Water audit to be mandatory for cos

Written by Ashish Sinha | New Delhi | Updated: Jan 6 2013, 06:21am hrs
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Move aims to encourage companies to follow best international practices; violators to be penalised

After tax audits and mandatory corporate social responsibility norms, the government is set to introduce water audit and yearly water footprint disclosures in annual reports a mandatory feature for companies. The move is aimed at encouraging companies registered in India to adopt the best international practices on water use efficiency.

A senior official said the idea is to make it mandatory for companies to disclose the volume of fresh water used by them in their production activities and the volume of recycled water use per year. Firms will also have to commit themselves to timelines on reducing their water footprint. This would be implemented through the corporate affairs ministry soon, said the official.

The corporate water footprint is defined as the total volume of fresh water that is used directly or indirectly to run and support a business. The water footprint of a business consists of water used for producing/manufacturing or for supporting activities, and the indirect water use in the producers supply chain. This will now have to be disclosed every year in the companys annual report.

On the corporate side, companies have already committed to this initiative. Hindustan Unilever, for instance, has said it would look at saving 50 billion litres of water in the next four years through its new initiative, India Water Body. Others, including units of Ashok Leyland, Mahindra & Mahindra, Hindustan National Glass & Industries, Godrej Industries and ITC, have already adopted water auditing as part of their plant functioning, said a senior official in the Confederation of Indian Industries (CII).

While many companies are adopting water audit and water conservation as part of their work culture at their respective manufacturing units, a mandatory including of water auditing and disclosure of water footprint in annual reports will go a long way in making corporate India improve its accountability towards reducing waste of fresh water, said a CII official.

The government will also make comprehensive water audits a recurring feature of industrial activity. The water audit will consider both quantity and quality aspects of these industries. These measure will begin with the scrutiny of water use by large water-intensive industries, including paper and pulp, textiles, food and beverage, leather, pharmaceutical, oil and gas and mining, among others.

Now the government will work with industry representatives and industry bodies to work out the modality on penalties that can be imposed in case of violations. The industry consultations are already on. The idea is to incorporate water footprint disclosures in the annual reports of companies. This can be done via an amendment to the new Companies Bill, 2011, which is yet to get the approval of Rajya Sabha, the official said.

As part of the mandatory auditing of water, the government will look at the quantity and quality of water and pollutants discharged to the aquatic environment and in sewage systems. The move has already found support from most state governments and the leading industry bodies like the CII and Ficci, sources said.

Water audits will allow the government to know what quantity of fresh water is being consumed by the industrial sector. "The audit results will help the government monitor water usage and develop the most cost-effective basket of water efficiency technologies and processes to reduce water demand and increase industrial value added per unit of water consumed," a senior government official said.

The water footprint of national consumption refers to the total amount of fresh water that is used to produce the goods and services consumed by the inhabitants of the nation. The average per capita water footprint of India is pegged at 1,089 cubic metres per year, much below the global average of 1,243 cubic metres per year. The water footprint of the US is almost twice of global average at 2,500 cubic metres or 2.5 million litres per person every year.