Over at framework:cr, CEO Kathee Rebernak’s bio includes this snippet:

everything is connected (silos are for grain storage)

I agree with Kathee. And much of the talk about ‘integrating’ financial and sustainability data is basically about helping to put two silos side by side rather than creating new kinds of reporting contexts to enable a more holistic view of the linkage between an organization’s behaviour and performance. So let’s create a new reporting context for water…

For most businesses, from a financial perspective, water is a cost. Sure some businesses generate income from water and others have water assets in tanks or reservoirs and perhaps future water liabilities on their balance sheets. But water is mostly a cost, and one that is very likely to increase in the near future. So understanding the sustainability dimension of an organization’s use of water is important and going to become more important especially if any kind of water tax is introduced in a country or region.

Now how do businesses report their water dimension? Well, some companies use the GRI environmental indicators to report their water-related behaviour (e.g. EN8,9,10 and 21), which is great, but just another example of a silo at work. There’s no reporting context in play here so there is no easy way to create peer-group comparable water performance against an individual organization’s water behaviour.

For that you need a new kind of balance sheet e.g. a water footprint report that looks something like this:

WATER FOOTPRINT REPORT

INPUT

Consumed (EN8)

OUTPUT

Returned (EN21 – usable only)

GROSS IMPACT

Input – output

LESS MITIGATION

Recycled Water (EN10)

NET IMPACT

gross impact – mitigation

From a simple reporting context like this you can easily figure out your NET COST OF WATER (e.g. Net impact x average cost per cubic meter in reporting year) and how these figures change year on year:

a. was it because consumption went up

b. or returns went down

c. or recycling went up or down

So just like the Grand Old Duke of York, with a new kind of reporting context, now you can zero in on how your water behaviour needs to change to get better sustainable water performance.

An important point about this report is that it has a minimum of two columns: Quantity (in millions of cubic meters) and cost. That’s the integration aspect. In fact, any well-designed accounting/reporting software can already produce this kind of report and has been able to for years. I was producing similar reports to this in the late 1980′s.

But that’s still not holistic reporting. Connect this footprint report to the detail income statement line ‘Water Cost’ and connect the footprint report to a ‘how we are going to do this better’ document and then you are getting much closer to a truly holistic report.