New Report Assesses Business Water Accounting Methods

Effectively Measuring Water Use and Impacts is Key to Understanding Risk and Promoting Sustainability

April 9, 2010, Oakland, Calif.: Effective business water accounting methods are critical for  sustainable water management, according to a new report from the United Nations Environment  Programme and the CEO Water Mandate. Current methods are a good start for measuring water  use and impacts, but they are inadequate for benchmarking. Advancing effective and coordinated  accounting methods for corporate water use and impacts is essential to help companies identify  risk, drive improvement, and address stakeholders’ needs.  The new report, Corporate Water Accounting: an Analysis of Methods and Tools for Measuring Water Use and Its Impact, for the first time pulls together the main water accounting tools being  used by the private sector and suggests where accounting methods might benefit from  harmonization and increased field testing. The report focuses on the four primary methods and  tools in use today: Water Footprint Network’s “Water Footprint”; Life Cycle Assessment;  WBCSD’s Global Water Tool; and GEMI’s Water Sustainability Tools.

Concerns about growing water scarcity, lack of access to water to meet basic human needs, degraded ecosystem function, and the implications of climate change have brought water to the  forefront as a strategic concern for companies around the world. Corporate water accounting  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.

Corporate Water Accounting: an Analysis of Methods and Tools for Measuring Water Use and  Its Impact, was prepared by the Pacific Institute and the Institute for Environmental Research  and Education.  “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,” said Jason Morrison,  director of the Pacific Institute’s Globalization Program and lead author of the report. “But what  we find is that it is complicated to collect and disseminate meaningful water-related information;  we need more sophisticated, location-specific tools and better data.”

Companies assess water use for many reasons, including pursuit of reduced costs, strategic  planning, brand management/corporate reputation, and corporate ethics/philanthropy – but the  bottom line is 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.  “The term ‘water footprinting’ is often used, but it means different things in different contexts,  and for many it’s an umbrella term like ‘carbon footprinting.’ Therefore, we refer in this report to  ‘corporate water accounting,’” said Guido Sonnemann, Programme Officer for Innovation and  Life Cycle Management within UNEP’s Sustainable Consumption and Production Branch.  “Currently claims about ‘water footprinting’ need to be scrutinized carefully. What we need is a  shared understanding of the term and practice, if we are serious about communicating  information on sustainable water management through the value chain.”

The report points to a more outward-looking approach to corporate water accounting, one that  considers the social, political, and environmental conditions of the watersheds in which the  companies operate. Key areas for improvement in water accounting practices are identified:

  • Reaching broad consensus on the concept of “water footprinting”;
  • Better measuring and characterizing the local contexts in which the companies operate (particularly social dimensions such as accessibility and affordability of water resources);
  • Developing more consistent ways to measure and communicate water-related information across industry sectors and regions;
  • Systematically assessing water risks and impacts across the full supply chain;
  • Coordinating efforts among companies to better measure and put into context their relationship with water resources and sustainable water management.

“Comprehensive corporate water accounting requires a number of different types of  assessments,” said Gavin Power, deputy director of the UN Global Compact. “In order to  meaningfully contribute to improved practices and, ultimately, the sustainable management of  water resources, businesses must also understand and work in unity with aspects they can’t  control, not just the components they can directly influence.”  The new Corporate Water Accounting report is part of the UNEP Water Footprint, Neutrality,  and Efficiency Umbrella Project, which aims to encourage convergence and compatibility among  water accounting methods and management tools.

The United Nations Environment Programme’s Division of Technology, Industry, and  Economics commissioned this report from the Pacific Institute in its capacity as part of the CEO  Water Mandate Secretariat. The report is one component of the broader UNEP Water Footprint,  Neutrality, and Efficiency Umbrella Project. The CEO Water Mandate is a UN Global Compact  initiative designed to help the private sector better understand and address its impacts on and  management of water resources.

Based in Oakland, California, the Pacific Institute is a nonpartisan research institute that works to  create a healthier planet and sustainable communities. Through interdisciplinary research and  partnering with stakeholders, the Institute produces solutions that advance environmental  protection, economic development, and social equity – in California, nationally, and
The Institute for Environmental Research and Education undertakes and disseminates  comprehensive, fact-based research for use in the development of responsible environmental policy, programs, and decisions. The American Center for Life Cycle Assessment, the
professional society for LCA in the United States, is its flagship program.