How the pressure to report got switched on

The water crisis is real and getting worse. Many regions of the world are reaching a point of “water stress” where water resources can no longer support the demands of human populations. Nearly 20 percent of the world’s population lacks access to safe drinking water and 30 percent is without adequate sanitation. Water withdrawals from rivers and lakes have doubled since 1960 according to the UN Millennium Ecosystem Assessment. By 2030 nearly half of the world’s population, some 3.9 billion people, will be living in areas of water stress according to the OECD. This will increase the challenge of allocating scarce water resources to meet human and ecosystem needs.

Water is used to make every product on Earth, and so all businesses, and all sectors, depend on it in some way. People are becoming more aware of water concerns and how it is allocated. Increasingly the spotlight is being cast on business, one of the world’s most significant users of water.

Water impacts business and business impacts water throughout the value chain. It is used, for example, as a key ingredient in the food and beverage industry, to create products, for cleaning and rinsing in industrial processes, and as part of the cooling process in thermal power generation – the largest single use of water by industry. Water is used as a means of transport, as a medium for waste disposal, and in the end-use of products. For example, some household products need to be mixed with water, pharmaceuticals need to be taken with it, and some food products are prepared with it.

Companies therefore have a role to play in helping find solutions to the water challenge.

Even if different businesses use water and will be challenged in different ways, external demands on companies to demonstrate sustainable water management are intensifying. The “water footprint” concept is generating ever-more interest worldwide, but there are also other measurement methods being developed. The International Organization for Standardization (ISO) is putting together standards on water footprinting requirements and guidelines. The Alliance for Water Stewardship is going to develop voluntary certification schemes. And the Carbon Disclosure Project has recently announced it will be collecting information on corporate water use.

The World Business Council for Sustainable Development (WBCSD) has been following progress in these burgeoning initiatives and in August 2009, launched Water for Business: Initiatives Guiding Sustainable Water Management in the Private Sector along with IUCN. This publication aims to help companies understand “who is doing what” in the area of water use accounting, impacts assessment and reporting and will be updated regularly.  

So the pressure is on to report. But what companies report on and how they measure it is a debate that is just starting.

Measuring water use and impact: easier said than done

It is encouraging to see the effort that is being put into developing measurement methods and impact assessments around water use. Together, academics, NGOs, business and governmental organizations have been trying to develop a way to capture the complexities of water into a usable and valuable metric. Some believe they already hold the key, others believe it will take years to make the optimal key, others believe it will take many keys, and finally some think it is not possible to make a key at all.

Let’s start by looking at water use and impact. The four essential parameters to consider are as follows:

1. Quantity – How much do you use or consume?
2. Quality – How clean is the water withdrawn and discharged?
3. Location and source – Where does it come from (ground, surface…), where are you using or consuming this water (Is it water abundant or stressed, highly urban or rural?)
4. Time – When are you using it and how often, e.g., day or night, summer or winter?

Moreover the biggest water use may happen outside a company’s operations, beyond its direct control.

Even though no current methodology sufficiently captures these four elements together, most experts working on developing them are aware of the associated limitations in their approaches.

The first tool developed specifically for business was the WBCSD’s Global Water Tool, which covers quantity and location. It contains an inventory of a company’s water use according to the Global Reporting Initiative’s Water Performance Indicators (e.g., total water withdrawal, percentage water recycled and reused). It also maps a company’s sites (whether direct operations or supply chain) with external water data to answer questions such as: How many sites, employees or suppliers are in water-stressed regions and how many will be by 2025? Since its launch in 2007, it has been downloaded over 10,000 times, and an estimated 300 businesses have used it.

Professor Arjen Hoekstra and his team at the University of Twente took huge steps to develop the water footprint concept and methodology. However, it still requires substantial business input to be made fully operational.

The Water Footprint Network (WFN), uses the water footprint as an indicator that looks at both the direct and indirect (e.g., supply chain) water use of an individual, community or business and defines it as the total volume of water that is used or consumed to produce the goods and services consumed by the individual or community or produced by the business. The first version of the Water Footprint Manual is available online for comment until the end of May 2010, and the group is working on further developing the impact assessment dimension, as any meaningful response will depend on an accurate understanding of the impacts associated with the water use.

While the water footprint definition used above is WFN’s, the notion is often used by others to express any impact on, or use of, water resources. For example, knowing how many operations are located in water-stressed regions could also be considered a water footprint. In developing methodologies, a lack of agreed common language is an identified obstacle to progress, which is why we have added a companion glossary of key water management terms to the Water for Business overview of initiatives. In fact, a term like “water use” appears simple, but can be misunderstood if it has not been clearly defined. For example, “consumptive” water use generally means water that is not returned to its proximate source for others to use. This contrasts with water that is “borrowed” and immediately returned to the system.

Further progress is also being made in incorporating water into life cycle assessments, which is led by the UNEP SETAC¹ Life Cycle Initiative. It not only looks at the water withdrawals, but the impact these can have (from cradle to grave) on human health and the environment. Efforts to integrate both water use and discharge into the analysis will lead to a measure of the environmental sustainability of a product.

The corporate water footprint is affected by the state the water is in after use.photo by Paul Hookway, Creative Commons

When measuring your impact, it is fundamental to keep trade-offs in mind including:

• The methodology: For example, what level of scientific accuracy is sufficient in order to provide valuable outcomes?
• Linked impacts: For example, does reducing your water footprint lead to increases in energy use? Does a negative impact (e.g., decreased water availability) come hand-in-hand with a positive one (e.g., creation of jobs) that should also be accounted for?

Companies should ask themselves whether reducing their water footprint leads to reduced or increased energy consumption. Water is needed to produce almost all types of electricity, and renewable energy sources are not always light consumers of water. This means that low-carbon energy is not necessarily low-water, and trade-offs have to be made at a local level depending on resource availability. The WBCSD is currently scoping out whether to add a “water-in-energy” component to the Global Water Tool.

Ready to report?

Although there is no perfect methodology available today, NGOs, finance institutions and others are expecting companies to report on their water use. This has led some companies to use the water elements of the Global Reporting Initiative reporting framework and others to publicly announce global water target reductions or create labeling systems for their products, which in itself is an encouraging sign that the corporate world is trying to respond as best it can with the information it has. A key limiting factor for companies to measure their water performance is the lack of reliable and credible data on the water situation.

However, without context or understanding, this public reporting might be misleading, even if it responds to some consumer or NGO expectations. For example, if a company’s water efficiency has increased globally, but mainly in water-abundant areas, the positive impact of that effort is much less than if it were in water-stressed areas.

The WBCSD will continue to be actively engaged in these critical and dynamic discussions because water is, and always will be, essential for business and growth.

Further reading by WBCSD:

• Business in the World of Water: WBCSD water scenarios to 2025 (2006) http://www.wbcsd.org/web/H20Scenarios.htm
• Global Water Tool (2007) http://www.wbcsd.org/web/watertool.htm
• Water, Energy and Climate Change – A contribution from the business community (2009) http://www.wbcsd.org/DocRoot/Dg6GYWJq7xuaLO0OwZOi/WaterEnergyandClimateChange.pdf
• Water for Business: Initiatives guiding sustainable water management in the private sector (2009) www.wbcsd.org/web/waterforbusiness.htm