Infosys: Mitigating water risk at India-based hubs
For over 15 years, Infosys - provider of business consulting, IT and outsourcing services - has maintained a plan to mitigate its operational risks related to water supply. Collaboration between the enterprise risk management (ERM) and sustainability functions enables Infosys to address risks at the facility-level while conducting overall monitoring activities at the enterprise level. Implementing measures to save and monitor water availability makes Infosys a steward of its environment while also delivering value to its business and its stakeholders.
Risk of water scarcity
Infosys employs more than 200,000 people at 116 global development centers, with 40 of its largest in India.1 The rapidly growing Indian population and increased demand for water resources has created a growing concern over water availability in the country. Because of its large campuses in major Indian cities, Infosys considers water stress and scarcity a significant near-term risk to its business operations India.
Water supports the company’s human capital (i.e., cooking, cleaning, bathrooms and drinking) at their campuses and is also necessary for landscaping and cooling towers.2 Water shortages during dry periods have the potential to halt operations at affected campuses, which would negatively impact the company’s ability to fulfill contractual obligations with customers and achieve performance goals.
Response to water risks
To address water risks, Infosys encourages collaboration between ERM and sustainability functions. The Infosys sustainability team conducts detailed risk assessments at individual facility locations while ERM conducts assessments at the corporate level. The company undertakes an iterative process: first assessing inherent risk and subsequently applying control measures and assessing residual risk.
Infosys chooses among five risk response types in line with COSO’s ERM framework: accept, avoid, pursue, reduce, escalate and share. In locations where water scarcity risk is high, avoiding or accepting the risk is not an option. In these cases, the company chooses to “reduce” the risk. Infosys uses site-based water risk assessments and root cause analyses to develop action plans for reducing risks to “low” or “moderate” levels. If actions taken do not fully mitigate the risks, Infosys may decide to reduce the impact by temporarily moving business operations or by reducing their footprint in the affected development center.
Infosys emphasizes the use of root cause analysis so that action plans focus on the underlying problem rather than symptoms. In the case of water scarcity, this approach has helped them determine what is influencing the water shortages: water access, lack of water storage or other issues. Following this analysis, the company implements mitigation measures to address the root cause and reduce risks to acceptable levels. These measures have included:
- Water conservation through reduce, recycle and reuse measures (e.g., water efficient fixtures, wastewater treatment)
- Aquifer recharge through injection wells
- Rainwater harvesting and reuse
- Construction of underground reservoirs that hold water to last for at least five days across locations
- Efficiency programs led by smart water metering program that monitors water consumption and encourages water use reduction
These measures are designed so that Indian campuses can sustain themselves for seven days using stored rainwater and potable water in the case of extreme water shortages. The sustainability team monitors water resources at all campuses and develops tailored responses at each campus.
Monitoring water scarcity
Sustainability and ERM work together to monitor water scarcity across the enterprise.
Sustainability teams collect and use the following types of data to monitor and assess water risk at its campuses:
- Rainfall data over a 10-year period for each geographic area;
- Water table data for each geographic area;
- Storage capacity of rainwater on each campus;
- Availability and cost of water via water tankers for delivery;
- Freshwater usage from municipalities, private providers, ground water and rainwater3
Corporate ERM monitors water scarcity as an emerging risk. It tracks an enterprise-wide metric of “per capita water consumption” using information provided by sustainability teams. Per capita water consumption is calculated by dividing the average monthly water consumption at Infosys locations by the average employee count per month, which is the sum of the swipe counts for employees and support staff in the Infosys offices. Corporate ERM actively tracks this metric to determine if water risk will become a higher corporate level priority in future years.
Business outcomes of managing water risk
Infosys’ risk management approach to water scarcity at the site and regional levels has been critical for realizing value for its customers, employees and communities. The company’s water risk management strategy in India enables the company to:
- Open new campuses in locations where competitors may not be able to operate due to water shortages.
- Maintain continuity in operations using stored water in times of scarcity, which helps maintain customer confidence and profitability.
The outcomes stem from Infosys’ organizational structure, which encourages sustainability to assess and mitigate risk at the local level while ERM maintains an enterprise wide view. Further, root cause analysis of local water issues empowered Infosys to develop effective responses and mitigation approaches at individual campuses.
1- Shareholder’s Services. (n.d.). Retrieved from Infosys: https://www.infosys.com/investors/shareholder-services/pages/faqs.aspx
2- Infosys (2016-2017). Sustainability Report.
3- Infosys (2016-2017). Sustainability Report.