Fund Solutions

Three Channels for Investor Support of SDG 6

Report highlights role of institutional investors in ensuring wider access to water, hygiene and sanitation.

One of the pillars of the fight against the spread of Covid-19 was the message to wash hands frequently and thoroughly. But that message did not resonate for the three billion people in the world who have no way of washing their hands with soap and water.

A report by not-for-profit organisation Water Aid and UK-based responsible investment and corporate sustainability strategy development firm Chronos Sustainability says institutional investors have a central role to play in meeting the UN’s Sustainable Development Goal 6 (SDG 6), aimed at ensuring availability and sustainable management of water and sanitation for all.

Framing the challenge, the report notes that 11% of the global population (more than 785 million people) do not have access to safe drinking water. Two billion people lack access to basic sanitation services and three billion lack basic handwashing facilities at home.

“SDG 6 is ambitious, but it is achievable if the public, private and non-profit sectors work together to raise the investment needed, and ensure that investment is deployed effectively and sustainably,” said the report.

The report identifies three channels or areas – investment, company influence and policy influence – on which institutional investors should focus their efforts. For example, they can support capital-raising efforts directed at providing water and sanitation to poor and vulnerable communities. They can encourage companies to pay attention to water, sanitation and hygiene-related issues in their operations and in their supply chains. And they can encourage policy action on these issues.

Financial benefits of water, sanitation and hygiene

By prioritising access to water, sanitation and hygiene, global companies can ensure a return to safe work conditions following the Covid-19 pandemic, said the report, not only in their own operations but also in the operations of companies in their supply chains. Other benefits of improved access to water, sanitation and hygiene include reduced absenteeism, increased productivity, and staff and supplier loyalty.

Citing a World Health Organisation report, the Water Aid and Chronos Sustainability paper notes that every dollar invested in sanitation yields a US$5.5 return, while every dollar invested in drinking water supply returns US$2.7 in benefits.

Expectations of institutional investors

The report provides a comprehensive list of expectations WaterAid has of investors. When supporting debt issuance or other capital raising by water utilities, investors should encourage these issuers to ensure continuous supply of safe water and sanitation to poor and vulnerable communities, to ensure that access is affordable, and to support practical hygiene measures such as handwashing.

These themes should also come to the fore when it comes to engagement with water utilities. Investors should ask all companies, in particular those for whom water, sanitation and hygiene are seen as most relevant, to make SDG 6 a strategic priority for the company. Key companies and sectors that WaterAid sees as relevant are those that rely on water as a raw commodity for manufacture; those that rely on good water sanitation for their products (such as personal products and cleaning products) to be used safely; and companies that rely on large numbers of people in their supply chains to produce goods and services (and therefore rely on healthy workers to ensure continuity of supply).

In the public policy arena, investors should ask governments to explain how they will deliver commitments to SDG 6; ensure national climate change adaptation plans are centred on addressing inequalities and building resilience on these issues; and encourage governments to mandate the provision of access to safe water, sanitation and hygiene in the workplace.

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