External Impacts

 

A company’s water practices may harm people and ecosystems, causing risk to the company, undermining sustainable water management, and potentially impinging on human rights. Key environmental and socioeconomic conditions that can be impaired by industrial and agricultural water practices are manifested in the three components of water stress: 1) water availability, 2) water quality, and 3) access to water and WASH services. Though companies are more likely to have impacts in water-stressed regions, an area need not be water stressed for a company to cause impacts in that location.

How Corporate Actions Can Affect Basin Conditions

 

Figure7

Disclosure on external impacts can be quite challenging for companies due to the high costs and scientific and technical limitations associated with carrying out impact assessments. At present, there is no standardized methodology for identifying a company’s water-related external impacts.

Content Scope Format
Basic
  • N/A (compliance used as proxy)
N/A N/A
Advanced(includes basic reporting)
  • Impacts on water availability, water quality, and access to water resources and WASH services (including human-rights-related impacts)
  • Prioritizing impacts
Location-specific Tabular; qualitative

BASIC

Basic disclosers are rarely able to report meaningfully on external impacts. Instead they can use compliance information discussed in detail in the Compliance subsection above as a rudimentary proxy for potential negative impact. Many water-related impacts stem from companies discharging contaminants into nearby water bodies that are used as a source of drinking water, recreation, or irrigation or that provide crucial ecosystem services or wildlife habitat. While imperfect, such compliance information should be available and reportable even for SMEs.

ADVANCED

Impacts on water availability, water quality, and access to water and WASH services

Companies with advanced disclosure practices can assess the negative impacts of their direct operations both by means of quantitative methods, robust stakeholder engagement, and basin assessment strategies. A company also describes the methods and tools it uses to assess its external impacts. In particular, a company includes the following types of information for each impact it reports:

  • Geographic or geopolitical area
  • Relationship to impact
    Describe the company’s relationship to external impacts using the following framework:

    • Cause: A company causes an impact if the impact is solely and directly a result of the company’s own decisions and actions.
    • Contribute: A company can contribute to an impact in parallel with other actors or through a third party where it incentivizes or facilitates that party to cause a negative impact.
    • Linkage: A company is linked to an impact when the impact is caused by an entity that it has a business relationship with (e.g., a supplier, distributor, collective action partner) and the impact is linked to the company’s own operations, products, or services.
  • Impact type
    Identify the aspect of water stress the company is negatively affecting (availability, quality, access to water and WASH services).
  • Description of impact
    Provide a brief explanation of the impact’s cause (e.g., runoff from agricultural or industrial effluent, spills to local water resources, utilization of nonrenewable aquifer) and who or what was adversely affected and to what extent.

Prioritizing impacts

Once a company identifies the negative impacts it is causing, contributing to, or linked to, it must then prioritize which of those impacts are most urgent to remediate and mitigate. Unlike risks and opportunities (which are typically prioritized based on their potential effect on business operations and a company’s bottom line) impacts are prioritized based on their potential to harm key stakeholders. Four critical factors to consider when prioritizing impacts are their:

  1. Actual or potential severity
  2. Likelihood
  3. Potential specifically to lead to human rights abuses
  4. Importance and urgency in the eyes of local stakeholders

When reporting external impacts, companies should describe the process they use to prioritize which impacts they address, as well as what impacts it has identified as top priorities.

Connected Reporting

Geographic or Geopolitical Area Impactful Action Relationship to Impact Impact Type Description of Impact Company Response

“ANGLOAMERICAN: SUSTAINABLE DEVELOMENT REPORT 2013”
“We employ a five-tiered scale to report on the impact of an incident. Level 1 and 2 incidents are minor in nature and, while remedial action is taken for every incident, only those classified as Level 3 and above are reported publicly.

During 2013, we confirmed 15 Level 3 environmental incidents relating to water. No Level 4 or 5 incidents were reported. The incidents related mostly to unauthorised discharges at the coal businesses in South Africa and Australia, following heavy rainfall. There was also one case of botulism resulting in avian deaths, which was found to be a result of naturally occurring conditions.”