3520: How Ecolab Is Rethinking Water Risk In An AI Driven World

[00:00:04] Why are so many organisations treating water risk as seriously as carbon and energy planning? And why has this conversation become impossible to ignore, especially as AI continues to accelerate? That is a question that has been hanging over every major tech event this year, because the rise of data-intensive workloads has collided with shifting climates, new operating pressures and a global push for reliability.

[00:00:34] And water has become a strategic variable in this story, and the companies that understand it, they're the ones that are going to gain far more than resilience. Because today I'm going to sit down with the Senior Vice President and Chief Sustainability Officer at Ecolab. And with four decades of experience across multiple industries, my guest brings a view that is hard to match, because we're going to talk about why water is often misunderstood,

[00:01:04] why the impacts are hyper-local, and why the financial stakes are far higher than many people realise. And he will explain how AI both increases demand for cooling, but also provides the tool to reduce that demand. And he will walk me through some of Ecolab's work with hyperscalers, where advanced monitoring and predictive systems have helped avoid the withdrawal of millions of gallons of water every year.

[00:01:31] It's a big topic this one, it is an important one, and I'm looking forward to exploring that evolution from traditional cooling to direct chip cooling. The shift towards circularity as a core business strategy, and the role that transparency will play in building trust with communities that worry about that growing concentration of data centres. And as our conversation moves through technology, risk, culture and inclusion,

[00:01:58] I want to end with the idea that diverse teams make better decisions in a world that is changing faster than organisations can adapt. So for me, it is a timely discussion that will shed light on the tools that Ecolab is building, yes, but also involve the Watermark study, which will I'll put a link in here, that can help companies navigate these challenges with clarity rather than fear.

[00:02:23] Before introducing today's guests, I just want to give a big thank you to my friends at Denodo, who are helping enterprises make sense of the data world. For example, are you overwhelmed by data chaos? Because between AI hype and lake house sprawl and siloed systems, it can feel impossible to keep up. But Denodo is helping you cut through that noise.

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[00:03:18] So if you're finally ready to make sense of the data world, visit Denodo.com today. But now it's time for me to officially introduce you to today's guest. So a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Well, thanks for having us, Neil. My name is Emilio Tenuta. I serve as Senior Vice President and Chief Sustainability Officer for Ecolab.

[00:03:46] And I have over 40 years with the company, including 25 years in a number of business and technical roles. And I have really touched a number of industries from food and beverage, automotive, steel, life sciences and a number of others.

[00:04:05] So I really have a lot of first-hand experience and knowledge on how Ecolab's purpose drives impact, which is really our purpose is to protect people and resources vital to life at Ecolab.

[00:04:20] And for more than a century now, our strategy has been built on delivering innovative, sustainable solutions that ensure clean water, safe food, healthy environments, while helping customers really operate more efficiently and profitably. That's been our call to action and our purpose of the company for over a century.

[00:04:45] And I just wanted to share that with the audience so they know a little bit more about who I am and my role, but also the company that is going to be discussed today. And it's a pleasure to have you join me. There's so much I'm excited to talk with you about today because you are someone who has been studying the intersection of climate pressure, resource scarcity and business risk for many years. In fact, it's a lifetime of work.

[00:05:11] So when you speak with leaders today, I'm curious, what kind of misconceptions do you still see around things like water risk and why it deserves the same strategic attention as energy and carbon? I would imagine in the US from the outside looking at it depends on what side of the country that you live in, because I think West Coast, obviously they see it more firsthand. But what misconceptions do you have there?

[00:05:37] Well, one of the biggest misconceptions is that, you know, the water crisis is a it is a global crisis like climate, but water is hyper localized. And it's a really important distinction about water versus climate. That's one point that I want to make sure we our audience knows about.

[00:06:00] The other big misconception, I think, is that water risk is seen as just a local operational issue rather than a strategic business risk on par with energy and carbon, as you pointed out. Unlike energy, there is no substitute for water. It's a it's under severe pressure.

[00:06:19] We know that over 40 percent of the global population lives today in water stressed regions and that by 2030, freshwater demand is projected to exceed supply by 56 percent. That's not that long from now.

[00:06:35] And so for businesses, CDP, the carbon disclosure project in 2024, launched a global water report that showed that 623 companies reported 77 billion. At risk from water related supply chain issues with 7 billion at what I consider deemed as immediate risk due to scarcity, regulatory pressure or reputational impacts.

[00:07:05] So as you can see, when water availability or quality is compromised, it disrupts operations, supply chains and even this notion of what they call a license to operate for companies, which is a really big deal. And I think another reason this is so important, of course, is we're all humans here. There's what, 8 billion of us and we can't live. I think it's something like three to five days is the maximum time you can live without water.

[00:07:31] And at the same time, data centers are expanding rapidly to keep up with AI workloads. Yet they're often built in regions already under water stress. How do you explain the scale of a challenge like that to business leaders who may not realize just how much water modern cooling systems can consume?

[00:07:50] It's such a great question because the stat that I shared a minute ago around this 56% water supply deficit is before the growth of AI. And so think about it now where we're layering on to your point, these AI workload data centers. So the increased demand for data centers only means more electricity to power them, but also more water.

[00:08:19] And everyone is talking about how AI requires a lot of energy or power. But the reality is AI also requires a lot of water. As, you know, by 2030, AI-driven growth could really demand as much power as India consumes annually.

[00:08:42] And by the way, that includes the embedded water to produce that power and enough water to meet the annual drinking demands for the entire U.S. That's the scale of what we're talking about by 2030. And you're right about the growth of data centers in water stressed areas. McKinsey estimates that 40% of the U.S. data centers are located in water stressed regions today, which makes water risk a critical business issue.

[00:09:12] And so the perception that AI data centers are inherently water intensive is evolving, though. And many modern data centers, especially those designed for AI workloads, are now thinking about, you know, what do they need to do in terms of cooling technologies that can enable them to manage those high heat loads?

[00:09:34] So I really feel this area of AI growth is really putting a strain on resources, natural resources. But at the same time, there's a lot of technology that is evolving to help address that. And just to make it clear as well, I'm not going to just bash AI for the next 30 minutes, because we're all about solutions, not just problems.

[00:10:00] And Ecolab has discussed the potential for AI to address part of the water crisis, even as AI itself drives demand for power and cooling. So I've got to ask, from your viewpoint here, how do you reconcile these two forces? And what does responsible innovation look like in this context? Because there is a big opportunity here too, isn't there? There is. It's true. And AI drives demand for power and cooling, but it also unlocks solutions to the water and climate crisis.

[00:10:29] And the key responsible innovation that we need to address it, that is really important. And as I mentioned from the McKinsey study, that 40% of the U.S. data centers are in water stress regions. So efficiency is non-negotiable in our minds. At Ecolab, we're applying AI to solve the challenge through our 3D Tracer technology platform for cooling,

[00:10:56] which is essentially, I like to call it the MRI for cooling systems, which is a way to kind of visualize for our audience that it's about using advanced sensors and predictive analytics to optimize cooling systems in real time, 24-7. This reduces water use by up to 20% to 30%. It improves energy efficiency, which is key for these data centers, as you know, when they're power thirsty.

[00:11:26] And it prevents the fouling, I call it, in water systems that causes costly downtime. Because the last thing a data center, let alone an AI workload data center, wants to hear, is that they're down, it's all about reliability. And so we've piloted AI-driven water conservation programs in a number of large hyperscalers,

[00:11:53] including co-located data center providers like Digital Realty, which is a large co-located global data center provider. They leveraged our technology that enabled them, our smart technology, enabled them to avoid the withdrawal of up to 126 million gallons of water, fresh water annually across 35 of their digital realty data centers.

[00:12:22] So that's showing that, you know, we can reconcile growth in stewardship, which is about taking care of something we don't own when you think of stewardship, using the same technology fueling AI to make data centers and industries more sustainable. And I also wanted to highlight that when I was doing a little research, that I'd seen that you'd launched a tech solution for direct-to-chip liquid cooling,

[00:12:51] which aims to reduce reliance on traditional water-intensive cooling solutions. So what operational problems does this actually solve for data center teams and for people listening that would be interested in this? And how different is it from the conventional approaches that they may have relied on? Yeah, so traditional cooling systems rely heavily on water and constant oversight,

[00:13:13] which is obviously very inefficient, which creates risk and, you know, challenges in its own way. The big challenge with AI workloads is heat. So traditional racks in conventional data centers average somewhere between 10 and 15 kilowatt. But racks, AI racks can hit 60 to 120 kilowatts.

[00:13:39] So up to 8x higher, that's roughly, you know, 4 to 8x more heat load than conventional racks. And so the massive increase is why cooling, traditional cooling, the server rooms becomes inefficient beyond this 20 kilowatt hour rack.

[00:14:00] So this is where driving adoption of what we call liquid cooling and direct-to-chip solutions is vital, and which is something that is new and something that EGLEB has launched this year. It's our new 3D Tracer technology for direct-chip liquid cooling.

[00:14:20] It solves this by managing heat at the chip level while using significantly less water than conventional evaporative cooling, which obviously, as you know, uses these large cooling towers, and it loses a lot of water to evaporation.

[00:14:38] By the way, 3D Tracer technology for direct-chip cooling can use as much as 90% less water than conventional open cooling systems. And here's the best part of all. It continuously monitors the coolant health by using sensors that prevents the fouling we talked about, even for fluids that are flowing in with very little water.

[00:15:06] So operators get the reliability, the efficiency, and what I call sustainability without the heavy water footprint. So it gives data centers that real-time visibility, but also the reliability that they're looking for without the need for significant natural resources to deliver the cloud performance that they're looking for.

[00:15:33] And circularity is also becoming a strategic priority across so many different industries now, including manufacturing, food, hospitality, and of course now our digital infrastructure. So when you speak to executives about reducing or reusing and repurposing, are there any behavioral shifts or mindset changes that are needed before companies can act at scale?

[00:15:56] Because I assume, as with any tech project, there needs to be a few cultural changes before you even think about putting new tech in. You'll appreciate this. When I talk to executives about circularity, I start with this. It's not just a sustainability trend. It's a business strategy. Reduce, reuse, and repurpose aren't about doing less. They're about doing smarter. But the biggest barrier isn't technology.

[00:16:25] It's really mindset, to your point. Many leaders still see water and other resources as risks to manage, not assets to invest in. And that has to change because water is a dependency that we all have across every industry. When companies start viewing water use as a competitive advantage and waste streams as a value stream, the economics of circularity becomes really clear.

[00:16:52] Our CEO and chairman, Christoph Beck, talks about wastewater is an engineering flaw. In other words, we designed a linear system, and it's hard to really break that linearity in terms of how we think about managing this valuable resource. We're seeing the shift in industries from food and beverage and manufacturing to digital infrastructure.

[00:17:20] However, circularity drives or driven solutions are still not the norm. And so we feel that circularity drives resilience, lower costs, and it strengthens this license to operate. I like to refer to it as actually a shift from license to operate to a license to grow. Because in many ways, it'll give you a chance to not only mitigate the risk, but also drive resilience

[00:17:47] in the face of the climate change that we're seeing around the regions in the world where many businesses are trying to drive growth. So once executives connect resource efficiency to growth and risk reduction, scaling isn't just possible. It's inevitable. And I think Ecolab has somewhat of a unique vantage point here because you're operating across more than 170 countries and numerous highly regulated sectors within that as well.

[00:18:16] So from everything that you're seeing and hearing here, where are you seeing the most promising examples of innovative water management? And are there any lessons that could be maybe transferred to industries that have been much slower to adopt these kind of practices? Anything you see here? Well, yes. In fact, we're seeing the most promising examples of smart water management in sectors where water is mission critical,

[00:18:40] such as food and beverage data centers we talked about, advanced manufacturing, whether it be EVs or building materials. These industries are deploying AI-driven platforms, real-time monitoring, closed-loop water systems to reduce water intensity and improve reliability while also lowering their costs. And here's the reality, is that no matter what industry you're in, you don't have to be a hyperscaler.

[00:19:11] You could be a food and beverage. You could be a company that makes building materials. We all need to think about ourselves with the mindset that we're also tech companies today, right? Yeah. So at Ecolab, we're enabling this transformation through solutions like Ecolab 3D, which is a digital cloud platform that enables the visibility for, you know, no matter what business or industry you're in.

[00:19:36] And the Smart Water Navigator, which is a publicly available tool that our listeners can find on their local browser. That tool enables us to really make smarter decisions about water stress and the value of water to your local area. When you combine these really unique digital predictive analytic tools with the operational expertise that Ecolab brings and the advanced analytics,

[00:20:05] these tools really help organizations predict risk but also optimize their water and energy use, which also quantifies both environmental and financial impact. So the lesson for industries slower to adopt, they need to start with visibility and value. Those are two things that I want our listeners to really understand that those are key because the business case for making the investment in technology is clear.

[00:20:35] When companies see that Smart Water Manager not only mitigates risk, but it drives growth and cost savings, let alone compliance and resilience. And so I think by 2030, we aim at Ecolab to help our customers conserve 300 billion gallons of water, which is equivalent to the drinking water and heat, believe it or not, of a billion people on the planet,

[00:21:01] and avoid 6 million metric tons of greenhouse gas emissions because water and energy are linked. As you know, you have to pump it, treat it, cool it, heat it. And get this, you know, by 2030, enabling about 11 billion in value created through our customers, you know, efficiencies and operational performance while also saving water and energy along the way. So smart water management is no longer optional. It's a competitive advantage.

[00:21:31] I think there is also increasing awareness in communities that are increasingly worried about corporate water use, particularly if they're living in an area that has high growth sectors such as data centers that will strain their local resources. And with that in mind, how should companies be more mindful and approach community engagement to ensure that water stewardship is being taken seriously and becomes more of a collaborative effort rather than just a source of conflict?

[00:22:02] Yeah, so communities and stakeholders at large are right to be concerned about, you know, water intensive industry growth, because especially in reasons where they're facing scarcity and, you know, I can't think of a region that's not facing water stress issues. The key is transparency and collaboration. And companies must engage early.

[00:22:28] And I feel that sharing water risk assessments through the reporting, co-creating solutions that work with their partners and suppliers that benefit both business and community is a, you know, not a nice to have, it's a must have. And at Ecolab, we take this very seriously. We're a founder of the Water Resilience Coalition that is housed within the UN Global Compact and the CEO of Water Mandate.

[00:22:54] Right. 41 big global brands today that is CEO led have come together to address the water crisis and raise it up the corporate agenda. And the pledge they're making is a commitment to what they refer to as positive net positive water impact, which is essentially giving back to the watersheds we operate in more than we take from it.

[00:23:18] And so we work with global peers to advance collective action in these high water stress bases because we know we can't do it alone. And through the CEO of Water Mandate, the Water Resilience Coalition, the California Water Resilience Initiative, which is obviously very important, California being, you know, an economic powerhouse in the United States, we help companies set science-based efficiency targets.

[00:23:45] And then really it's important that inside the fence line, these businesses are using smart technologies like some of the ones we talked about, 3D Tracer, to minimize water use. But it also, you know, driving basin level partnerships means that we need to focus outside the fence line where communities are dependent on that water resource that is being, you know, where there's competition for it.

[00:24:12] And so we need to think about how we restore and replenish water that's done the right way where it matters most. And the lesson I would say is that water stewardship isn't just about reducing your footprint. It's about building trust and resilience and taking care of something that we don't own. Water is a shared resource. And so when companies demonstrate that shared value in protecting those local resources, that's when, you know, you really enable economic growth.

[00:24:43] And you're someone that's spent your entire career championing sustainable growth. And looking ahead, now you've got the attention of the world. People are taking this stuff seriously. What role do you think diverse teams and more representation in science and engineering and environmental leadership, all these things that you're passionate about, what kind of role do you see them shaping the next generation of water and climate solutions?

[00:25:06] And how do you see inclusion strengthening innovation in a world that's collectively facing rising ecological risk right now? This is really important. And I can't say enough about how important this is to Ecolab and to many companies. At Ecolab, operating in more than 170 countries, as you pointed out, and serving over 1 million customer locations was just mind-boggling when you think about it. Diversity isn't just a value.

[00:25:35] It's a business imperative for us. So we have 27,000 of our 48,000 associates working in the field that engage daily with customers across different cultures, industries, and regulatory environments. So the diversity of perspective is critical to solving complex sustainability challenges, but also business challenges as well.

[00:25:59] So looking ahead, diverse teams and greater representation in science, engineering, environmental leadership, will shape the next generation of water and climate solutions, for sure. Innovation thrives when different viewpoints come together because ecological risk is global, but its impacts are felt deeply locally, right?

[00:26:24] So inclusion ensures that we design solutions that work everywhere from a beverage plant in Brazil to a data center in Ireland to our experience, our experiences in the U.S. when it comes to data centers. Our experience at Equal Lab proves that when we bring together people with varied backgrounds and expertise,

[00:26:52] we accelerate progress, whether it's deploying smart technology like 3D Tracer or advanced basin level partnerships like we talked about with the Water Resilience Coalition. Diversity strengthens that resilience, but also enables us to really develop a foundation for sustainable growth. And I think that is a very powerful moment to end on. But before I let you go, for anybody listening that is also passionate about this topic

[00:27:19] or just want to find out more information about Equal Lab, the work that you're doing, and how they can keep up to speed or maybe even play a part in some of the things we talked about today, where would you like to point everyone listening? Well, I'd love for everyone to, first of all, follow us on Equal Lab.com and our LinkedIn channels. Social media platforms, we're on many of them. But I'd also like to highlight that on Equal Lab.com, some of the remarks I made today,

[00:27:49] I want to highlight the Watermark study that we recently launched. It's an annual report that measures the state of water stewardship through how important that is. And I think it's a consumer, it's a study that really helps us understand the consumer sentiment around the world as we interview a number of consumers around their thoughts around not only climate and environmental, but also the state of play of water stewardship. So I encourage everyone to check that out.

[00:28:19] And I will add links to everything, including that Watermark study there. And I think with increasingly disruptive weather events and evolving economy, rapidly transforming technology, the world does feel like it's facing a significant uncertain future right now. And new technologies and shifting climates can place increased demands on water and energy use. But we are waking up to it. And as I said at the very beginning, it's not about the problems, it's about the solution.

[00:28:47] And I love what you're doing at EcoLabs here and seeing the possibilities offered by AI and how harnessing it could create new solutions that better drive efficiency, innovation and operational performance. So much food for thought. Love to hear what people listening have taken away from this conversation. But thank you for starting it today. And thanks for hosting us today. We really appreciate it and helping us get the word out on the importance of water in industry.

[00:29:13] I think talking to Emilio today has just reinforced how central water has actually become to the future of AI, cloud and global operations. And it's easy to focus on compute growth and overlook the invisible systems that are making it all possible. And yet every rack, every workload and every facility depends on resources that are already under pressure.

[00:29:38] And Emilio's perspective makes that connection visible without painting a bleak picture. And I think that is something that he did magically there because he's presenting a path where technology, data and circular design can shift water from a liability to a almost operational advantage. And what resonated most for me was this idea that smart water management is no longer just a side consideration and nice to have.

[00:30:05] It influences cost, reliability, community trust and a company's long-term license to operate. And the examples he shared today from hyperscalers along with the direct chip cooling work underway all show that progress is possible when innovation is tied to stewardship rather than short-term gains. Final point about diversity I think just adds another great layer here because the scale of the challenges that we're talking about,

[00:30:35] overcoming them will demand a mix of perspectives if we want to be serious about creating durable solutions rather than temporary fixes. So I'll be adding the links to everything Emilio mentioned, including that watermark study so you can explore the data and the tools that Ecolab has made available. But over to you, I'd love to hear your take on this as well. Is water becoming part of your technology planning?

[00:31:00] Or is this an area that still feels disconnected from the AI conversations you're having in the boardroom? Please share your thoughts with me by going over to techtalksnetwork.com. You can leave me an audio message there. You can leave me a message. You can also go to LinkedIn X Instagram. Send me a quick DM. My name's just at Neil C. He was on all those platforms. Easy to find. But that is it for today. Lots to think about. But I'll return again tomorrow with another conversation on a completely different topic.

[00:31:29] But I'll speak with you all then. Bye for now. Bye for now.