Rising water risks drive push for common water reporting rules

LONDON – As climate change and population growth place increasing pressure on freshwater resources, a global initiative is pushing for a standardized approach to tracking water use. The goal is to improve risk assessments and transparency regarding water consumption, which is becoming harder to monitor due to inconsistent reporting standards across the world.

Currently, water use is reported using a fragmented array of standards, making it difficult to compare practices across companies, industries, and regions. Unlike carbon emissions, where tracking methods are more unified, water use definitions often vary significantly.

“Everyone is tracking something different, often using the same words to mean different things,” said Lauren Enright, Programme Manager for Water Services at SCS Global, a consulting firm helping to organize the initiative. “That creates real problems for investors, auditors, and communities trying to understand what companies are actually doing with water.”

This new initiative, set to launch later in April, is expected to be called Corporate Guidance for Assessing Water Scopes 1-3 in Value Chains. It is backed by leading organizations such as the World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the U.N.-backed CEO Water Mandate. The initiative’s aim is not to replace existing frameworks, such as the European Union's Corporate Sustainability Reporting Directive, but rather to complement them by providing a unified set of definitions and core concepts for reporting water use.

The push for consistency has gained momentum as water scarcity increasingly affects various sectors, particularly technology, where data centers have faced protests from local communities concerned about their water consumption.

For investors, the new framework promises to transform often qualitative or narrative-based disclosures into reliable data that can be used to make more informed decisions. “It would allow us to actually compare companies and then specific interventions on more of a like-for-like basis,” explained Ida Hempel, an investment analyst at Galvanize Climate Solutions, a climate-focused investment firm.

As the global demand for water grows, this initiative aims to offer businesses and stakeholders a clearer view of water-related risks, contributing to more responsible water management practices across industries.

-Reporting by Simon Jessop. Editing by Mark Potter/Reuters