What You Need to Know about Developments in Corporate Water Management and Disclosure

image: water riskWith oil, natural gas, and energy receiving most of the popular press, the often forgotten resource that presents a growing challenge is the availability of water.  Unlike energy constraints, water cannot be economically brought in from neighboring areas in tankers, on trucks, or even in transmission pipelines.  With all the advances in technology, communities still rely on the access and availability of a local water  supply.  

Corporations are taking note.  With at least 60% of the United States now experiencing drought conditions, companies are focusing more than ever on intelligent water usage. They are opting to conserve and to work with their watershed stakeholders to keep costs down and avoid potential compliance and repetitional problems, and risk : 

  • Physical scarcity - Is water available when and where it is needed?
  • Regulatory issues - Are regulations changing with respect to water use and pricing, and how might that affect a company and operations going forward?
  • Reputational risk - An increasing number of stakeholders in a watershed care how companies are using water. They may be able to influence how a company uses water or even the withdrawal of its license to operate.

Addressing water management, recently, Ceres and the World Business Council for Sustainable Development  released a new roadmap for 21st century corporate water management, the Ceres Aqua Gauge. It’s a practical (and free) self-assessment tool that outlines detailed steps for effective water risk management, from the boardroom to the factory floor to the farm field. 

Movement has been made addressing corporate water disclosure.  Just this week the UN Global Compact’s CEO Water Mandate initiative   announced the release of its Corporate Water Disclosure Guidelines – providing the first ever common approach to corporate water disclosure.  The UN Global Compact CEO Water Mandate has released Corporate Water Disclosure Guidelines to help advance a common approach to corporate water disclosure that addresses the complexity of water resources in a comprehensive yet concise and practical manner. The Guidelines suggest that companies offer several types of water-related information while the framework builds on three areas : 

  1. Company Water Profile - an overview of the company’s relationship with water resources, offering a snapshot of water performance, risks, impacts, and response strategies that nontechnical audiences can easily understand.
  2. Defining Report Content - a description of the process by which a company determines which water-related content to include in its report. The company assesses the significance of different water topics to the company and its stakeholders, and the extent to which those topics cause, or may in the future cause, adverse impacts to ecosystems and communities.
  3. Detailed Disclosure - specific, detailed metrics and qualitative information related to the company’s water management as well as to the specific water management programs and projects it implements.

“Corporations have increasingly acknowledged the importance of water, and its stewardship, as a growing business risk with direct impact on their operations,” said Michael P. McCauley, Senior Officer, Investment Programs & Governance at the Florida State Board of Administration. “Because efficient companies can gain an economic advantage by prudently managing their use of water, many investors support clear disclosures surrounding water use and management. As a result, corporate water use has become a more significant corporate governance factor.” 

For more information, the CEO Water Mandate Corporate Water Disclosure Guidelines can be downloaded free of charge from the Pacific Institute website here and on the CEO Water Mandate website.

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