Within the evolving field of sustainability, businesses have faced a rapidly evolving series of priorities. Climate change, energy efficiency, corporate citizenship, material efficiency, waste and ethical production have all become common business language. Now, with the United Nations, the Carbon Disclosure Project, CERES, the Sustainable Packaging Coalition, and others announcing a raft of new initiatives, water is surging onto the corporate sustainability agenda.
A defining issue for business
Water has the potential to become one of the defining sustainability issues of this century. A recent Circle of Blue-Globescan Survey found that water is now the number one global concern among sustainability experts. Water is a fundamental ingredient to human health, environmental well-being and economic prosperity. Critical for business, it’s also a vital resource for production of materials, for manufacturing and for product function. If this shared resource is not managed sustainably the impacts—environmental, health, social and economic—will be felt.
Although Canada, when compared with many jurisdictions, may have a relatively abundant supply of water, stakeholder interest in corporate management of water is still growing rapidly.
“The acceleration of water conservation is astounding,” says Michael Glade, director of water resources and real estate for the Molson Coors Brewing Company. “The public seems to relate better to water than carbon as they can immediately touch and see it. It would be hard to find someone who has not been impacted by water in a personal or professional way. We believe this makes the water conversation more relevant to both the public and investment community.”
The high profile of water, and its importance to operations, makes it a material business issue for most companies, regardless of the sector. Changes in water quantity and quality upstream from a business can change operating practices. The outputs of operations have the ability to impact water users downstream. Whether it’s consumed, emitted, sold, or reused and recycled, water is a fundamental ingredient for business—that makes effective management both a business opportunity and a risk. Glade puts this truth into context within brewery sector. “Ultimately, without good water you can’t have good beer.”
It’s not surprising that companies are starting to ramp up strategic responses to water, developing management systems, setting targets and reaching out to their stakeholders to explore water related collaboration.
Disclosing the right way
As issues become important strategically for a business, stakeholders start to demand effective disclosure. As a result, efforts to improve corporate disclosure of water use and management are escalating.
Molson Coors has chosen to focus on water as one of its corporate responsibility initiatives and acknowledges that disclosure is a critical component of this process. “Self disclosure and participation in initiatives like the United Nations CEO Water Mandate and the Carbon Disclosure Project’s Water Disclosure Initiative will both highlight the importance of water and also encourage other companies to participate,” says Glade. “Ultimately, companies that do not have water risk information readily available could be considered a bad investment.”
Effective water disclosure provides stakeholders with information on which to base decisions about their interaction with a company. This information contextualizes the scale and scope of water related exposures and specific at-risk operations or supply chains.
While the quality of water disclosure in corporate reports is improving, there’s still much work to be done to provide stakeholders with the information needed to make high quality decisions. In particular, disclosure of information such as regional water use and water recycling metrics is less advanced. A recent report from CERES—the U.S.-based coalition of investors, environmental groups and other public interest organizations—indicated that businesses and investors are not fully taking into consideration the economic impact if water resources and that disclosure of risk and corporate water performance is weak. Similarly, a study commissioned by the United Nations’ Principles for Responsible Investment’s CEO Water Mandate found that while most of the 110 companies analyzed provided data regarding their total water use, data on regional or local water use or any contextual information in which their water uses and/or impacts could be understood at the regional level was missing. Since water issues at the local or sub-regional level have potential to pose real risks to operations (for example, restricted water access, conflicts with other users, production delays), this represents a significant void in corporate water disclosure and indicates more work to be done.
While the devil is in the details, stakeholder information needs for business strategy and for corporate disclosure are relatively straightforward and fall into four categories:
How does water relate to business strategy? Stakeholders want to know how water issues can impact on short and long-term business strategy—the profile of operations, manufacturing approaches, products and services.
What risks and opportunities does water present? Stakeholders want to know what risks and opportunities water presents to the business. They want to understand potential impacts and what locations or regions are particularly exposed.
How is water managed? Stakeholders expect information on how an organization is managing water and mitigating risks to the business. They want to know who is responsible and what the company is trying to achieve with its water practices. They expect evidence of consideration of the use of management tools including process optimization, transportation efficiencies, reuse and recycling and financing of innovative water management efforts (for example, clean technology).
Is the company meeting water performance goals? Perhaps the most important information for stakeholders has to do with water performance against targets. This might include reporting on direct and indirect water use, consumption volumes, and quality of water released. Where performance standards are not met, stakeholders hope to see disclosure of the steps the company will take to remedy performance. Verification of data by a third-party helps demonstrate quality of management.
In today’s business environment, companies can’t afford not to address water. For those that are serious about sustainability, water needs to be a part of corporate strategy and disclosed appropriately.
“The benefits of all of these activities ultimately lead to the reduced risk to our operations and the surrounding communities. With open dialogue and transparency, it is expected that we will be both a leader and participant during potential future challenges related to quality or quantity impacts from climate change, droughts or other water related conditions,” says Glade. WC
Carla Stevens is the water services lead and Matt Loose is a director of corporate sustainability at Stratos, a Canadian consultancy committed to helping organizations take real steps towards sustainability.