Water and Nature Outlook for 2025: Uncertainty and Fearless Optimism

It is the time of year when we can look back on the year and look forward to what might be. My inbox has no shortage of these insights and outlooks for the new year and beyond.

Earth Finance recently released Key Trends and insights (Earth Finance: Insights and 2025 Outlook) on climate strategy, renewable fuels, transition finance, water and nature, and technology. In addition to me, Reuven Carlyle, Kat Hunt, Garrett Kephart, and Tim Zenk contributed to the report.

This article is adapted from the Water and Nature section of the Earth Finance: Insights and 2025 Outlook publication.

This end-of-year newsletter summarizes my insights on water and nature and my contribution to technology innovation with my colleague Kat Hunt.

Here we go.

Overview

Momentum for action on water and nature reached new heights this year, but progress isn’t nearly fast or large enough. Current rates of biodiversity decline threaten to reduce global GDP by nearly $3T per year by 2030, and the water crisis could jeopardize over 50% of food production by 2050. The good news is that companies are increasing their investment in solutions to address these over-exploited resources, and many are taking the critical first step of developing an internal shadow price on water. On the international scale, standard-setting organizations such as the Science Based Targets Network (SBTN) and

Taskforce on Nature-related Financial Disclosures (TNFD) is developing frameworks to help companies integrate water and nature as strategic assets and formalize action plans. The corresponding uptick in corporate replenish water and net positive nature strategies has led to tangible investments and positive impacts. However, it has also created a narrow, quantitative focus on gallons and liters saved at the expense of “non-volumetric” issues, including water and nature's social and spiritual dimensions. In some cases, this has led to water and nature strategies becoming overtaken by reporting. To reach global sustainability goals and ensure a livable world for generations, companies must start positioning water and nature strategy as a catalyst of business growth and brand value.

Water & Nature Strategy in 2025: Start, stop, or continue

Start: Speaking the language of your CEO, CFO, and Board. As we have seen over the past few decades, moral arguments don’t resonate with C-suite executives. Start developing hard-nosed value creation narratives demonstrating water and nature initiatives' positive financial and brand impact (business continuity, brand value, resource productivity, etc.).

Start by getting more engaged in public policy. The private sector has a much-needed voice advocating for water and nature policy. While federal policy may be limited under the new administration, your voice can help advance regional, state, and city leadership.

Stop: Joining coalitions for the sake of joining a coalition. Cross-sector coalitions in water and nature, especially those without commercial relationships, can be limited by disparity in alignment, lack of funding, and a tendency for individual stakeholders to go at it alone. Critically ask yourself whether the coalition you’re considering is structured to deliver impact.

Continue: Finding ways to quantify the business value of water and nature. In addition to internal mechanisms like shadow pricing, explore AI-driven solutions that can help you forecast and monitor initiatives in real time.

Continue: Challenging the status quo. Climate, water, and nature are wicked problems that will only be solved by “unreasonable people” who think beyond what’s possible. Our runway to address these issues is short, and the time is now to move past outdated thinking and frameworks.

Water & nature trends to watch for in 2025

Convergence of climate, water, and nature issues. Corporations increasingly understand that climate change, nature loss, and water scarcity are deeply interconnected. As investor and regulatory pressures to think beyond climate amplify (such as from the EU’s deforestation and sustainability reporting mandates), corporations should proactively de-silo their climate, water, and nature programs in favor of a more systemic approach.

Rise of catalytic communities. New frameworks for stakeholder collaborations are emerging that push the boundaries of collective action. One example is WaterUnited (Water United), a first-of-its-kind initiative linking multinationals, tech companies, and water utilities to accelerate action across the Colorado River Basin. Leveraging the power of commercial relationships, these catalytic communities are vital in bridging financing gaps, enabling innovative business models, attracting mainstream investors, and fostering collaboration among diverse stakeholders. Climate, water, and nature are wicked problems that will only be solved by unreasonable people who think beyond what’s possible.

Increasing corporate interest in water and nature technologies. Recognizing the criticality of water and nature technologies to reach their goals, corporations are stepping in to help jump-start the market. Programs such as the 100+ Accelerator, which recently welcomed Danone, are seeing an uptick in participation, a trend expected to continue in 2025.

Closing Thoughts

We are at a pivotal moment in the world of water and nature. In the face of impending 2030 targets, determining who pays for these initiatives is an ongoing challenge. How do we price undervalued natural resources into what we wear and consume while ensuring equitable access to those who can’t afford it? What stakeholders need to come together to advance this work? Tackling these questions through rising political and macroeconomic uncertainty is a formidable task. But amidst this uncertainty, there’s also untapped opportunity. Now more than ever, companies are uniquely positioned to elevate sustainability, including water and nature, as more than just an overhead function – it is a driver of business model innovation, growth, resilience, and long-term financial value.

As we close out 2024, I have a few additional thoughts. Despite the world's uncertainty, I remain “fearlessly optimistic.” Why?

I am not naïve about the current state of the world. Still, the need to build a sustainable, resilient, regenerative, and equitable world has never been more critical. Our challenges can immobilize us or double down on our commitments and efforts. I choose “living in the solution” (this is credited to a dear friend, Drai Schindler).

Best wishes for a peaceful holiday season and a healthy and prosperous 2025 filled with joy and laughter.

Onward.