Water & Marine Resources

The goal of this standard is to define disclosure requirements to help users of a company’s sustainability statement understand:

1. how the company impacts water and marine resources, including significant positive and negative current or potential effects;

2. any actions taken to prevent or reduce significant negative effects, protect water and marine resources, reduce water consumption, and address related risks and opportunities;

3. whether, how, and to what extent the organization supports the European Green Deal’s goals for clean water, fresh air, healthy soil, biodiversity, and sustainable activities in the blue economy and fisheries sectors;

4. the organization’s plans and ability to align its strategy and business model with sustainable water use, long-term water resource protection, aquatic ecosystem conservation, and restoration of freshwater and marine habitats;

5. the nature, type, and scale of significant risks and opportunities related to the organization’s impacts and reliance on water and marine resources, as well as how they are managed; and

6. the financial implications for the organization in the short, medium, and long term resulting from these significant risks and opportunities.

This standard outlines disclosure requirements concerning water and marine resources. For “water,” it includes surface water and groundwater. It requires disclosures about water consumption in the organization’s activities, products, and services, as well as information on water withdrawals and discharges. For “marine resources,” it addresses their extraction and use, along with related economic activities.

The disclosure requirements of this standard are described below.

(Expand each chapter to view more details)

CH 1. Impact, risk and opportunity management

DR related to ESRS 2 IRO-1 : Description of the processes to identify and assess material water and marine resources-related impacts, risks and opportunities

The company should describe the process it uses to identify material IROs. It should provide information on:

1. whether and how it screened its assets and activities to identify actual and potential IROs related to water and marine resources in its own operations and its upstream and downstream value chain, including the methodologies, assumptions, and tools used in the screening; and

2. whether and how it conducted consultations, particularly with affected communities.

The company should evaluate the materiality of water and marine resources in its own operations and across its upstream and downstream value chain. It may follow the LEAP approach, described as follows:

1. Phase 1: Locate where interactions with nature occur within its operations and value chain.
2. Phase 2: Evaluate dependencies and impacts.
3. Phase 3: Assess material risks and opportunities.
4. Phase 4: Prepare and report the results of the materiality assessment.

The materiality assessment for this standard corresponds to the first three phases of this LEAP approach, while the fourth phase addresses the outcome of the process.

The processes to assess the materiality of IROs should consider the provisions in ESRS 2 IRO-1 (Description of the processes to identify and assess material impacts, risks and opportunities), and IRO-2 (Disclosure Requirements in ESRS covered by the company’s sustainability statement).

The sub-topics related to water and marine resources covered by the materiality assessment include:

1. water, which encompasses the consumption of surface water, groundwater, as well as withdrawals and discharges of water; and

2. marine resources, which encompasses the extraction and use of such resources and associated economic activities.

In phase 1, to locate the areas at water risk, and areas where there is an interface with marine resources that could lead to material impacts and dependencies in its own operations and along its upstream and downstream value chain, the company may consider:

1. the locations of direct assets and operations and related upstream and downstream activities across the value chain;

2. the sites located in areas at water risk, including areas of high-water stress; and

3. the sectors or business units that are interfacing with water or marine resources in these priority locations.

The company should consider river basins as the relevant level for assessment of locations and combine that approach with an operational risk assessment of its facilities and the facilities of suppliers with material impacts and risks.

In phase 2, to evaluate its impacts and dependencies for each priority location identified, the company may:

1. identify business processes and activities that lead to impacts and dependencies on environmental assets and ecosystem services;

2. identify water and marine resources-related impacts and dependencies across the company’s value chain; and

3. assess the severity and likelihood of the positive and negative impacts on water and marine resources.

Marine resources are defined based on their use by human societies and must be considered in relation to the pressure they face. Some of the pressure indicators are presented in other ESRS, namely microplastics and emissions to water in ESRS E2, and plastic waste in ESRS E5.

For the identification of water and marine resources-related dependencies, the company may rely on international classifications such as the Common International Classification of Ecosystem Services (CICES). The company should also consider if it depends on key marine resources-related commodities, such as gravels and seafood products.

Examples of marine resources dependencies that the company may consider are:

1. dependencies on commercially exploited fish and shellfish in its own operations and its upstream and downstream value chain; and

2. fishing activities that involve mobile bottom trawling, which can also have negative impacts on the seabed.

In phase 3, to assess its material risks and opportunities based on the results of phases 1 and 2, the company may:

1. identify transition risks and opportunities in its own operations and its value chain by the following categories:

   1. policy and legal: e.g., introduction of regulations or policies (e.g., increased water protection, stricter water quality regulations, regulation of water supply flows), ineffective governance of water bodies or marine resources, especially across boundaries (e.g., transboundary governance and cooperation), exposure to sanctions and litigation (e.g., non-compliance with permits or allocations, negligence toward threatened marine species), and increased reporting obligations on marine ecosystems and related services;

   2. technology: e.g., substitution of products or services with those having lower impacts on water and marine resources, transition to more efficient and cleaner technologies (i.e., technologies with lower impacts on oceans and water), new monitoring technologies (e.g., satellite), water purification, flood protection;

   3. market: e.g., changes in supply, demand, and financing, volatility or increased costs of water or marine resources;

   4. reputation: e.g., changing societal, customer, or community perceptions due to the organization’s impact on water and marine resources;

   5. contribution to systemic risks: e.g., risks of marine ecosystem collapse or the loss of a critical natural system’s function (e.g., reaching tipping points, summing physical risks);

2. identify physical risks, including water quantity (e.g., water scarcity, water stress), water quality, infrastructure decay, or unavailability of some marine resources-related commodities (e.g., rarefaction of certain fish species or other marine organisms) that could prevent operations in certain geographical areas.

3. identify opportunities categorized by:

   1. resource efficiency: e.g., transition to more efficient services and processes that require less water and marine resources;

   2. markets: e.g., development of less resource-intensive products and services, diversification of business activities;

   3. financing: e.g., access to green funds, bonds, or loans;

   4. resilience: e.g., diversification of marine or water resources and business activities (e.g., starting a new business unit focused on ecosystem restoration), investing in green infrastructure, nature-based solutions, adopting recycling and circularity practices to reduce dependencies on water or marine resources;

   5. reputation: positive stakeholder engagement as a result of a proactive approach to managing nature-related risks (e.g., leading to preferred partner status).

The company may rely on primary, secondary, or modelled data collection, or other relevant approaches to assess material impacts, dependencies, risks, and opportunities. This may include Commission Recommendation 2021/2279 on the use of environmental footprint methods to measure and communicate the life cycle environmental performance of products and organizations (Annex I – Product Environmental Footprint; Annex III – Organization Environmental Footprint).

When providing information on the outcome of the materiality assessment (phase 4), the company should consider:

1. a list of geographical areas where water is a material issue for the company’s own operations and its upstream and downstream value chain;

2. a list of marine resources-related commodities used by the company that are material to the good environmental status of marine waters and the protection of marine resources; and

3. a list of sectors or segments associated with water and marine resources material IROs.

DR E3-1 : Policies related to water and marine resources

This disclosure requirement requires companies to describe the policies it has adopted to identify, assess, manage and remediate its material water and marine resources-related IROs. This disclosure should be in accordance with “ESRS 2 - MDR-P: Policies adopted to manage material sustainability matters”.

The company should indicate whether and how its policies address the following matters where material:

1. water management, including:

   1. the use and sourcing of water and marine resources in its own operations;
   2. water treatment as a step towards more sustainable sourcing of water; and
   3. the prevention and reduction of water pollution resulting from its activities.

2. product and service design aimed at addressing water-related issues and preserving marine resources; and

3. commitment to reduce material water consumption in areas at water risk in its own operations and along the upstream and downstream value chain.

When disclosing this information, the company may disclose whether its policies:

1. prevent further deterioration and protect and enhance the status of water bodies and aquatic ecosystems;

2. promote sustainable water use based on long-term protection of available water resources;

3. aim at enhanced protection and improvement of the aquatic environment;

4. promote a good environmental status of marine waters; and

5. promote the reduction of water withdrawals and water discharges.

The company may also disclose information about policies which:

1. contribute to the good ecological and chemical quality of surface water bodies, and the good chemical quality and quantity of groundwater bodies, to protect human health, water supply, natural ecosystems, biodiversity, the good environmental status of marine waters, and the protection of the resource base upon which marine-related activities depend;

2. minimize material impacts and risks, and implement mitigation measures that aim to maintain the value and functionality of priority services and increase resource efficiency in its own operations; and

3. avoid impacts on affected communities.

The company should also specify whether it has adopted policies or practices related to sustainable oceans and seas.

If at least one of the company’s sites is located in an area of high-water stress and it is not covered by a policy, the company should state this to be the case and provide reasons for not having adopted such a policy. The company may disclose a time frame in which it aims to adopt such a policy.

The policies described under this disclosure requirement may be integrated in broader environmental or sustainability policies covering different subtopics.

DR E3-2 : Actions and resources related to water and marine resources

The company should disclose its water and marine resources-related actions and action plans, and the resources allocated to their implementation.

Resources can be allocated to:

1. avoidance of the use of water and marine resources;

2. reduction of the use of water and marine resources such as through efficiency measures;

3. reclaiming and reuse of water; or

4. restoration and regeneration of aquatic ecosystem and water bodies.

The company can use the Alliance for Water Stewardship (AWS) as a guide while disclosing this information.

The company should also specify actions and resources in relation to areas at water risk, including areas of high-water stress.

Considering that water and marine resources are shared resources which may require collective actions or action plans involving other stakeholders, the company may provide information on those specific collective actions. This may include information on other parties such as competitors, suppliers, retailers, customers, other business partners, local communities and authorities, government agencies and, specific details about the project, its contribution, its sponsors, and other participants.

When providing information on capital expenditures, the company may consider expenditures related, for example, to storm water drain rehabilitation, pipelines, or machinery used to manufacture new low water-use products.

CH 2. Metrics and targets

DR E3-3 : Targets related to water and marine resources

The objective of this disclosure requirement is to help users of the sustainability statement to understand the targets the company has adopted to support its water and marine resources-related policies and address its material water and marine resources-related IROs. These targets may cover its own operations and/or its upstream and downstream value chain. The description of targets should contain the information requirements defined in “ESRS 2 - MDR-T: Tracking effectiveness of policies and actions through targets”.

This disclosure should indicate whether and how the company’s targets relate to:

1. the management of material IROs related to areas at water risk, including the improvement of water quality;

2. the responsible management of marine resources IROs including the nature and quantity of marine resources-related commodities such as gravels, deep-sea minerals and seafood, used by the company; and

3. the reduction of water consumption, including an explanation of how those targets relate to areas at water risk, including areas of high water-stress.

Additionally, the company should provide targets relating to the reduction of water withdrawals and the reduction of water discharges. If it provides targets on withdrawals, it may include water withdrawal from polluted soils and aquifiers, and water withdrawn and treated for remediation purposes. If the company provides targets on discharges, it may include water discharges to ground water such as reinjection to aquifiers, or water returning to a groundwater source via a soak way or a swale.

In addition to ESRS 2 MDR-T, the company may specify whether ecological thresholds and entity-specific allocations were taken into consideration when setting targets. If so, the company may specify:

1. the ecological thresholds identified, and the methodology used to identify such thresholds;

2. whether or not the thresholds are entity-specific and if so, how they were determined; and

3. how responsibility for respecting identified ecological thresholds is allocated in the company.

If the company refers to ecological thresholds when setting targets, it may refer to the guidance provided by the Science-Based Targets Initiative for Nature (SBTN) in its interim guidance (Initial Guidance for Business, September 2020). It may also refer to any other guidance with a scientifically acknowledged methodology that enables the setting of science-based targets¹ by identifying ecological thresholds and, if applicable, organisation-specific allocations. Ecological thresholds can be local, national and/or global.

DR E3-4 : Water consumption

The company should disclose information on its water consumption related to its material IROs.

This disclosure relates to the company’s own operations and should include:

1. total water consumption in m³ ;

2. total water consumption in m³ in areas at water risk, including areas of high-water stress (only for those areas that have been identified as material in accordance with ESRS 2 IRO-1 and ESRS 2 SBM-3);

3. total water recycled and reused in m³ ;

4. total water stored and changes in storage in m³ ;

5. any contextual information necessary regarding the points above including the water basins’ water quality and quantity, how the data has been compiled, such as any standards, methodologies, and assumptions used, including whether the information is calculated, estimated, modelled, or sourced from direct measurements, and the approach taken for this, such as the use of any sector-specific factors.

This information can be disaggregated by sector or segments.

Additionally, the company should provide information on its water intensity i.e. total water consumption in its own operations in m³ per million EUR net revenue. It may also provide additional intensity ratios based on other denominators.

When disclosing information on contextual information, the company should explain the calculation methodologies and more specifically, the share of the measure obtained from direct measurement, from sampling and extrapolation, or from best estimates.

Lastly, the company may also provide information on its water withdrawals and water discharges.

DR E3-5 : Anticipated financial effects from water and marine resources-related impacts, risks and opportunities

The objective of this disclosure requirement is to provide an understanding of:

1. anticipated financial effects due to material risks arising from water and marine resources-related impacts and dependencies, and how these risks have (or could reasonably be expected to have) a material influence on the company’s financial position, financial performance, and cash flows, over the short-, medium-, and long-term; and

2. anticipated financial effects due to material opportunities related to water and marine resources.

This disclosure should include:

1. a quantification of the anticipated financial effects in monetary terms before considering water and marine resources-related actions or, where not possible without undue cost or effort, qualitative information. For financial effects arising from opportunities, a quantification is not required if it would result in disclosure that does not meet the qualitative characteristics of information (see chapter 2 of ESRS 1);

2. a description of the effects considered, the impacts and dependencies to which they relate, and the time horizons in which they are likely to materialize; and

3. the critical assumptions used to quantify the anticipated financial effects, as well as the sources and level of uncertainty of those assumptions.

The company may include an assessment of its related products and services at risk over the short-, medium-, and long-term, explaining how these are defined, how financial amounts are estimated, and which critical assumptions are made.

The quantification of the anticipated financial effects in monetary terms may be a single amount or a range.

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Footnotes

1. Science-based targets (SBTs) are goals that companies set to reduce their carbon emissions in line with what scientists say is needed to stop climate change.