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Water is no longer just an environmental concern. It has become a strategic business risk. Across Europe and the UK, companies are facing growing pressure to manage water responsibly, not only because of climate change but also due to new regulatory requirements such as the Corporate Sustainability Reporting Directive (CSRD).
In 2024 alone, the number of companies reporting water-related data to CDP doubled. At the same time, businesses disclosed up to $339 billion in potential financial risks linked to water scarcity, pollution, and climate volatility. These figures highlight a clear shift. Water is now a core ESG issue.
This shift is also reflected in the latest update of the Alliance for Water Stewardship (AWS) Standard 3.0, which aligns more closely with CSRD and European sustainability expectations. For ESG professionals, this creates both urgency and opportunity.
If water is not yet part of your ESG strategy, it soon will be.
Benefits of Integrating Water Stewardship into ESG Strategy
Organizations that proactively integrate water stewardship into their ESG frameworks gain several advantages.
First, they improve regulatory readiness. CSRD and ESRS standards, particularly ESRS E3, require companies to disclose water-related impacts, risks, and dependencies. Companies that already use structured frameworks such as AWS are better positioned to comply.
Second, they strengthen risk management. Water-related risks are becoming increasingly unpredictable due to climate change. From supply chain disruptions to operational shutdowns, water scarcity can directly affect business continuity.
Third, they enhance ESG ratings and investor confidence. Platforms such as CDP increasingly evaluate water performance alongside carbon emissions. Strong water management practices can improve ESG scores and attract sustainability-focused investors.
Finally, companies that lead in water stewardship build long-term resilience and brand credibility. Industry leaders like Nestlé, Apple, and PepsiCo have already embedded water strategies into their operations, recognizing that water is both a resource and a reputational issue.
Practical Steps, Tools, and Best Practices
For ESG professionals, the challenge is not understanding that water matters. The challenge is knowing how to integrate it into strategy, reporting, and operations.
A good starting point is to align water strategy with existing ESG frameworks. The updated AWS Standard 3.0 provides a structured approach, including 72 requirements across water use, discharge, recycling, and ecosystem impacts. Importantly, it has been simplified by 27 percent, making it more practical for organizations to adopt.
Next, organizations should conduct a water-related risk and materiality assessment. Under CSRD, double materiality is essential. This means evaluating both how water affects the business and how the business impacts water resources.
Companies should also integrate water into ESG reporting frameworks such as:
- ESRS (especially E3)
- GRI 303 (Water and Effluents)
- CDP Water disclosures
Another best practice is to embed water into supply chain management. Many companies underestimate how exposed they are to water risks beyond their direct operations.
Finally, organizations should use data and digital tools to monitor water usage, identify inefficiencies, and model future risks driven by climate change.
Common Mistakes ESG Professionals Should Avoid
One common mistake is treating water as a secondary issue compared to carbon. In reality, water and climate risks are deeply interconnected.
Another mistake is focusing only on internal operations while ignoring the supply chain. For many industries, the highest water impact lies upstream.
Finally, many professionals struggle to connect technical frameworks (like AWS or CDP) with regulatory requirements (like CSRD and ESRS). This gap often leads to fragmented strategies and weak disclosures.
Real-World Applications and Industry Leadership
Leading global companies are already demonstrating what effective water stewardship looks like.
Nestlé has certified all 39 of its water bottling sites under the AWS framework. Apple has applied the standard across its data centers, while PepsiCo focuses on water-stressed regions within its manufacturing network.
These companies are not acting out of compliance alone. They recognize water as a strategic resource tied to long-term value creation.
As Muriel Lienau, CEO of Nestlé Waters, noted, water resilience cannot be achieved in isolation. It requires collaboration, transparency, and continuous improvement.
This is where frameworks like AWS and regulations like CSRD converge. They create a common language for companies to manage and report water risks in a consistent and credible way.
FAQs
What is water stewardship in simple terms?
Water stewardship refers to the responsible management of water resources in a way that balances business needs, environmental sustainability, and community impact. It includes reducing consumption, improving efficiency, and protecting ecosystems.
How long does it take to build expertise in ESG reporting and CSRD?
Basic understanding can be developed within a few weeks, but mastering ESG reporting, CSRD, and frameworks like ESRS typically requires structured learning and practical application over several months.
Is water stewardship important for career growth in ESG?
Yes. As CSRD expands across Europe, professionals who understand water risk, reporting standards, and ESG strategy integration will be in high demand across industries.
Start Learning Today
As ESG expectations evolve, professionals across Europe and the UK are expected to translate complex topics like water stewardship into clear strategies, measurable actions, and compliant disclosures.
Understanding frameworks such as AWS is important. However, the real challenge lies in connecting them with CSRD, ESRS, ESG ratings, and business strategy.
If you want to stay ahead of these changes and strengthen your ESG expertise, you can explore the programme here.
