A new study published in Nature Water has introduced a quantitative framework designed to strengthen corporate accountability on water use, amid concerns that water stewardship remains a weak link in ESG reporting.
The research, led by Prof. William Mitch of Stanford University and Prof. Yong Sik Ok of Korea University, in collaboration with Prof. Jay Hyuk Rhee of Korea University Business School and the International ESG Association, presents the Water Sustainability Index (WSI). The index is intended to provide a transparent and comparable metric for evaluating corporate water performance.
While corporate commitments to ESG targets have expanded significantly in recent years, water management disclosures have lagged behind carbon reporting. According to data cited from the London Stock Exchange Group database, 14% of major companies report greenhouse gas emissions, compared with 9% disclosing total water withdrawals and only 1% reporting recycled water use.
“Water is fundamentally different from carbon,” Prof. Ok said. “While carbon is a global issue, water is intensely local, and ESG metrics must reflect that reality.”
The WSI framework moves beyond qualitative disclosures and simple volume reporting. It assesses water withdrawals, consumption, discharge quality and reuse, while incorporating local water scarcity and watershed stress. The aim is to reduce inconsistencies in ESG water metrics, where non-uniform methodologies and opaque algorithms have led to divergent ratings and the risk of unintentional greenwashing.
Prof. Mitch noted that the index allows companies to evaluate water-related performance under different operational scenarios before committing capital. “The quantitative nature of the WSI allows companies to identify cost-effective pathways to improve water sustainability,” he said. “It enables scenario testing before capital is committed.”
To demonstrate its application, the study assessed seven theoretical scenarios. A baseline facility operating in a stressed watershed scored 1.17 on the index. Introducing water reuse increased the score to 1.98, while further improvements in water quality and siting optimisation raised it to 3.0.
The authors argue that withdrawing large volumes of water in water-rich regions differs significantly from doing so in drought-prone basins, a distinction often overlooked in existing ESG frameworks. By incorporating source water type, watershed stress, discharge quality, consumption and reuse, the WSI seeks to align corporate reporting more closely with the realities of local water systems and support progress towards United Nations Sustainable Development Goal 6.
With around 25% of the global population living in extremely high-stress watersheds, the researchers say the index bridges scientific standards such as ISO 14046 with practical ESG reporting needs, offering a more consistent basis for assessing corporate water performance.
