ESG Reporting Frameworks: Prioritizing Water Challenges for Sustainable Business
When companies and their consultants oversee an ESG reporting framework, the main focus is clearly to positively influence environmental, social, and governance factors. Each category within these ESG programs have multiple metrics that organizations must track.
Common ESG metrics for the environmental category are greenhouse gas emissions and waste management. For the social category, well-known metrics include labor standards and diversity. And when it comes to governance, it’s typical to consider board composition and regulatory compliance. While all of these metrics are imperative to consider, a more focused emphasis is starting to be placed on water-related metrics. These metrics include water consumption, water reuse, and water pollution, all of which can be allocated into the environmental category.
Water scarcity, micropollutants and emerging contaminants are prominent issues affecting organizations and communities worldwide. ESG programs are evolving to prioritize water challenges. For these initiatives to be successful, companies and their consultants must consider adopting an ESG reporting framework that focuses on tackling water issues.
Before identifying the critical points of an ESG framework program as it relates to water issues, it’s important to clarify the definition of the term itself.
Therefore, an ESG framework—also known as an ESG reporting framework—helps businesses standardize the reporting and disclosure of ESG metrics. Companies utilizing these standards have a clear roadmap for what they should be doing and goals to be achieved to positively impact the environments in which they operate, society at large, and governance categories.
While beneficial, ESG plans are not typically mandated roadmaps that businesses must use.
Oftentimes, companies voluntarily adopt these practices to steer their ESG programs to success.
With water challenges becoming increasingly prominent, there are multiple benefits to adopting an ESG reporting framework that speaks to these important strategic and operational issues.
Having a clear guideline that helps companies decrease water issues will allow them to do the following:
Meet investors’ and stakeholders’ expectations to build trust.
Comply with water regulations as they become more stringent.
Increase their business’s longevity by discovering ESG risks and opportunities.
Gain a competitive advantage by showcasing their company’s commitment to sustainability.
Standardize their company’s ESG performance by using clear benchmarks that can be compared against peers.
Obtain greater access to capital (because high performance attracts new water-conscious investors).
As climate change and pollution decrease water resources while water demands increase, organizations that take steps to mitigate water challenges will help keep the world running as best as possible—and that will go a long way in the public eye and with investor relations.
Now, it’s time to discuss the three popular ESG reporting frameworks that are focused on the environment and, specifically, water-related metrics.
The CDSB Framework provides a roadmap for reporting environmental and climate change metrics. Currently, 374 businesses across 32 countries and ten sectors use it. This ESG reporting framework addresses multiple factors, such as climate-related risks and opportunities, greenhouse gas emissions, climate-related financial reporting, and carbon pricing.
To supplement the framework, the CDSB recently created the Application Guidance for Water-Related Disclosures. This guide is designed to help companies disclose water-related financial information that investors need. With this insight, investors can allocate capital that fosters a company’s transition to a resilient, sustainable, and water-secure economy.
This ESG reporting framework provides organizations with a questionnaire covering various environment-related metrics, including water usage and climate change. Based on the results of the questionnaire, companies will receive a sustainability score and insights on whether they face ESG risks or opportunities. Overall, the CDP framework is a convenient way for companies and their consultants to see how their scores compare to similar companies and make improvements where necessary.
The UN SDGs were developed in 2015. As global goals, they aim to create a more sustainable future for everyone across the world. Two of the main things the UN SDGs address are climate action and protection of the environment. Some of the goals that relate to those factors are the following:
Delivering access to affordable and clean energy
Combating climate change
Increasing the availability and sustainable management of water and sanitation
If companies adopt UN SDGs as their ESG framework, it could play a significant role in boosting investor confidence, especially since this UN initiative is well known and respected worldwide. Businesses will also have a better chance at preparing their companies to adapt to changing environmental challenges and regulations.
Each of these ESG frameworks mentioned in this article will help an ESG program tackle water-related issues. Companies and their consultants should still take time to consider which specific reporting framework is best for them. The best way to do that is to implement a few steps:
Understand the intent of each ESG framework to ensure the one that’s picked aligns with a company’s ESG program and water goals.
Assess whether certain frameworks work best for specific companies and industries.
Examine the regulatory environments of a company’s industry and jurisdiction so that the ESG reporting framework chosen will help meet regulations.
In some cases, companies and their consultants may find that implementing more than one ESG framework will lead to a better ESG report for stakeholders and investors. Therefore, it’s okay to adopt multiple as needed. The route companies and their consultants choose will simply depend on how many water-related and environmental goals their business needs to meet and which frameworks will help them achieve these initiatives.
One thing businesses and their consulting engineers should keep in mind after choosing an ESG framework is whether they have a foundation in place to comply with the requirements in the framework. If a framework requires a company to decrease water consumption, increase water availability, or ensure access to clean water, then companies need the right metrics in place to succeed. One of the best puzzle pieces they should pick up is a partnership with water and wastewater experts.
At Genesis Water Technologies, we use innovative tools, technologies and methods to enhance the success of ESG programs by ensuring organizations meet their water-related and sustainability goals. In doing so, we help companies comply with increasingly strict water regulations, create sustainable sources of water, and treat water and wastewater effectively so that it’s clean, safe and usable.
If you are overseeing or assisting with an ESG program and plan to adopt a reporting framework that makes water issues a strategic and operational priority, contact our wastewater and water experts for help. We will show you how to implement the framework and meet your sustainable goals with innovative technologies and solutions that will provide greater business value to your organization, its stakeholders and investors alike.
To learn more, call us at +1 877 267 3699 or email us at email@example.com. We look forward to helping you achieve your water related ESG compliance goals.