Water Journal : Water Journal May 2015
MAY 2015 water 7 My Point of View terms provides a means to help improve the management of organisations and improve societal outcomes. The voluntary standards are recognised and available for use by organisations across the globe. Water management accountants provide a foundation for improved management and the assurance that water risk is appropriately measured. They encourage development of credible information provided for decision-making and risk reduction. WHy AccounTAnTs? Why should accountants be party to resolving water issues for business? 1. They speak the language of business, rather than having a sole focus on, say, science or engineering information. By classifying and collecting relevant physical as well as monetary information about the water resource, and basing such collection on well- established accounting principles, they provide the foundation for better decision-making and management. 2. These professional service providers do not work in silos. Accountants integrate their solutions in particular with the expertise of other professional groups such as engineers, lawyers, management experts and scientists involved in climatology, hydrology and meteorology. Based on pragmatic operational and investment options solutions to water problems, which go beyond any single discipline, are developed to anticipate water crises and reduce associated risks. 3. They have standard and flexible tools, such as six sigma, which reflect the risk that managers feel is acceptable when facing water risk. 4. Through ongoing membership of professional accountancy bodies they have a commitment to be ethical and consider environmental and social issues in their work. 5. Through the long history of the profession they have provided independent assurance of the credibility of information gathered and used by managers and others to compare alternatives. For example, accountants have become the ‘go to’ people for providing assurance on carbon-related matters and assuring the content of corporate sustainability reports. 6. Water management accountants are at ease with obtaining physical (e.g . volume and quality) and monetary information to help manage and solve, for example, critical water quality and supply chain issues affecting clients in whichever country they operate. The integration of such information types in effective and efficient decision settings helps towards sustainability and can ensure that water works in the best way. AWArEnEss And THE inTEGrATion cHAllEnGE The Association of Certified Chartered Accountants reported last year that the case of water integration presents a number of challenges with which water management accountants can assist: • Accounting needs to lead transdisciplinary teams to predict rainfall, its capture, storage, distribution, waste, cost and impact on company value; • Accountants need to be trained in disclosures about perceived risks and opportunities and, led by the Chief Financial Officer (CFO), produce water-related accounting information for management as well as external stakeholders; • Accountants need to understand water markets and water banking to assist companies with selling or transferring unused water rights or excess groundwater in the ‘bank’ or store; • Water stewardship standards for companies and water footprints, while in an early stage of development, should be followed closely; • Professional associations provide the necessary self-regulation link between government and business interests through codes, voluntary agreements and certification schemes. is WATEr MAnAGEMEnT AccounTinG of usE To your businEss? If your business or sites are sensitive to water scarcity, then improved awareness through water management accounting provides the foundation for better management. Of critical concern is that local information is provided about the quality of water supplies, the cost of treating polluted water, the cost of alternative sources, such as desalination, and the potential benefits and costs of new water markets. Each company and site is in a different situation in relation to water and the need to be aware of risks to business survival. Evidence gathered indicates that water management accounting take-up and use in one Australian water-sensitive industry depends on a range of considerations, including the business’ source of water, the type of business, size, production processes, skills of employees and, above all, leadership from CFOs. Evidence confirms (Christ, 2014) that the benefit to be obtained from involvement with water management accounting depends on the setting in which a company operates. For some firms many millions of dollars can be saved through the information provided by environmental management information. For others, awareness of the issues associated with potential future water risk can provide a competitive advantage in this highly competitive global industry. If water becomes the new oil, with long-term tightening supply concerns and water markets leading to water value identification and water pricing, then there is a strong case for business to seek the benefits of improved strategic management. Simple but useful information is needed about vulnerability of the business to water deficits and surpluses. In this way, businesses can ensure they are well aware of, and advised about, water. Accountants are awareness experts for revealing and encouraging business performance, whether financial or environmental, or related to water. With the pressing need to be mindful about water resources, such information will help to institutionalise behaviours that ensure ‘water works’. rEfErEncEs Ernst and Young (2012): Preparing for Water Scarcity: Raising Business Awareness on Water Issues, Ernst and Young Global Limited, London. Christ KL (2014): Water Management Accounting and the Wine Supply Chain: Empirical Evidence from Australia. British Accounting Review, 46, pp 379–396.
Water and CSG
Water Journal June 2015