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Question: Corporate Water Accounting, Where Do We Stand? The International Water Accounting Field and French Organizations

Answer: Water is, by abundance, the third molecule in the universe after hydrogen and carbon dioxide (Coulomb, 2013). However, our water resource has been under constantly increasing threats in the past years. Physical water scarcity affects 1.2 billion people (UN, 2007). Another 1.6 billion people face economic water shortage (UN, 2007). By 2025, 1.8 billion people will be living in countries or regions with absolute water scarcity (UN, 2007). Water demand is an increasing challenge, as for example, the power and energy sectors account for 44% of water withdrawal in the European Union (Ceres & World Business Council on Sustainable Development (WBCSD), 2011). Additionally, water quality is probably one of the most pressing challenges related to water: “in developing countries, 70 percent of industrial wastes enter lakes and rivers untreated” (Ceres & WBCSD, 2011). Its affordability, although it is a “humanity common good” is increasingly challenging, with a water price that is surging. Water is closely related to other sustainability challenges such as health, climate change, and food. Approximately, 2.6 billion people have no sanitation, which would stop the spread of water-related diseases, which are the leading cause of death worldwide (Coulomb, 2013). More than 1 billion people suffer from malnutrition, which is linked to the availability of water for agriculture (Coulomb, 2013). Finally, “water serves as the fundamental link between the climate system, human society and the environment” (Intergovernmental Panel on Climate Change (IPCC), 2007). Water, as climate change, is therefore a significant challenge posed to humanity. Water is as much a global sustainability goal, as it is a very locally embedded sustainability issue. Water accounting needs to address both water as a global challenge through, for example the notion of “virtual water,” but also needs to address the local impact on the river basins through connecting organizational information with locally gathered river basin information.
Water is also essential for socio-economic development (UN Water, 2007) and the future of business depends on the sustainability of water resources (WBCSD & International Union for Conservation of Nature (IUCN), 2010). The World Economic Forum in 2015 rated “water crises” as the number one risk in term of impact (World Economic Forum, 2015). In their Commission Guidance Regarding Disclosure Related to Climate Change from 2010, the SEC warned “changes in the availability or quality of water, or other natural resources on which the registrant’s business depends, or damage to facilities or decreased efficiency of equipment can have material effects on companies.” When introducing their case for the water disclosure project, the CDP stated “the actions of business will have a significant impact on the scale and impact of such scarcity and on the development and implementation of potential solutions” (Irbaris, 2009). Water-related risks are already a reality for many sectors such as agriculture, with flooding, the apparel industry with higher commodity price on cotton, the power industry with droughts in China which have led to decreased hydroelectric power availability, fines that have to be paid for polluting rivers, lakes, and water basins and the bans on the practice of hydro-fracturing (Ceres & WBCSD, 2011).
Although water has not received the same attention given to both climate change and biodiversity globally, corporate tools related to the water challenge have gradually emerged since the early 2000s. Today, contrary to the corporate carbon accounting field, which has a largely dominant accounting standard (Green, 2010; Ranganathan, 2011), the corporate water accounting field is still scattered and multiple. Multiple actors including the UN CEO Water Mandate, the Alliance for Water Stewardship (AWS), Ceres, the Global Environment Management Initiative (GEMI), the Water Footprint Network (WFN), the World Business Council for Sustainable Development (WBCSD), the World Resources Institute (WRI), the World Wildlife Fund (WWF), and the International Organization for Standardization (ISO) have all been involved into risk assessment, accounting and reporting guidelines and standards related to water. Therefore, our first research question is: what are the water risk assessment, accounting and reporting tools available to corporations for water performance management? From this first research question, we design an analytical performance framework to assess the level of maturity of French companies into water accounting. Therefore, our second research question follows: what do French multinationals account for and report in relations to the water challenge?
The following section reviews water in the accounting literature and the previous reviews of water disclosure conducted between 2004 and 2011. The section “Research Design” describes the research design used to conduct the analysis of both the water accounting field and the water reporting of French multinationals. The next three sections develop the findings in relation to the water accounting field, the analytical framework developed and water reporting. The last section develops the contributions and concludes.

(Source: , 20 Aug 2021)

Source Link: https://doi-org.onlinedatabase.librarynet.com.my/10.1108/S1479-359820180000007002