Water - The next carbon
ACCA (the Association of Chartered Certified Accountants) is calling
on businesses to not only account for their carbon emissions, but their
water usage too in a report called 'Water - The next carbon?'
ACCA's report outlines how sustainable sources of water underpin
economic growth and security and can help combat the effects of climate
change. It also discusses the effects water scarcity could have on
business, from a financial and operational perspective.
Water has become a fast disappearing resource
Issues discussed include, water as a key business risk, water
footprinting guidelines for companies, public-private partnerships,
corporate water management best practice; and mainstream investor
interest in water.
ACCA hopes to encourage accountancy practices and the finance
function in businesses to incorporate water risks and usage in its
company reporting. ACCA is calling on the profession to also start
working on methodologies for measuring water footprints and their
accountancy departments to better track water use and water risks.
Over recent years ,the issue of climate change has steadily risen up
in company, Government and civil society's agendas. It is now recognized
as a significant business issue and one that must be managed.
In the report, three key risks were identified arising from water
scarcity and management issues.
Physical risks - arising through flooding, pollution and scarcity of
water in regions where an organization operates .
Financial risks - arising from competition, increase in water tarrifs
and other pricing mechanisms and cost inflation of water and energy as a
result of increasing water stress across regions. Higher costs, plant
closure, and reputational damage are other risks as resulting from water
Reputational risk - those businesses that fail to understand the
impacts that their operations, supply chains and business
responsibilities have on water resources, aquatic ecosystems and local
communities are leaving themselves open to reputational risks and
potential loss of customers and investors.
So what can businesses do to start managing this issue? ACCA offers
practical advice in the report.
One action is the determination and calculation of the water
footprint to find out where material water impacts originate and how
they can be managed. Calculation of this footprint then leads to
comprehensive disclosure on the issue within annual and sustainability
reports. An organization's footprint can be thought of as its "direct
"and "indirect "or "virtual "water impacts.
Doing this in isolation from Government regulation is ineffective.
Therefore private organizations need to engage with the Government and
other stakeholders on public policy of water - the extent to which and
how water use can be regulated, monitored and managed.
Recommendations as to how to address water risks are relatively
straightforward and somewhat similar to how multinationals are
developing and implementing carbon strategies:
* Determine your enterprise-wide water footprint and, if appropriate,
evaluate the embedded water in key products,
* Identify ways to reduce water use (direct and indirect),
* Consider local water "offset projects" in collaboration with local
and global NGOs,
* "Re-value" water beyond the current cost of water,
* Determine physical, regulatory and perception risks with direct and
indirect water use,
* Be transparent in communicating your goals and performance and
* Finally, develop a corporate-wide sustainability strategy that
takes a systems-wide approach to energy, carbon, water and material use.
All of these resources are interrelated, and any corporate strategy
requires an integrated solution.
ACCA Sri Lanka Country Manager Aruni Rajakarier, welcomed the new
report and urged more firms to embrace water-reporting methodologies.
"Businesses should be addressing and reporting on the importance of
water resources and management in their operations as well as upstream
and downstream activities, one element of which is calculating the water
footprint," she said.