Clean Water, ESG Risk And The UN Sustainable Development Goals

The UN Sustainable Development Goals are a useful high-level framework for thinking about your firm’s ability to deliver a positive social impact. Goal 6 is to ensure access to water and sanitation for all.

In a world with ever-increasing stakeholder expectations, boards and senior executives must to actively engage with and ensure that environmental, social and governance risks in their organisations are identified, managed or eliminated.

Zooming out to consider the global context in which your firm operates is a helpful exercise. The UN Sustainable Development Goals help boards disclose these ESG risks because the 17 high-level goals align with the classification of the material risks your business faces.

Through embracing sustainability reporting with the UN SDGs as part of the reporting framework, comparability between businesses and across industry sectors and countries becomes possible. Over time, institutional investors will increasingly demand more disclosure around sustainability outcomes your business is delivering for stakeholders.

The current focus on ESG risk is predominantly on responsible investing. Setting up processes and frameworks for asset managers to consider whether or not a particular company is suitable to invest capital into or lend to is also known as impact investing.

The focus for the next decade will need to be on building a responsible operating model. A responsible operating model is an evolution of a target operating model that incorporates sustainability outcomes and positive social impact into the strategy, design principles, and execution of the new operating model.

An exercise for boards and senior leaders to run is an assessment of your firm’s current operating model against the UN Sustainable Development Goals. Once you have that, consider your purpose and fundamental value proposition for your customers. Are there parts of your operating model that could be modified or enhanced to deliver a positive social impact as well as deliver value to your shareholders?

If you are going through a transformation, it can be like turning a container ship in a large organisation. During the programme initiation and spin-up phases, the sustainability outcomes need planning and analysis. Projects required to enable these outcomes to be delivered will never be scoped, budgeted, delivered and used by the business unless they are there from the beginning.

Goal 6: Ensure access to water and sanitation for all

The goal of ensuring access to water and sanitation for all has particular application for some companies. They may operate in countries where clean water and adequate sanitation is behind the country where their headquarters are.

Poor access to clean drinking water, inadequate sanitation, and poor access to reliable water supplies at all are problems faced by hundreds of millions of people every day. Water scarcity affects almost 40% of the global population. Nearly 1,000 children die every day because of preventable water or sanitation-related diarrheal diseases.

If your business operates in the water, sanitation, or engineering industry sectors, there is a clear opportunity to deliver a positive social impact and support the achievement of Goal 6 by 2030.

A business doesn’t have to have an office in a developing country to help. They can use their people and resources to assist developing countries in improving water and wastewater systems. They can offer secondments to experienced engineers and technicians to assist impoverished communities. They can use their voice to lobby for global efforts that improve access to sustainable and affordable finance for water and sanitation projects in developing countries.

Many technologies can benefit from further investment in research & development such as water recycling, desalination, water and wastewater analytics, wastewater treatment, recycling and reuse technologies.

If you are running a business that works in an office in an OECD country, starting with the water and sanitation efficiency and sustainability of your building and any other premises you own or occupy is a vital part of any current operating model review.

You will need to work with your building manager and landlord to understand the sustainability performance of your office space. There are sustainability analytics tools that can assist in reporting on this. Some older buildings may not be able to deliver sufficient levels of water reuse and recycling without substantial investment from landlords.

If you are a manufacturing company, ensuring there is no environmental impact from water or wastewater pollution from your factories is table stakes for the 2020s. Ironically, many manufacturers are well ahead of many service industry businesses because of environmental regulation and stakeholder pressure over the past few decades in identifying and managing these risks.

Goal 6 is about water and sanitation, and every business will be able to do its part to identify and report how it is supporting the achievement of this goal. It may not be the highest priority for a business in terms of how it can help sustainability outcomes, but similar to supporting gender equality it is table stakes for being able to communicate to stakeholders how it holistically considers its overall social impact.

Considerations for directors and executives

Boards and senior leaders that decide to use the UN Sustainable Development Goals in their sustainability strategy and reporting should consider a wide-ranging review of their current operating model against the 17 high-level goals.

The active engagement and governance of ESG risks inside a business will become increasingly critical for boards of directors. Boards should consider how they want to incorporate ESG risk into their risk management framework and ensure there is sufficient budget available to spend on sustainability projects, reporting, and assurance.

 A decade ago, a business could respond to ESG risk issues with a press release. They could even donate to a project in a developing country. These PR focused measures did not involve deep introspection and analysis of their current operating model and its strengths and weaknesses when it comes to sustainability outcomes.

In the 2020s, from the board-level down to the operational level, the enterprise value of the business is increasingly going to be impacted positively or negatively by the ability of the company to deliver value to its customers through a responsible operating model that has sustainability outcomes considered, measured and achieved through the capabilities the business assembles to provide value to customers and a broader set of stakeholders around the world.