A best-practice guide to creating sustainable water programs

When it comes to building a sustainability practice, companies have a lot to consider beyond just energy usage and emissions; water usage is also a growing area of focus. This is partially driven by public concern, especially in water-stressed regions. For example, in the United States, public concern regarding the water consumption of data centers has prompted Amazon and Google to reconsider their water management strategies in Virginia and Arizona, and California has implemented water disclosures and restrictions.

Companies are also encountering heightened regulatory pressure, such as the EU Corporate Sustainability Reporting Directive (CSRD) being revised under the Omnibus proposal, as well as the passed – but currently paused – 2024 US SEC regulations. Globally, nations such as India and China mandate companies to report on their water usage and management practices.

To help companies stay ahead of these shifts, Ramboll’s experts present four key actions you can take to align your water programs to best practices and make them truly sustainable.

1) Improve data management

2) Conduct regular water risk assessments

3) Set targets and a strategy to meet them

4) Integrate water into policies and processes

Improve data management

For good water stewardship, it’s critical to know how much water is used across the business. With this information, companies can identify water usage hotspots, optimize efforts around water conservation, and measure the effectiveness of such initiatives.

Companies should first focus efforts on improving data coverage. At a minimum, companies should understand overall water flow (including water withdrawals, discharges, and consumption) within each of their assets and gather similar data within their value chain. Where possible, companies should also aim to break down water usage by end to better understand drivers of water use.

Depending on where the company operates, it may be important to collect other water-related metrics, such as water recycled, water quality, and pollution metrics. Many of these metrics on quality and pollution may already be collected for environmental reporting, but not visible to the sustainability organization.

Further, obtaining accurate water metrics can be a challenge because water data is not as consistently provided or metered like electricity. In these cases, improving coverage may require the installation of new equipment or co-ordination with key stakeholders like tenants, utilities, or suppliers.

Conduct regular water risk assessments

Sustainability-focused water risk assessments – as part of broader climate risk assessments – can help companies understand potential impacts to their operations, reputation, or financial performance. When conducting these assessments, companies should aim to make the assessment as comprehensive as possible by:

• Evaluating the value chain, not just direct operational water usage

• Considering all water-related dependencies, impacts, risks and opportunities (not just risks)

• Quantifying financial impact of water-related dependencies, impacts, risks and opportunities

• Breaking down analysis by region, not just looking at a corporate level

•Integrating scenario analysis (exploring several scenarios to understand potential risks)

Conducting these risk assessments on a regular basis can help companies better identify and mitigate long-term risks and liabilities with water (e.g. proactively reducing water dependence in regions prone to drought, or that might become water restricted as the climate changes). In addition, these assessments can help capitalize on opportunities (e.g. implementing a closed-loop water recycling system to reduce operational costs and fund local groundwater restoration). Finally, conducting and disclosing these risk assessments improves transparency with stakeholders on water-related concerns.

Develop targets and a strategy

In addition to data collection and risk assessments, companies should create a water forecast to help understand their relationship with water in the future and how that relationship might change. These forecasts can also help quantify the gap to any potential targets.

With this data in hand, companies can start to think about goals for their water programs and how to achieve them. There are a variety of resources that can help companies set goals and strategies, including the Science-Based Targets for Nature (SBTN), and the UN CEO Water Mandate’s Setting Site Water Targets Guide. Setting targets and laying out a strategy to achieve them will help companies articulate the objective of their water program, focus and optimize their efforts, and measure progress over time.

Integrate water into policies and processes

To manage water sustainably in the long term, companies must integrate sustainable water practices into the way they do business. This could include taking actions like incorporating water considerations into the organization’s environmental policies or providing incentives to key decisionmakers to achieve water goals.

Additionally, companies should keep the board updated on water-related dependencies, impacts, risks and opportunities, and factor water concerns into procurement decisions and supplier contracts. Companies with sustainability programs should start by expanding their existing sustainability policies and procedures to cover water. This would make for a stronger, comprehensive water plan with organization-wide applicability that promotes interdepartmental communication.

We’ve outlined the four key actions companies can take to improve their water sustainability programs. In addition, companies could consider additional practices to make their water program more robust and successful. They should collaborate regularly with key external stakeholders, including non-profit water initiatives, local communities, and regulators. Companies should also expand communication to increase transparency around water-related concerns. Finally, they can integrate water considerations into business decision making such as by setting an internal water price based on the social value of water.

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