The ongoing water scarcity problem in South Africa is fast making water consumption an ESG reporting priority. The Sustainability Communication Company (SUSCO) has observed how many stakeholders are demanding more clarity on water consumption, usage intensity and recycling plans in sustainability reports, given the current challenges in the country.
In the 2026 State of the Nation Address, President Cyril Ramaphosa identified water as one of the most pressing issues affecting South Africans, noting that shortages and infrastructure failures are increasingly disrupting communities and economic activity.
Setting up the scene
South Africa faces a projected 17% water supply deficit by 2030.
At the same time, municipal debt owed to water boards has risen to R28bn, up from R22.4bn in early 2025, placing significant pressure on bulk water suppliers.
Infrastructure inefficiencies further compound this strain, as 47% of purified water is currently lost through leaks and non-revenue water.
In addition, 67.6% of wastewater treatment plants are categorised as high or critical risk.
All the above indicate systemic vulnerability within sanitation and treatment systems.
“Water scarcity and infrastructure instability influence operational continuity, regulatory compliance and long-term planning for companies,” says Ntombovuyo Linda, communications manager at SUSCO.
“Sectors such as mining and agriculture treat water intensity as a clear material issue, routinely disclosing consumption and usage intensity.
“But many industries continue to treat water as a background ‘accepted’ utility cost rather than a strategic ESG issue that warrants urgent reduction plans.”
In hospitality and healthcare, water affects hygiene protocols, infection control, laundry services and food preparation standards.
When municipal supply becomes inconsistent or water quality declines, organisations incur additional costs through private or alternative supply arrangements.
In the technology sector, reliable water access is central to cooling systems and data centre functionality, which in turn support financial transactions, communication networks and digital infrastructure.
Construction and retail operations are similarly exposed through location-based risk, particularly in municipalities where wastewater treatment systems are under strain.
Properties located in water-stressed regions or dependent on failing municipal systems present long-term credit risk.
The financial implications
Insurance models are also adjusting to account for climate-related and infrastructure-related water stress.
As a result, water risk is increasingly financial in nature, even for companies that do not consider themselves water-intensive.
“The current reporting gap lies in the limited integration of water data into mainstream ESG strategy.
“Global standards such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) already provide structured guidance on water-related disclosures,” says Linda.
“However, in practice, many organisations report water consumption figures without providing a narrative that links them to geographic vulnerability, infrastructure reliability or financial exposure.
“As a result, reporting may satisfy minimum disclosure requirements without reflecting operational reality.”
Addressing this gap requires ongoing monitoring and measurement, contextual analysis and transparent communication.
Quantifying water infrastructure reliance and supply risk allows businesses to assess materiality accurately.
When this information is integrated into ESG reporting alongside financial planning and governance oversight, it strengthens investor confidence.
“Considering our country’s water challenges, every company doing a sustainability report or designing an ESG programme should treat water as a priority.
“This should include identifying sector-specific exposure, strengthening disclosure accuracy and ensuring that reporting reflects genuine resource stewardship, not only compliance.”
The era in which water could be treated as a guaranteed and uninterrupted utility has passed.
Organisations that incorporate water into core ESG reporting demonstrate foresight, accountability and resilience within a constrained resource landscape.
“We want to invite businesses to review their current sustainability disclosures and ensure that water risk is assessed, measured and reported with the seriousness it needs,” adds Linda.