Water availability is a growing global challenge shared across countries, industry sectors and society. Furthermore, water quality, access to water and sanitation, and the ongoing decline of freshwater biodiversity all represent other dimensions of water that are also growing in importance in the face of increasing climate instability.
As substantive water-related risks become more immediate, there is a pressing need for greater transparency and comparability on the part of all those who use and manage water resources.
This is especially true for the mining and metals industry, considering its high water-dependency for mineral processing, dust suppression, slurry transport and employee needs, and its potential for impacts on water quality and ecosystems.
Water is a shared resource - indeed a shared right - within basins where mining occurs. With any form of sharing, trust is foundational. To that extent, transparent water use by companies through external reporting is vital to building trust and relationships with others.
In addition to transparency being an important aspect of good governance, transparency provides investors, regulators, local communities and civil society with greater insights into a company's water stewardship practices. And beyond strengthening trust at the corporate and facility level, transparency can help at the sectoral level - a rising tide that floats all boats.
What trends are we seeing in corporate water reporting?
As rising temperatures drive more energy in weather systems, we are seeing more variable water patterns: more extreme floods, more extreme droughts, or so-called acute water risk events. These tend to exacerbate the longer term, chronic risks such as water scarcity and pollution.
As a result, water availability and water use are of increasing concern for governments and communities - and water risks, opportunities and their management strategies have increasingly become a focus for investors. Alongside a general rise of interest in ESG and SRI investing, ratings agencies and investors as a whole are seeking more information to inform their engagement with companies based on environmental performance.
This has driven a plethora of reporting requirements, initiatives and more detailed disclosure requests over the last few years (eg GRI's revised Standard 303: Water and Effluents and CDP's tailored Water Security Questionnaire for specific high-risk sectors, including mining and metals), with stakeholders looking for more granular asset-level operational data, along with greater details on the context of water use (e.g., are water withdrawals coming from a scarce basin or not?).
At the country or regional level, we are seeing some governments pushing for greater levels of sustainability reporting. For example, in South Africa, integrated reporting is mandatory; in the US, the Securities and Exchange Commission has adopted new rules governing disclosures by mining registrants; and in Europe, the EU has developed its own mandatory reporting requirements, which includes providing external assurance. This is a trend we expect to continue.
In turn, more transparency is increasingly being championed at a corporate level, and it is great to see overall trends showing growing levels of water disclosure, with more companies engaging in this area - in the mining and metals industry and its value chains, and across other sectors. As companies in all sectors focus on ‘environmental materiality' within the value chain, there will be a growing push from other sectors to have the mining sector provide data to their customers.
A path to alignment and consistency
Though one system does not currently exist that meets the needs of all stakeholders, company reporting of water use in the mining and metals industry is becoming increasingly standardised over time through the development of industry specific water reporting guidance such as ICMM's Water Reporting: Good Practice Guide (2nd edition) which was published in August 2021.
Companies facing multiple reporting standards has caused reporting fatigue within the industry, and so alignment and interoperability of reporting standards is another growing trend (albeit more slowly). ICMM's guidance was developed with this in mind to support the industry in compiling relevant water-related information, including consistent and comparable metrics, to provide a solid basis for consistent water reporting and transparency that will enhance stakeholders' understanding of, and ability to use, corporate water disclosures. Its water reporting requirements build directly on external reporting guidance and definitions, including those of the CEO Water Mandate, GRI and CDP as well as the Mineral Council of Australia's (MCA) Water Accounting Framework (WAF).
This alignment of standards - including strategies, opportunities and asset level scenarios - is critical and will continue to be a focus. The integration of water risk into corporate strategies will become a central facet of sustainability - and indeed climate - strategies for the industry. Furthermore, policies need to be translated into practice, and that translation needs to be taken in a local approach to implementation.
What's next?
As a global society, we will not be able to meet the sustainable development challenges of the 21st century without improving the stewardship of water resources. As large water users, and potentially as large water providers, the mining and metals industry has a leading role to play in contributing a deeper understanding and practical solutions to water resource challenges. The sector's responsibility requires the implementation of robust water governance, including transparency and disclosure around water use, and ensuring water is considered not only at a site level but rather within the broader basin context as future water use will be contingent upon our collective ability to resolve shared challenges at the catchment-scale.
As we look to the future, there is a growing need to think in terms of systems. The linked challenges of climate change, biodiversity loss, and social inequality will all exacerbate shared water challenges facing water users. It is no longer enough to be a strong, singular actor - rather we must think about the resilience of operations in the face of their shared context. This demands that the industry once again raise its ambition levels and demonstrates both proprietary water outcomes and shared water impacts. On a practical level, we must ensure that we have the right expertise and integration of social and environmental disciplines to drive those results. Water is an important linkage between these disciplines.
The mining and metals industry is one of the few sectors globally that has a clear, articulated and common approach to water reporting. The sector's efforts to advance transparency can act as a signal to other sectors, to investors, and to communities on its commitment to tackling the growing challenges we face as a planet. While ICMM and our members have taken up the challenge, it is only by working with other stakeholders, users and industries that we will secure a sustainable future for our shared water resources.
These insights were some of the key takeaways from the virtual panel event ‘Corporate Water Reporting: Moving the industry forward' where ICMM's Aidan Davy recently moderated a conversation on what strong and transparent water reporting looks like in practice, joined by Alexis Morgan, Global Water Stewardship Lead, WWF, Nadja Franssen, Responsible Investment Officer, ACTIAM and Chris McCombe, General Manager, Minerals Councils of Australia. Watch a recording of the event here: https://www.icmm.com/en-gb/event-recordings/2021/corporate-water-reporting
