Keeping your head above water: Why you need to measure your water footprint

Water scarcity is a growing global issue, affecting billions of lives and posing substantial risks to businesses. In this context, water footprinting is a strategic tool—one that not only sheds light on a company’s water usage but also contributes to improving global water security. EcoAct analysts, Josh Greenside and Iain Barber explain what water footprinting is, the benefits of a water footprint inventory, and how it fits into ESG and climate reporting frameworks.   

Introduction

According to the United Nations, over 2.2 billion people lack access to clean water, facing daily hardships due to scarcity. Analysis by The World Bank identifies this as a growing problem, where water stress could cost countries up to 6% of their GDP.

Recognising their pivotal role in confronting climate change, businesses are stepping up to the challenge of tackling water scarcity. By understanding their water impact, they can proactively mitigate risks, foster innovation, and contribute to sustainable water management. Companies like PepsiCo and Microsoft are starting to make progress on water, championing ambitious targets, and positive water practices.

What is water footprinting?

A water footprint is a key strategic tool to help businesses understand their water impact. Water footprinting is defined by ISO (International Organization for Standardization) as a comprehensive assessment method that quantifies the amount of water used directly and indirectly by an individual, organisation, or product throughout its lifecycle. It evaluates both water consumption and pollution, and provides valuable insights for sustainable water management and resource efficiency.

A carefully calculated water footprint inventory reveals areas of high-water use within a business —whether tied to specific products, locations, or processes. But its impact extends beyond corporate walls. Excessive water consumption can strain local communities, ecosystems, and other users of the same water basin. When best-practice methods are followed, water footprinting can unlock insights and opportunities for businesses to build a more resilient and water-secure future.

What are the benefits of a water footprint inventory?

Similar to carbon footprinting, a water footprint inventory offers valuable insights into environmental impact. By measuring and understanding their footprints, companies can proactively reduce their environmental impact. Beyond environmental benefits, water footprint inventory assessment also yields various business advantages including:

• Operational Insight: A water footprint inventory offers a clear understanding of a company’s water usage, consumption patterns, areas of pressure, and water intensities of products and processes – allowing companies to target areas of high consumption.
• Future-Proofing: Helps in preparing for environmentally-conscious business practices by identifying key areas for improvement in resource efficiency.
• Risk Mitigation: Identifies risks such as water scarcity, dependency on water quality/sources, and potential reputational damage from water-related crises.
• Regulatory Compliance: Companies may already be reporting their water withdrawal and/or discharge water to bodies such as the Environment Agency but are now increasingly required to disclose their water footprint for regulatory compliance, such as through CDP and CSRD.
• Stakeholder Expectations: Addressing water-related issues, and setting and communicating water related targets can align with expectations of your stakeholders, including investors, customers, and communities.
• Strategic Alignment: Helps align targets and strategies with scientific recommendations, such as those advocated by the Science Based Targets Network (SBTN) and CDP.
• Cost Reduction: Increased efficiency from water footprinting leads to cost savings and contributes to overall business strategy while mitigating against rising future costs.

Where does water fit into ESG

Environmental, social, and governance (ESG), and climate reporting frameworks increasingly emphasise water-related metrics as investors, consumers, and regulators scrutinise companies’ water management practices. Metrics such as water consumption, intensity, policies, targets, and wastewater treatment feature prominently in ESG and climate assessments, with non-compliance potentially resulting in reputational damage and legal repercussions.  Integrating water footprint data into reporting enhances transparency and accountability, reinforcing a company’s commitment to sustainable practices, and allows companies to position themselves to adapt swiftly to changing regulatory requirements.

There are already a number of important regulatory and reporting bodies putting emphasis on water, a pattern expected to continue as water becomes a material issue for more people and businesses around the world.

	Objective	Reporting focus
SBTN	Enable companies to minimise their impact on water, and transition to a water-secure world.	Science-based Targets: Understand how activities affect water quality and quantity. Basin Prioritisation: Define the highest-priority water basins. Coordinate water targets with land, climate, and biodiversity targets.
CDP	Measure water impact, manage risks and opportunities, report on progress with transparency, and commit to proactive action.	Water Quantity and Quality: Assessing how activities affect water availability and pollution. Business Factors: Business impacts, water management procedures, water strategy and accounting methods. Forward looking activities: Water targets, policies, and water-related risks and opportunities.
TNFD	The TNFD aims to integrate nature into decision-making and shift global financial flows toward nature-positive outcomes. Water is one of the four “realms” of nature in TNFD.	Governance: Assessing how water-related decisions are made within the organisation. Strategy: Identifying risks and opportunities related to water. Risk & Impact Management: Managing water-related risks and minimising negative impacts. Metrics & Targets: Setting measurable goals for sustainable water use
CSRD	Improve availability and reliability of climate information, enhancing transparency and accountability of companies’ impact on people and the environment.	Double Materiality Approach: Reporting on a broad range of sustainability topics, including water, applying a dual perspective—how the company impacts nature and how nature impacts the company. Assurance: Mandatory assurance of reported sustainability information Water Strategy: Risks and opportunities, targets and policies, water management procedures.

EcoAct has supported numerous organisations understand their water impact, ranging from FMCG companies aiming to enhance water efficiency by understanding their water intensity, to assisting financial sector entities in strategically aligning with their water pledges through effective target setting. Whether you’re at the beginning of your sustainability journey or seeking to enhance existing efforts, our experts are here to assist you at every stage.