| Description |
As the amount of interest and capital invested in sustainable companies, indices, and funds has ballooned, the demand for sustainability data on which to base investment has increased significantly. Investors, companies, and regulators have all petitioned the US Security and Exchange Commission (SEC) for a standardized, robust reporting framework. This market demand for data has driven the interest in and development of the sustainability reporting landscape. In an important step, the SEC proposed this year that companies be required to make certain climate-related disclosures, including their current greenhouse gas (GHG) emissions. While not perfect, this proposed framework would allow investors and other stakeholders to consider a company's emissions performance based on reliable, comparable, and relevant data, which currently does not exist. This paper recommends that SEC continue this trajectory and require companies to disclose their usage of water, another important sustainability metric. Companies should do so because water is a critical resource under increasing pressure around the world. Additionally, current sustainability reporting is process-based and does not give adequate weight to current outcomes and consumption. Finally, water consumption data is readily available and can be used to track resource consumption across the value chain, improving accountability for companies as well as consumers. Requiring a water disclosure similar to the SEC's proposed GHG disclosure would improve the market's ability to value companies' governance of the resource and chart a course towards a sustainable future. |
