A coalition of leading sustainability organisations has launched what could become a defining moment for corporate water management: an initiative to develop the first standardized guidance for assessing water risk across entire value chains.
The initiative, Corporate Guidance for Assessing Water Scopes 1-3 in Value Chains, brings together SCS Global Services, the World Resources Institute (WRI), WWF and the CEO Water Mandate, a partnership between the UN Global Compact and the Pacific Institute. Its ambition is to do for water what the GHG Protocol did for carbon.
For many companies, the greatest water risks and impacts lie in their supply chain or in the end use of their products
The GHG Protocol moment for water
When the GHG Protocol introduced Scope 1, 2 and 3 as standard categories for measuring corporate greenhouse gas emissions, it created the shared foundation that made science-based targets, investor disclosure and regulatory compliance possible at scale. The same logic, distinguishing direct emissions, those from purchased energy and those across the value chain, has never been systematically applied to water. That is the gap this initiative sets out to close.
Water Scopes 1-3 will establish equivalent categories for corporate water, covering direct operations, indirect upstream impacts and the full value chain through to end customers and product use. The exact boundaries of each scope will be defined through the development process, with one of the initiative's core goals being to establish that common terminology where none currently exists. Crucially, the framework's developers are clear that water is far more complex than carbon: unlike greenhouse gases, water challenges are intensely local, and a company's impact and risk depend not just on how much water it uses, but where and when it uses it.
The gap the framework addresses
Frameworks such as TNFD, CSRD and SBTN are already demanding value chain water reporting, but without a shared foundation, every company must determine what to include and how to calculate materiality, often differently depending on the regulation or initiative. Even basic terminology, such as what constitutes blue, green, grey or black water, varies across initiatives. The result drains resources from sustainability teams and makes meaningful comparison almost impossible.
The financial stakes are significant. According to CDP, at least $77 billion in business value is threatened by water-related supply chain risks. Flooding in Slovenia in 2023 forced Volkswagen to cut production in Germany, while prolonged drought across India and Thailand drove a 9% rise in sugar and confectionery prices in the United States.
Beyond the factory gate
For most sectors, the greatest water risks lie well beyond a company's own operations. Agriculture accounts for 70% of the world's freshwater withdrawals, making upstream supply chains the critical exposure point for food and beverage companies. For consumer goods companies, the largest water footprint often occurs downstream, during product use. Yet only half of large companies currently report taking action on water risks in their supply chains.
"For many companies, the greatest water risks and impacts lie in their supply chain or in the end use of their products, yet attention remains stubbornly focused on direct operations," said Sara Walker, Director of Corporate Water Engagement at WRI.
The guidance will be structured in two parts: how to assess and prioritise water dependencies, impacts, risks and opportunities; and how to act and report on them, connecting to existing frameworks including CDP, GRI, TNFD and CSRD rather than replacing them.
What comes next
Development will take place over 18 months through a transparent, multi-stakeholder process, with a public comment period at month 12 and final guidance targeted for Q4 2027. Companies, NGOs, foundations and technical experts are invited to join as sponsors or working group members.
