ESG Investing

Clean Water and Sanitation Solutions Impact Broader ESG Goals

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Nearly one million people die annually from water-, sanitation- and hygiene-related diseases. Combined with large-scale concerns over population growth, pollution, urbanization, and drought, a rising tide of water scarcity issues could send the world toward a global water crisis.

Innovative clean water and sanitation solutions may help mitigate—and perhaps even reverse—some of these problems.

How Big Is the Issue?

Water underpins efforts toward sustainable development and the eradication of poverty and hunger. Furthermore, safe sanitation systems—not only access to toilets, but the secure containment, emptying, transport, treatment, and reuse or disposal of fecal waste—are fundamental for protecting public health.

Yet more than half of the world’s population uses sanitation services that leave human waste untreated, and 673 million people have no access to toilets at all.

Meanwhile, other water and sanitation issues loom large:

  • Approximately 40% of the globe faces water shortages as the population continues to grow.
  • Three in ten people lack access to safely managed drinking water resources.
  • Nearly 2.4 billion people lack access to basic sanitation services.
  • One in four healthcare facilities lacks basic water services.
  • Almost 1,000 children die from preventable water and sanitation-related diarrheal diseases each day.
  • Approximately 70% of all water extracted from natural sources goes toward irrigation.

Companies’ use—or misuse—of global water resources can directly impact a range of ESG issues.

Which Technologies Support Change?

As technology advances new avenues for impact on many ESG issues, investment in water, sanitation, and hygiene endeavors are available whether one supports traditional solutions such as recycling improvements or looks to new technologies:

How Can Clean Water and Sanitation Further ESG Issues?

Improving water and sanitation access has an immediate impact on water-related issues, but also carries a broader influence on other ESG concerns:

  • A lack of access to clean water is a prime underlying cause of malnutrition.
  • Water-related diseases undermine productivity, reinforcing deep-rooted inequalities and trapping vulnerable populations in poverty.
  • Poor sanitation results in significant financial expenses. These may be personal—such as preventable healthcare costs, lost income, and decreased productivity—or costs associated with environmental damage.
  • Many girls either cannot attend school or miss many days because of inadequate water and sanitation facilities, impacting the larger community for many years to come.
  • Inadequate sanitation, particularly in urban areas, encourages sewage and waste to flow directly into streams, rivers, lakes, and wetlands. This affects coastal and marine ecosystems, polluting the environment and exposing millions to disease.

How Can Impact Investors Help?

Water scarcity affects all facets of the global supply chain, and companies’ use—or misuse—of global water resources can directly impact a range of ESG issues. Unfortunately, 2021 data found that most companies do not report on key water metrics such as water consumption and water extraction. By pushing for transparency and rewarding positive movers, impact investors may support progress by organizations focused on improving water and sanitation strategies.

Investments in these and other global sanitation solutions allow ESG investors to address the threat of water scarcity and access to sanitation. The beneficial effects also spill over into a host of ESG issues including education, industry, agriculture, security, and community health.

Any company, security, fund or other investment identified herein is provided solely for illustrative purposes and should not be construed as a recommendation or solicitation for the purchase or sale of any such investment. By clicking on a weblink included in the above article, you may access a website operated by a third-party. Please review the website’s terms of use and privacy policy upon entering the site. We are not responsible for any content, links, products or services available on third-party websites.

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