In order to contribute to improved corporate management practices and ultimately the sustainable management of water resources, corporate water accounting must work in unity with a number of other corporate and public activities. Understanding this broader context—and how water accounting fits into it—is essential for companies seeking to reduce and mitigate water-related risks.
Key components of this broader framework are: (click a title to expand)
A foundational component of this framework is the real-world characteristics and conditions of the watersheds, ecosystems, communities, government, and economy in which businesses exist.
Accounting allows companies to measure and understand the water systems in which their business and suppliers operate, as well as the volume, timing, location, and impacts of their water use and discharge. This provides a basis from which to plan strategically, assess management practices, track performance over time, and communicate with stakeholders.
Once corporate water use and impacts are accounted for, companies disclose quantitative and qualitative information to affected communities, investors, consumers, civil society, and other stakeholders. This allows stakeholders to evaluate companies’ approaches to reducing impacts and addressing risk and to hold companies accountable for their management practices. Stakeholder feedback in turn helps companies identify and prioritize material issues and improve the processes through which they mitigate negative impacts and thereby address water-related business risks.
Accounting is intended to inform more responsible and efficient corporate water management practices. Once these management responses successfully address negative impacts on ecosystems and communities and proactively enhance the sustainability of the watershed, the company may be considered a good steward of water resources.
Corporate water stewardship alone cannot ensure sustainable water management within a region. Many players (e,g., communities, policymakers, water managers, and other stakeholders) must take action in order to move toward sustainable water management of a locality or watershed.
When companies and other stakeholders in a watershed are effectively and collectively implementing responsible water practices and managers prioritize needs (i.e., industrial, agricultural, municipal, and environmental) based on resource availability and account for long-term risks (e.g., population growth and climate change), the system is positioned to reach a sustainable state—the overarching goal of corporate water stewardship and water management in general.