Conveying Water Information to Stakeholders



Historically, companies have typically used internal proprietary software and/or undisclosed metrics when carrying out water accounting for internal management purposes. In recent years, companies have been increasingly expected to disclose the results of their water accounting to key stakeholders and the general public. These expectations have led to the development of harmonized measures, metrics, and indicators on corporate water use by third party interests, most notably the Global Reporting Initiative (GRI), and, most recently, the Carbon Disclosure Project (CDP), in order to support consistent and meaningful corporate disclosure of water information. Emerging corporate water accounting methods, such as water footprinting and LCA, are also increasingly being used to inform waterrelated disclosure by companies. This section will discuss how water accounting methods and tools can be used to support corporate disclosure efforts and provide an overview of other third-party initiatives that have developed reporting metrics and protocols.

A significant portion of corporate waterrelated reporting is qualitative, with companies providing descriptions of various water stewardship initiatives, principles, policies, programs, and goals. However, companies are perhaps more intently evaluated based on their reporting of quantitative information. Theoretically, such quantitative reporting could be about any of the findings from corporate water accounting efforts, including the local water context of their operations and the quantified impacts to watersheds, communities, and ecosystems. In practice, however, companies almost always report a much more limited and context-neutral set of information, such as their total water use, total wastewater discharge, water use efficiency, or total amount of recycled water. Such metrics usually serve as the basis for most companies’ social responsibility reporting regarding water, though the meaningfulness and legitimacy of such generic and aggregated data are widely disputed (JPMorgan 2008, Pacific Institute 2008).


Third-Party Water Disclosure Metrics and Protocols

The use of harmonized metrics or indicators on corporate water use developed by thirdparty
interests is often seen as one factor in credible corporate sustainability reporting. The most widely used and accepted metrics for sustainability reporting are developed by the Global Reporting Initiative (GRI). GRI’s most recent reporting framework, known as the G3 Guidelines, contains indicators for the economic, environmental, and social performance of companies, including five core indicators specifically focusing on waterrelated issues:

  • Total water withdrawal by source
  • Water sources significantly affected by withdrawal of water
  • Percentage and total volume of water recycled and reused
  • Total water discharge by quality and destination
  • Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the organization’s discharge of water and runoff

While certainly useful, these indicators are limited in the nature and scope of information
they provide. First, as discussed throughout this paper, strict volume measurements of water use/discharge alone do not capture the risks and impacts that vary depending on the relative local water conditions. Furthermore, aggregated company total water use data without regionally specific volumes obscures important relative water scarcity contextual information.
CDP— an organization that collects information from companies worldwide regarding their greenhouse gas emissions and climate change strategies—is currently developing a similar framework through which to collect companies’ water-related information and policies. The first iteration of the annual CDP Water Disclosure Information Request will be sent
to companies to disclose against in April 2010 (with results reported in Q4 2010). It demonstrates an increased sophistication in what is asked of companies in respect to their understanding of their interaction with water resources. For this analysis, perhaps the most relevant of CDP Water Disclosure’s requests are: 1) an in-depth examination of waterrelated business risks and 2) an assessment of the local context in which companies operate (e.g. the proportion of facilities located in water-stressed regions). The CDP Water Disclosure Information Request asks that companies disclose this data for their own facilities, as well as their suppliers. CDP Water Disclosure’s new framework underlines the fact that not only do these types of analysis help drive down water-related impacts and risks, but they are also becoming expected of companies by investors, consumers, and other key stakeholders.


Click each box to learn more about each method’s approach to convey information to stakeholders
WFs are beginning to be used as a reporting/ communication tool, though the appropriateness of this use is questioned by some. These concerns are based on the notion that generic and aggregated claims (such as 2,500 liters of water to produce one cotton shirt or 960 liters of water to produce a liter of wine) are inherently misleading and/or meaningless because they obscure essential information regarding the local context and nature of the water use, and therefore do not reflect impacts or risks.

For this reason, total water footprint calculations can be very easily misused and misconstrued. For instance, Raisio, a Finnish food company, has produced a water “ecolabel” for its products that essentially uses a product’s total water consumption as the basis for its scores. Such scores do not speak to the source of that water (i.e. blue or green) or the conditions of the watershed from which it was taken and thus have little value in terms of assessing the sustainability of a product’s water use. That said, more detailed reporting of WF studies has served to help companies be accountable to (and receive feedback from) key stakeholders, as well as help build a good reputation relating to water transparency and responsible water practices. More generally, proponents have also identified WF as an effective awareness-raising tool for business, consumers, and policy makers on water issues worldwide.

WF studies typically use maps and other visualizations to express data and results. Though such visualizations are not provided for or required by the WF methodology, they have become common practice for WF studies. These maps can illustrate internal data such as facility locations and water use, as well as external data that contextualize the WF data, such as different water users within a system and the relative water scarcity of different regions. This not only allows companies to visually locate (i.e., “hotspot”) potential impacts and risks (e.g., linking facility sites with water scarce regions or where their water uses may potentially infringe upon other uses), but is also emerging as a particularly powerful communication tool. Corporate sustainability managers have found these maps very effective in communicating with non-technical audiences, both internal (e.g., upper management) and external (e.g., investors, consumers, local communities).

Water policy and management interface
Water footprinting has also proven to be useful for companies who look to engage with stakeholders (particularly water policy makers and managers) to manage impacts and advance sustainable water management beyond their fenceline. Companies can use WF to highlight where major water uses are in the value chain to prioritize where they might focus their external engagement. For instance, if a company determines that the majority of their water use occurs in agricultural production, they could work with local growers (and suppliers) to implement efficiency improvements. Companies could also work with academia to further develop technologies that support these efficiency improvements. Similarly, companies could work with water managers to conserve water (e.g., through funding the repair of pipes), which is often cheaper and saves more water than internal efficiency improvements. If companies determine that their water use is hindering environmental flows or community access to water, they could partner with local NGOs to find effective solutions. Water footprinting is particularly well suited to help inform corporate engagement with water policy and management because it was originally designed as method for assessing WRM (and therefore many managers and policymakers are familiar with it). Its effectiveness as a communication tool for non-technical audiences also makes it particularly useful to this end.

For some time, LCA outputs have been used to inform environmental purchase and sales decisions. This occurs either as a support for environmental claims or as the supporting information for LCA-based (i.e., Type I and Type III) ecolabels. In this context, LCA is useful to program operators of ecolabel programs, whether they are governmental or private sector programs. Type I labels are provided for products whose life cycle performance exceeds set standards. In contrast, Type III environmental product declarations (EPDs) merely disclose performance in a pre-set fashion by product category rules and make no claim of environmental superiority. EPD programs require LCA studies to be performed for all products seeking the label. EPDs are becoming a requirement under law in some countries, such as in Northern Europe. Almost all EPDs are aimed at the business or institutional customer. If and when the labels become available in a consumer setting, they will have to be accompanied by a substantial educational effort. Studies on nutrition labels, for example, show that even decades on, the consumer is confused about the meaning of the information, and environmental information is even more obscure to the average consumer.

The general framework for and validation of LCA studies is governed by the relevant ISO* standards:

  • ISO 14040 and 14044 (the life cycle standards)
  • ISO 14025 and 21930 (the EPD standards)

In general, these standards require higher levels of verification as the use of the data becomes more public and more widespread. The required/recommended validations are:

  • For internal use only, verification by a co-worker who was not involved in the original study.
  • For external use (what is called a thirdparty report), verification by a panel of at least three, including LCA experts and interested parties.
  • For EPDs, there are two levels of verification: the first for development of th product category rules, which requires a panel of experts and interested parties, and the second for EPD productspecific LCA study, which requires only an independent individual. The standards call out the requirements for LCA experts, including that they be independent (with no conflicts of interest) and be technically competent in LCA matters and in the specific elements of the EPD program and the relevant standards. The review team must also have expertise in the products and processes under consideration.

Though limited in the scope of data it addresses, the WBCSD Global Water Tool can serve as an effective communications tool due to the fact that it is easily understood by non-technical audiences. Companies are increasingly starting to include brief summaries of the proportion of their operations in water-stressed and water-abundant regions in their CSR reports and often use the WBCSD Global Water Tool as the basis for this assessment. Furthermore, the Tool converts the water use and discharge input data into GRI G3 indicators for total water withdrawals (GRI EN8); total recycled water use (GRI EN10); and total water discharge (GRI EN21). This allows companies to easily quantify and report their water use in a manner that is harmonized and comparable across many businesses and industry sectors.

The GEMI tools are geared toward internal assessments at the facility- and company-wide level and are not designed or generally used as communication tools.

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