Business Case

Increasing Productivity & Reducing Absenteeism

Health indices and access to safe WASH are related. An investment into WASH services in the workplace can generate public benefits as well as be valuable to business as it creates opportunities for growth and profitability.

• Lower absenteeism leads to high productivity given a more capable workforce and lower factory error rates. Through the HERproject, Levis Strauss provided women at factories with health education and improvement of on-site health services and behaviour. Absenteeism fell by 55% and staff turnover has dropped from 50% to 12%. One factory calculated a $4:$1 return on investment (ROI).⁵
• In Vietnam, a number of factories created an environmentally comfortable and trusting workplace, including water and bathroom satisfaction. One factory reported a 7.6% increase in profitability⁶ where workers expressed greater satisfaction with water, air quality, bathrooms, canteens and health services.
• Inclusion of menstrual hygiene management can help women stay in work and ensure gender equality in the workplace. In Kendougou, Senegal, 96% of the women surveyed said they did not regularly go to work while they were menstruating.⁷
• Attrition rate can drop which will lead to an increase in employee retention, the general wellbeing of the workplace to increase and higher levels of worker satisfaction.

Reducing Operational Costs and Business Risks

• Given that poor water stewardship management and WASH management could force the closure or relocation of business operations, investing in this area can increase investor confidence and protect the company share price.
• Reduced water treatment costs: lack of sanitation can lead to higher on-site pre-treatment costs in making contaminated water usable for industrial purposes, or worse, water supplies are so polluted that they are unavailable for industrial use.
• Of those companies that publicly responded to the 2016 CDP water questionnaire, 65% believed that they were exposed to water risks that could generate a substantive change in their business, operations, revenue or expenditures, WaterAid found only 15% reported WASH-related risks in direct operations and 7% in supply chains.⁸
• Diarrheal diseases were the 4th largest source of hospital admissions and 10th largest cause of death at Newmont Mining, Ghana. In response to this, investment into their sanitation systems led to a  30-40% reduction in the incidence of diarrhoea  and the avoidance of $28,000 in medical costs per year in one mining community.⁹

Developing Supply Chains and Supply Security

• Investment in WASH facilities across the business supply chain provides the opportunity to increase workforce productivity and grows supply security of the product. Cost savings across the supply chain are of benefit to both producers and consumers which will in turn increase economic efficiency.
• Further, an investment into WASH in the supply chain represents an investment into market security and will ultimately provide a more enhanced supply side infrastructure. Through their Water of Life Programme, Diageo has worked to support water supply, sanitation and hygiene projects in 58 communities in Ghana, some of which input to their subsidiary breweries’ supply chain. In addition to the positive social impact generated, Diageo is looking to better understand and capitalise on the potential strategic and sustainable impacts for its business.¹⁰

Strengthening Social Licence to  Operate and Addressing Reputational Risk

• • The implementation of WASH facilities in the workplace provides further opportunity for the business beyond its walls. As many businesses are often within close range of Low Income Communities, there are significant opportunities to invest in providing better WASH services in the surrounding area. This mechanism strengthens a company’s social capital via a stronger connection with the local community.
  • This work can lead to enrichment of brand loyalty and  goodwill towards the company:  “Being a responsible water user is an opportunity for us – it helps build stronger relationships with local communities and governments and enhances our social license to operate: being responsible makes it easier for us to do business” Anglo American, UK(2015)
  • Good water management, provision of WASH and meeting companies’ responsibility to respect the HRWS ensures companies’ social license to operate, reduces reputational risk and can strengthen relationships with governments and other key influencers.

• The requirement for businesses to comply with local regulations within the jurisdiction of their operations.

Exploring the economic benefits

There is a considerable range of economic benefits that follow from investment in WASH provision. For low income countries, improved WASH and economic growth go hand in hand and contribute to unlocking communities from poverty and support the discovery of economic potential.

• • The recovery of lost economic potential is significant. A World Bank Study estimates that in 2008, the economic loss of poor WASH to Indonesia and the Philippines was $3.3bn and $1bn, respectively.¹¹
  • The reduction of disease and the increase in general health levels brings a stronger and more productive workforce. Every day, on average, over 800 children under 5 years of age die from diarrhoeal diseases due to poor WASH.¹²
  • Time saved in fetching water, especially for children and women, leads to more opportunities for primary and secondary education which in itself is essential for individuals to have an opportunity to increase their standard of living. “Nestlé repaired the pumps in Bonicro and constructed latrines and water stands for our schools. With the repairs, women who used to have to walk many kilometres to get water now save a lot of time and can get clean water”(beneficiary of Nestlé and IFRC intervention in Cote d’Ivoire).¹³
  • The creation of an efficient, well governed WASH sector is essential to reduce the waste of economic resources that occur when consumers pay inflated prices to illegal vendors for WASH services.
  • Investment in household or communal WASH facilities will lead to an improvement in housing conditions and an increase in the value of property. These benefits will primarily be experienced in urban areas and can contribute to the development and prosperity of cities.¹⁴
  • Rural areas across a nation can also receive benefit from WASH improvements in urban settings. As workers migrate towards buoyant urban labour markets, they in turn begin to produce a flow of remittances back to family members in rural settings. In Sub-Saharan Africa and Asia, the volume of internal remittances is consistently greater than international remittances and the majority of beneficiaries of these internal remittances are poor households.¹⁵
  • With the increase in economic production from a healthier and more educated workforce, GDP will rise which will lead to a higher levels of income per capita and economic growth.
  • Inward investors will notice the growing opportunities to establish business operations within their country, given the improvements in the WASH infrastructure. Capital inflows are not only positive for employment opportunities, but also positively affect the balance of payments.

Inadequate WASH is associated with global economic losses of USD 260 billion every year, largely due to lost time and productivity. WHO (2012)¹⁶