Directions for Corporate Water Disclosure. Bridging Local Risks with Global Frameworks

University essay from Lunds universitet/Internationella miljöinstitutet

Abstract: Water availability faces increasing pressure due to economic growth, population growth,greater affluence as well as climate change. For companies, this could lead to higher businessrisks as water is often a key ingredient in their operations for example in cooling, steamgeneration and cleaning. Moreover, companies might be competing over water with otherstakeholders in the region when water scarcity is a local issue. On the other hand, companiesgenerally discharge wastewater, which when released untreated, could pollute receiving waterbodies. Pressures related to water availability are intensifying throughout the world, resultingin a growing appetite from investor for water disclosure. In order to satisfy investor demands,companies should report how they manage and perform on their water impact.The research objective of this thesis is to create understanding for companies on whatelements of water reporting are needed to assess, manage, and communicate water risks intheir operations, geographical context and supply chains. In my research, the water risksdisclosure of 101 companies have been investigated in four water-intensive sectors, namelyfood products, beverage, chemicals, and metals & mining. In addition, ten companyrepresentatives were interviewed to learn about the drivers and constraints of water risksdisclosure. The chemicals and metals & mining sectors are communicating most on theirwater risk exposure within the operational activities, when looking at policies, programs andGRI reporting. The food and beverages sectors are disclosing the most on water managementin their value chain. In all four sectors, between 25 up to 45% companies disclose informationon the identification and management of water risks in water scarce regional. During theinterviews, company mentioned that they had identified water risks related to the lack in wateravailability (both in quantity and quality) halting or ending productions, fines and reputationalharm due to water discharge or spills, increased costs due to more stringent legislation andhigher costs on the supply side. They have set programs and management systems to controltheir water use performance and many pursue to improve these figures through corporatewideor facility-based targets. The GRI supports many companies in identifying whatinformation they could disclose in order to make peer comparisons. Although contested thisview, stating that the water-related GRI indicators prove neither high nor low water impacts.The water footprint might be a more exact way of measuring the water impact of a companyand some companies are pioneering in the use of this measure. Lastly, suppliers can expecthigher demands for water disclosure from purchasing companies.

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