The Dual Materiality of Water Management in Mining

Water management in the mining sector is undergoing rapid evolution, transitioning from a mere operational concern to a critical risk factor with far-reaching financial implications. Over the past decade, the perception of water within mining operations has shifted to include issues of water availability, discharge impacts, regulatory compliance, and social acceptance.

Water in mining has become a direct business risk, with mandatory financial disclosures from 2025 onwards (ESRS) and upcoming ISSB standards for finance and Investors. However, it appears that both the mining sector and the broader financial world are still getting up to speed for the impending regulatory requirements, and many may struggle to accurately meet reporting obligations.

Analysing the water impact within mining operations extends beyond simple water usage assessments. It requires a comprehensive understanding of the local context, including vulnerability to flooding and water shortages. Moreover, companies must evaluate their environmental externality, assessing discharge impacts and striving to minimise environmental harm.

One significant challenge lies in quantifying the financial risks associated with water management. Without consistent metrics, the differing reporting approaches among mining companies complicate the assessment of production risk from water availability and regulatory constraints.

Another development in mandatory reporting is the aspect of double-materiality assessment. It is not sufficient anymore to evaluate your own company’s dependency, and financial opportunity and risks, but recently approved reporting regulation for companies with operations in or doing business with the EU (ESRS), require assessment and (financial) quantification of the company’s financial impact to other stakeholders, including nature.  

In conclusion, the dual materiality of water management in mining demands a holistic approach that considers both environmental impacts and financial implications. Embracing transparency, accountability, and proactive risk mitigation strategies is essential to navigate the complexities of water management.

As the mining sector grapples with evolving regulatory landscapes and climate challenges, addressing water-related risks will be integral to safeguarding long-term viability and operational resilience.

To discuss water impacts in mining, Contact Raymond Philippe, Manager, Skarn Water.