Investors have a key role to play if clean water and sanitation are to be universally available by 2030, fulfilling the United Nation’s Sustainable Development Goal 6 (SDG 6).
As the Sustainable Development Goals Report 2020 highlights, that goal is not yet within reach. More than 2 billion people lacked safely managed drinking water in 2020, while 3.6 billion were without safe sanitation services, and 2.3 billion had no access to basic hygiene. Unsafe drinking water resulted in more deaths in 2019 than diabetes, malaria, or HIV. One-third of the world’s population still lacks basic handwashing facilities at home.
In the wake of new and pressing issues exacerbated by the coronavirus pandemic, meeting the goals of SDG 6 has taken on new urgency. Here’s a primer to establish the fundamentals and help direct impact investment.
What Is SDG 6?
Centering on sustainability and investment in water infrastructure, SDG 6 aims to establish equitable access to drinking water and sanitation. The goal also accounts for the ongoing structural obstacles to already scarce water resources posed by population growth, climate change, and pollution.
The good news is that there has been some progress. Access to safely managed drinking water and sanitation services grew in recent decades by 2 billion and 2.4 billion people, respectively. However, that progress is not enough to offset the effects of global warming and population growth.
The United Nations reports a rise in water stress, where water supply is insufficient or of too-poor quality to meet demand. According to the UN, water stress globally rose from 18.2% in 2015 to 18.4% in 2018. The most notable increases in water stress occurred between 2017 and 2018 in Southeast Asia, Latin America, the Caribbean, and Sub-Saharan Africa.
Investing in Water Infrastructure
New York-based Global X launched an exchange-traded fund called AQWA in April 2021 with the goal of providing exposure to companies advancing clean water provision, including firms targeting industrial water treatment, storage and distribution infrastructure, and purification and efficiency strategies. Among the top holdings are hygiene specialist Ecolab, water technology company Xylem, water products company Advanced Drainage Systems, and sustainable water solutions provider Pentair.
Pentair has promoted access to clean water in developing countries through its Project Safewater. In India, the company addressed the health impacts of groundwater pollution as well as how education suffered when children were forced to make long journeys in search of drinkable water. Pentair’s 260 iJal water stations have provided clean water to more than 900,000 people across India.
Other initiatives include the WaterCredit loan program from Water.org, a nonprofit that has helped more than 36 million people access safe water and sanitation. WaterCredit offers small loans to those in need of affordable financing and resources to support household water and toilet solutions.
Despite progress, the UN says the world is not on track to achieve SDG 6. Against a backdrop of population growth and global warming, countries and global institutions face growing pressure to address water stress along with related issues of insufficient clean water and sanitation. As a result, impact investors may see new opportunities to effect positive environmental as well as social change.