The following conversation is excerpted from an interview for Smart Energy Voices with Matt Howard, Vice President of Water Stewardship at The Water Council.
In the world of water regulations, what does the U.S. look like right now?
The regulatory environment in water has been changing simply because the science is improving, so we now have a better understanding of how we’re impacting surface and groundwater. Because of that, we’re understanding some of the quality-related concerns like nitrates and phosphates infiltrating groundwater and getting a better grasp on how much water is actually left in those aquifers. This is real and measurable information, and because of it, we’re seeing more localized regulations around limits on withdrawal and tightening of permits on some water quality parameters.
From a very localized level, we’re definitely seeing a lot of regulatory changes, and it’s a patchwork. Each state, more or less, handles water regulations differently, so it can be a real pain point for companies to figure out what that regulatory risk environment is at the very local level. But at the national level in the U.S., the new administration is starting to roll back protections and regulation which impact water quality and quantity.
What are some specific regulations coming at the state and local levels?
There are two key California Senate bills right now on the books that companies are going to have to comply with in the reporting year of 2026. One is for reporting GHG emissions, and the other one is for reporting climate-related financial risks. For the most part, these are based on company size, and reporting is required every two years.
If you conduct a certain amount of sales or business in California, even if you’re based in one of the other 49 states, you are going to have to comply with this reporting. Because California is the world’s fifth-largest economy, that has an effect at the federal level in the U.S. as a de facto national regulatory force. These rules are just a step or two farther than where the draft U.S. SEC rules were, which have since more or less been scrapped, but nowhere near as stringent as the rules that we’re seeing in the EU right now. Nevertheless, they are a potential driver of action.
Within the United States, investors, customers and other key stakeholders are probably more important drivers of reporting right now. I get calls from companies that are Tier 1 or Tier 2 suppliers — automotive supply chain, for example — who say they’re being required to report through the supply chain on volumetric water use, for instance.
I think regardless of what happens in the U.S. regulatory landscape, companies are going to feel pressure — whether it’s from OEMs, brands, investors or others — to start reporting on what they’re doing around water. This is still considered voluntary reporting, but if you get one large sector of the economy like automotive or food and beverage requiring at the brand level or the OEM level that their supply chain has to report water-related data or impacts, that’s going to have an economy-wide ripple on reporting. So market forces are probably the biggest driver in the U.S. in the near future.
The EU is steps ahead in terms of what they’re requiring. What is their status?
On the books, the EU has the Corporate Sustainability Reporting Directive, which requires companies to do a double materiality assessment. They have to assess financial risks, and they also have to assess potential climate-related risks of their operations. Based on what they discover, companies are then required to report on the specific issues that rank high on that assessment.
If water ranks high for your company, there’s an actual standard called E3, and it’s a pretty significant step for companies to do that reporting. There are water data reporting requirements and risk assessment requirements that are part of that standard, and external validation is required.
The EU is most likely going to loosen the requirements for who has to report based on company size, because there is concern around small- and medium-sized businesses spending too much money to comply. I have heard directly from a handful of companies in the past couple of months in the U.S. that are definitely gearing up for reporting and they are spending considerable sums in preparation.
What should our energy and sustainability buyer community think about in terms of water right now?
Explicit recognition that there is a connection between energy use and water use is crucial. Twenty-plus years ago, energy efficiency was really catching on in the industrial sector — the idea of having the plant manager look at the electric bill to see energy costs and usage. That’s where we’re at with water right now: You look at both of those bills together to understand those connections.
The second issue is, even if you’re not highly consumptive — maybe you’re only using water for domestic purposes like the cafeteria, restrooms — you’re not immune from water risk. A key example of that right now is in the sports and entertainment venues, where they are seeing increasing insurance premiums on the amount of impervious surface area at those facilities. Because they’re managing more stormwater on-site due to more extreme rain events, their insurance premiums are increasing year-over-year — and they’re not highly consumptive users of water.
We have to recognize that water risk is more than just scarcity or consumption, in fact, the water-risk radar is really wide to include quality, regulatory and reputational risks. At least do a once-through every couple of years of your risk assessment profile around water.
What should the energy and sustainability community think about in coming years?
It all boils down to having more resilient operations and more resilient supply chains. This isn’t some theoretical thing that’s going to happen in the near future. These impacts are happening now. They’re disrupting operations. They’re disrupting supply chains. As an example, right now in the Corpus Christi region there is a drought emergency with water restrictions in place and this is impacting the chemical sector – heavy users of energy and water. The bottom line is, water should be part of your overarching resiliency strategy and the position you’re taking in terms of operations and supply chain.
Water stewardship is a great climate adaptation strategy, and it will bring other benefits — energy reduction, increased biodiversity and positive nature outcomes. The call to action is to start treating water seriously before a crisis occurs.
Matt Howard oversees The Water Council’s stewardship initiatives, including WAVE: Water Stewardship Verified, water stewardship advisory services and comprehensive professional water stewardship training. Previously, TWC helped establish the Alliance for Water Stewardship (AWS) System globally with specific oversight of North America. Matt created the world’s first professional credentialing program for water stewardship professionals and made the business case for use of the International Water Stewardship Standard (“AWS Standard”) in the North American marketplace. His 15+ years in sustainability program development and management include serving as Milwaukee’s sustainability director and leading sustainable manufacturing initiatives during his time in Washington, D.C., where he worked at the U.S. Department of Commerce and as a staffer in the U.S. House of Representatives. He has an MA from George Washington University and a BA from Valparaiso University. He is AWS and Lean Six Sigma accredited and serves on the WELL Water Advisory and the Wisconsin Governor’s Wetlands Study Council. He served on the U.S. EPA’s National Advisory Council on Environmental Policy and Technology from 2014 to 2019.