Executive Summary



Problem Statement

Water as a natural resource is facing many challenges at the local, regional, and global levels. Human water use is increasingly having negative impacts on human health, economic growth, the environment, and geopolitical stability. In recent years, concerns over growing water scarcity, lack of access to water to meet basic human needs, degraded ecosystem function, and the implications of climate change on the hydrologic cycle have brought water to the forefront as a strategic concern for companies around the world.

Companies’ ability to measure and account for their water use and wastewater discharges throughout the value chain is a critical component in their risk assessment and mitigation efforts, as well as their broader ambitions to become responsible water stewards. Corporate water accounting also allows consumers, civil society groups, and the investment community to compare different companies’ social and environmental impacts in order to inform their actions and decision making. In sum, the ability to effectively account for corporate water use and impacts is essential in helping companies drive improvement and become aligned with external stakeholders’ expectations, as well as their efforts to advance sustainable water management.

However, collecting and disseminating meaningful water-related information is a complicated and difficult undertaking. And while corporate water accounting methods and tools have been under development for the past decade, there is still near universal agreement that current methods—though a good start—are inadequate and need to be refined.


Project Objectives and Methodology

This stocktaking exercise—a joint effort of the United Nations Environment Programme (UNEP) and the CEO Water Mandate—aims to assess existing and emerging water accounting methods and tools being used in the private sector, with the goals of:

  • Elucidating commonalities and differences among emerging methods and practice;
  • Identifying gaps and challenges;
  • Suggesting where accounting methods might benefit from harmonization and increased field testing.

Our analysis focuses primarily on four main

  • The Water Footprint Network’s “water footprint”: A method for measuring the volume of water used by any group of consumers (including a business or its products) that is intended to help those consumers better understand their relationship with watersheds, make informed management decisions, and spread awareness of water challenges.
  • Life Cycle Assessment: A systems analysis tool designed specifically to measure the environmental sustainability of products (including water use/discharge and many other resource uses/emissions) through all components of the value chain.
  • WBCSD Global Water Tool: A free online platform that couples corporate water use, discharge, and facility information input with watershed- and country-level data as a means of assessing water-related risk.
  • GEMI Water Sustainability Planner/ Tool: Two free online tools meant to help companies better understand their waterrelated needs and circumstances. The Water Sustainability Tool assesses a company’s relationship to water, identifies associated risks, and describes the business case for action. The Water Sustainability Planner helps elucidate a facility’s dependence on water and the status of the local watershed.

In an appendix to this report, we provide a brief overview of several water accounting methods that are regionally/nationally specific, industry-sector specific, or proprietary and therefore not included in our analysis. In addition, the International Organization for Standardization (ISO) is currently developing a standard for water accounting that is highly relevant to this research, though is not included here because the standard is in its early stages.

Water accounting—as well as companies’ need for and use of it—has evolved significantly over time. In exploring these needs and their evolution in recent years, we summarize when and for what reasons companies are seeking to use existing methods and tools,
along with the questions they are asking with regard to their corporate water use/discharge and the resulting impacts and business risks. Because current water accounting methods and tools all have different histories, intended objectives, and outputs, we explicate these origins and core functions in order to shed light on the circumstances for which various methods and tools may (or may not) be appropriate and effective.

Corporate water accounting today can be seen as serving four general, inter-related applications:

  1. Operational efficiency, product eco-design, sustainable manufacturing
  2. Water risk assessment/identification
  3. Managing water-related social and environmental impacts and water stewardship response
  4. Communicating water risk/performance with stakeholders

These areas of interest to companies represent the broad types of methods and tools available and are motivated by a number of factors, including pursuit of reduced costs, strategic planning, brand management/ corporate reputation, and corporate ethics/ philanthropy. However, at their root, they are all driven by the desire to identify and reduce water-related business risk (and seize
opportunities), whether through building competitive advantage, ensuring long-term operational viability, or maintaining and/or improving social license to operate. Because understanding and mitigating the interrelated issues of water risk and impact is a core driver for emerging water accounting methods and tools, they are explored extensively in this analysis.



Our analysis has resulted in a number of key findings, including those pertaining to: 1) the areas in which corporate water accounting in general is lacking, 2) the similarities across all four general applications covered in the study, and 3) the characteristics, strengths, and weaknesses of specific methodologies and tools. Conclusions about the four application areas and water accounting in general are listed below, while conclusions regarding the main methods/tools assessed are summarized in Table ES-1. We conclude with a list of recommendations for improving corporate water accounting in the future.

Overarching conclusions

  • Terminology confusion: The term “water footprinting” is frequently used by different interests to mean very different things. Most notably, for many, it is used as an umbrella term for all water accounting methods connoting a volumetric measurement of water use that reflects water-related impacts. This usage of the term is similar to the way that many understand carbon footprinting. However, water footprinting—as defined by the Water Footprint Network (WFN)—is in fact fundamentally different from carbon footprinting in a number of key ways, especially with regard to the assessment of impacts, which the WFN excludes. Because of this varied understanding, any claims or conclusions made about “water footprinting” should be scrutinized carefully.
  • Shift toward external factors: The extent to which a company has water-related business risks is largely dependent on the sociopolitical, environmental, and geo-hydrologic contexts in which the company and its suppliers operate. As such, corporate water accounting has transitioned from a primarily inward focus on production processes to an outward focus that entails the social, political, environmental conditions of the watersheds in which companies operate.
  • Lack of harmonization: Being a nascent field, the approaches used by businesses to measure and report water-related risks and impacts vary significantly among companies and industry sectors. In addition, methods for characterizing watershed conditions are still largely underdeveloped. As such, it is often difficult for companies to compare their water risks and impacts, and benchmark their progress against that of other companies. Furthermore, it makes it difficult for external stakeholders to accurately assess companies’ risk and impacts.
  • Supply chain issues underemphasized: Companies are increasingly recognizing that a significant portion of their waterrelated risks and impacts can occur in their supply chain rather than their direct operations. Yet this component of corporate water accounting remains relatively underdeveloped. This is due partly to the challenge of collecting and managing data from often hundreds of different suppliers, as well as the fact that many companies (e.g., those that source supplies in global commodity markets) are not able to track water issues relating to their supplies.
  • Inadequate data: A lack of sufficient data is in many cases the greatest factor limiting the ability of corporate water accounting to provide meaningful information on waterrelated impacts and risks. This is most often due to inadequate databases, lack of access to existing data, or insufficient granularity of data.
  • The water-energy-carbon nexus: Companies are increasingly acknowledging that water-related impacts and risks are inextricably linked to their energy use and carbon emissions. Sustainability accounting methods are only beginning to develop efficient ways to align such assessments and highlight linkages.

Findings regarding the four application areas

Operational efficiency, product eco-design, sustainable manufacturing
Companies simply seeking to improve the efficiency of their operations with respect to water use and discharge may require relatively little knowledge of watershed conditions in which they operate. Although the need for operational efficiencies may be greater in certain locations due to water stress, the process through which these improvements are achieved is typically not dependent on the local context. Thus, companies can often track operational efficiencies using internal production data alone. That said, efforts to make “eco-friendly” products are predicated on assessing external factors, which will require watershed-level, local context data.

Water risk assessment/identification
Water-related business risks are associated not only with the impacts of corporate water use/discharge on the surrounding environment, but also changing external social, environmental, and political conditions in places where the company operates. As such, risk can be effectively assessed using a number of different approaches, including the four main methods/tools evaluated in this study. Conducting a simple “first-tier” risk screen that identifies at-risk operations or value chain stages that are likely to have water issues is quick and relatively inexpensive, and can be done without extensive detailed internal or external data. However, conducting a comprehensive assessment that considers the specific local social, environmental, and political conditions that create risk in a particular locale requires detailed data on both internal water use/discharge and local watershed conditions. Such data collection requirements can be resource intensive and are often hindered by a paucity of primary data.

Managing water-related social and environmental impacts and water stewardship response
Accurately assessing the social and environmental impacts of a company’s water use/ discharge is an important component in any comprehensive corporate water accounting exercise. Yet methods for assessing such water-related impacts are currently underdeveloped. This is partly due to the data limitations mentioned above, but also due to a lack of agreement among practitioners on the appropriate range of social and environmental impacts that must be addressed, as well as consensus on the methods by which such impacts are characterized. A detailed assessment of impacts could consider a number of different environmental and social factors, including physical abundance of water, human access to water, affordability of water services, human health issues, and ecosystem function/biodiversity, among others. However, at present there is no consensus in the field of corporate water accounting as to the appropriate scope of such impact assessments.

Communicating water risk/performance with stakeholders
Companies are increasingly using their water accounting outputs to support their disclosure to key stakeholders and the general public as a strategy for improving transparency and accountability. Traditionally, quantitative water data disclosed has focused on indicators such as total water use, discharge, and/ or recycling. This information alone is now widely considered inadequate as it does not address the local contexts in which the water is used. As corporate water accounting has evolved from an inward to outward focus over the years, a corollary shift in demand for supporting information has taken place. New initiatives, such as CDP, underline that such disclosure of riskrelated and location-specific information is now an expectation of companies.

Table ES-1: Summary of Findings on Corporate Water Accounting Methods and Tools


In our analysis, we identified six key areas in which water accounting practices can be improved through emerging practice. These improvements can manifest themselves through the field testing that UNEP is planning within its multi-year WaFNE Project, or the efforts of other corporate water stewardship initiatives.

  • Common definitions: Reaching broad consensus on an acceptable definition of the term and concept of “water footprinting” is essential moving forward in order to clarify communication of important information among companies and allow non-technical audiences, including consumers and investors, to more easily understand and engage with this field.
  • Assessment of local water resource context: Corporate water accounting must better measure and more consistently characterize the local external contexts in which companies operate. In particular, a better understanding of the social dimensions (e.g. accessibility, affordability) of water resources is needed. Companies, practitioners, and other stakeholders stand to benefit from reaching agreement on appropriate and effective “local context” metrics and better ways of working together to collect and manage the relevant watershedbased information.
  • Harmonized reporting criteria: In order to support companies’ and stakeholders’ ability to assess corporate water risks, impacts, and performance and guide future corporate water stewardship practices, a more consistent approach to measuring and communicating water-related information must be developed. Such information should be relevant across industry sectors and regions and must be valuable for companies themselves, while addressing external stakeholder needs.
  • Improved data collection: Since many corporate water accounting efforts are limited by insufficient corporate water use and external watershed data, emerging best practice should focus on building the capacity of operations managers to develop and manage more robust information systems.
  • Assessment of supply chain: More robust and systematic ways to address suppliers’ water issues must be developed. Building out this relatively underdeveloped aspect of corporate water footprinting can be accomplished by focusing on standardized and improved data collection systems in complex supply chains—and innovative ways to communicate and incentivize this focus to suppliers.
  • Addressing water quality: Priority should be given to developing more effective ways of accounting for wastewater discharge/ water quality, assessing related impacts on ecosystems and communities, and “characterizing” ambient water quality in the watersheds in which companies operate.
  • Cooperation among companies: There is an opportunity for companies to pool resources in their efforts to better measure and contextualize their relationship with water resources and contribute to sustainable water management. Companies can expedite the advancement of water accounting practices by sharing policies and programs, watershed and supplier data, innovative technologies, and effective reporting criteria.
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