From global to local: enhancing ESG data on water

Environmental, Social and Governance reporting has become increasingly important over the last years as it enhances companies and investors understanding of risks not captured by traditional financial reports. However, there are significant shortcomings in current ESG reporting and ESG data on water risks, including a one-dimensional view of water risk exposure, lack of standardised reporting frameworks, insufficient contextual detail, and unaddressed cascading risks. This was identified in a previous study conducted in 2022. Building on these findings and recommendations of the previous report, this report analyses water risk management and reporting with a particular focus on localised risks. In order to compare water risks in a local context, the report conducts a scenario analysis focused on two economic zones: the Chennai (India) and São Paulo (Brazil). These zones were chosen because of their existing and future water risks as well as the importance of these zones for investment portfolios. Through this scenario analysis the report seeks to evaluate the actual and potential future water risks in each region, and the reporting practices under differing regulatory and climatic contexts, while addressing the benefits and limitations of these practices. By doing so, we provide a pathway for improving water reporting and ESG data on water. This report highlights a) the need for improved data and reporting on corporate water risks, especially regarding contextual, localised and forward-looking water risks and b) provides the tools with which forward-looking and localised risks can be identified. By doing so, localised and forward-looking data will enable companies, investors, and data providers to better manage water-related risks and strengthen sustainability efforts, leading to improved corporate performance and improved environmental stewardship.