“Water in ESG is matter and matrix, material and medium.”
Introduction
ESG reporting stands for Environmental, Social, and Governance. It represents a framework for evaluating a company's performance across these three pillars.
- The environmental pillar focuses on energy efficiency, water usage, and overall sustainability practices of the organization.
- The Social pillar includes diversity and inclusion, community engagement, and the company's overall contribution to societal well-being.
- Governance gives insights into board composition, risk management, and overall adherence to ethical business practices.
Annual reports, sustainability reports, and ESG reports are published annually disclosing the data related to these pillars. This provides a thorough grasp of the company's influence that goes beyond financial data.
What is ESG and ESG Reporting
ESG is just one piece of the broader sustainability puzzle. It documents materiality assessment to meticulously consider the influence of environmental and social aspects on a company's profitability. Through the promotion of transparency and risk management, ESG harmonizes corporate strategies with social and environmental issues. But it's crucial to understand that ESG is a first step and not the end objective.
ESG reporting becomes essential as the landscape of sustainable investing is notably trending in the financial world for risk-resilient businesses. The diverse sets of criteria can make ESG reporting both challenging and dynamic. Hence, sector-wise reporting characterizes the specific indicators to disclose the environmental and social impact of the organization over time.
According to the World Economic Forum, by 2030, global water demand is projected to exceed sustainable supply by 40%. This stark reality underscores the significance of water in ESG reporting. In this context, the focus on water within ESG reporting is not merely a regulatory requirement but a strategic imperative for companies aiming to navigate the complexities of a water-constrained world while aligning with stakeholders' expectations. Water in ESG data sheds light on performance patterns and is essential for comprehending the effects of financial decisions.
Role of Water in ESG Reporting
Between 2002 and 2017, there was a 13% global increase in water stress. About sixteen countries are predicted to be nationally deriving unsustainable amounts of water from non-replenishable groundwater and surface water sources by 2030.
The importance of water footprints is increasing as businesses expand the reach of their ESG initiatives. As with carbon footprints, comprehensive data and reporting are essential for water footprints. Water plays a crucial role in ESG reporting, and its impact is significant across all three pillars of ESG reflecting the interconnectedness of environmental, social, and governance factors. Metrics relating to water like water consumption, water reuse, and water pollution are beginning to receive increasing attention. ESG programs are evolving to prioritize water challenges.
Hence, there are a lot of frameworks available that are used by the institutions to report and reflect their water-based performances like the Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI standards), Climate Disclosure Standards Board (CDSB), etc. Here, the organizations are expected to report data on water withdrawal, consumption, and discharge through their operations and supply chain.
How To Achieve Maximum Impact with Water
Amidst the pressing issue of the water crisis, exacerbated by climate change, the discussions at COP28 prominently focussed on dealing with rising sea levels, floods, and droughts. Negotiations on the water at COP28 centered around three key topics that can help organizations create maximum impact with water:
- Conservation and restoration of freshwater ecosystems; where technologies like Kritsnam can help empower companies with water intelligence. Businesses can now objectively evaluate water risks and digitally manage their water footprint to achieve sustainability.
- Ensuring that urban populations have access to high-quality water and protection from water-related hazards by using efficient water meters; e.g., Dhaara, a new-age water meter that combines the power of IoT with the latest sensor technologies which make it easy to manage water consumption from anywhere and anytime (even when the power is down).
- Enhancing the resilience of food production systems to cope with rising sea levels, flash floods, and droughts.
Also Read: 25 Best Quotes On Save Water & Water Conservation
Water ESG Metrics
Water-related metrics fall under the bigger umbrella of the environmental pillar. Greenhouse gas emissions, energy usage, biodiversity conservation, waste management, and water efficiency are other important environmental indicators. Key Performance indicators (KPIs) related to water efficiency are divided into qualitative and quantitative indicators. The existence of water policy, water risk management programs, disclosure of water-related data, water consumption, discharge and water withdrawn, amount of recycled and reused water, source of water, investment in water-related projects, etc are a few important metrics related to consumer-based industries.
Managers and policymakers can keep an eye on the risks that businesses and sectors face linked to water by using water metrics. Water metrics, such as water intensity, consumption, and withdrawal, are instruments to assess the hazards associated with businesses' water use.
The first step is to install a water meter
Installing water meters is instrumental in measuring and monitoring water usage, which is a fundamental component of water ESG metrics. Water meters provide accurate data on the quantity of water consumed by a company, allowing for informed decision-making and effective water management strategies. By leveraging data from water meters, companies can implement targeted strategies to enhance water efficiency, reduce environmental impact, and demonstrate their commitment to sustainable water management practices.
Kritsnam water meter
Kritsnam’s Dhaara provides a step-by-step solution for transparent reporting and accounting of water resources. It provides time-series data on groundwater abstraction metering and monitoring. It efficiently detects sources of leaks and helps in reducing water footprint by more than 30%. It also assists farmers in tracking their crop water usage, estimating the water savings, and forecasting the irrigation requirements over days and seasons. Dhaara tracks the domestic water distribution from the source to the final delivery point. Municipalities can track their supply, estimate leakages, and bill the end consumers.
5 Ways for companies to ensure effective water strategy
Comprehensive water audits:
Through assessment of water usage patterns including examining water consumption in manufacturing processes, cooling systems, office facilities, and supply chains. Water audits provide the foundation for developing targeted strategies to optimize water usage and minimize waste, leading to cost savings and environmental benefits. With Dhaara, a revolutionary water budgeting application, businesses can now objectively evaluate water risks and digitally manage their water footprint.
Implementing water-efficient technologies:
This can include installing low-flow fixtures in restrooms, implementing water recycling and reuse systems in manufacturing processes, and adopting precision irrigation techniques in agricultural operations. Embracing innovative technologies that minimize water usage not only conserves valuable resources but also enhances operational efficiency and reduces operational costs over time.
Setting clear water conservation goals:
Companies like Unilever have aligned their water targets with UNSDGs 6, 12, 13 and 17. They disclose their progress, present status, and future targets in alignment with the ESG framework, which helps them to be at par with their peers. Offsetting initiatives and quantitative targets demonstrate the company's commitment to responsible water stewardship.
Engaging stakeholders and communities:
Collaboration with local communities on watershed restoration or community water access initiatives can create a positive social impact. Collaboration involves working together with various stakeholders, including local communities, government agencies, non-governmental organizations (NGOs), industry partners, and other businesses, to address water-related challenges and achieve shared goals. Stakeholder engagement helps companies identify potential water-related risks, such as water scarcity, pollution, or conflicts for sustainable water management, leading to more efficient and effective solutions.
Monitoring and Reporting Performance:
Disclosure of water-related ESG data using the CDP, and CDSB framework helps companies maintain transparency and showcase the progress and target achieved to the stakeholders. Implementing robust monitoring and reporting mechanisms is crucial for tracking water usage, assessing performance against targets, and evaluating the impact of water management initiatives. Companies establish key performance indicators (KPIs) related to water usage, efficiency, and conservation metrics to measure progress effectively.
Conclusion
Businesses now find that the regulatory landscape is drastically changing, with a focus on environmental, social, and governance issues. The impending adjustments necessitate a purposeful and proactive strategy that goes beyond compliance to include sustainability in business models as a fundamental component. This all-encompassing strategy is not only morally required, but also strategically essential for resilience, business continuity, and, eventually, financial success. The growing number of water-related problems and difficulties linked to resource constraints highlights the critical need for new technology adaptation and global collaborations to deal with these severe issues.
Kritsnam Technologies, with its innovative products and solutions, offers a transformative opportunity for companies to enhance their ESG performance in the water sector.
With features like Dhaara Smart, a compliant water meter, and Dhaara Live, a digital application for real-time data visualization and analysis, companies can make informed operational decisions that contribute to their water sustainability goals. By partnering with Kritsnam Technologies, companies can enhance their ESG performance, reduce water consumption, mitigate risks, and drive long-term value creation in the water sector.
