD), operational implementation practices and good practices in water management. The analysis indicates that water has so far been of little strategic importance in the supply chain management of German companies. Although the LkSG is seen as an important catalyst for sustainable supply chains, the requirements to date fall short of increasing the pressure to act on water protection. The effectiveness of legal due diligence obligations can be strengthened by a broader scope of application, civil liability and extension to the entire supply chain. At the same time, companies face key challenges in implementing water risk management that hinder water protection, such as insufficient data transparency, limited influence on suppliers, lack of cooperation with other actors in their industry and water catchment areas, and the dynamics of constantly changing legal requirements.

Effective water protection therefore requires both a reliable and manageable legal framework and stronger cooperation within each industry and in water catchment areas. The report formulates practical recommendations for stakeholders from business, politics and civil society. Specifically, it recommends that the German government maintain and strengthen legal due diligence requirements as an important step towards sustainable supply chains. Clear, reliable and uniform rules create a level playing field and contribute to planning security for companies.

(Study in German only)