(Illustration by Eric Nyquist)
The ever-increasing threats of climate change challenge the mandate of every organization, even those whose missions seem unrelated to climate issues. As the impacts mount, climate change will shape every mission, and even organizations not focused on climate will have to rally and figure out how to join the common fight.
This dynamic can unsettle many organizations. For some, it feels like their own mission is shrinking in importance or like they are competing with climate activists for resources and bandwidth. But sooner or later, every organization will go through its own learning experience to find a path into climate action, no matter the mission, because what is at stake has far-reaching impacts on the systems in which we all operate.
We at WaterEquity have gone through this process. Thanks to the lessons we have learned, we can advise other organizations on how they might authentically define and integrate their own climate mission.
Urgent Climate Action
WaterEquity is one of the first asset managers to bring affordable financing to people at the base of the economic pyramid so they can invest in their own safe water and sanitation. Today, 1 in 4 people—2.2 billion—around the world lack access to safe water, and 2 in 5 people—3.5 billion—lack access to safe sanitation. Lack of financing is the key barrier preventing individuals from securing safe water or sanitation, along with the infrastructure necessary to deliver it.
Building off and leveraging our work at Water.org—an international nonprofit that helps make access to potable water and sanitation affordable to those living in poverty—we launched WaterEquity in 2017 to mobilize private investments in water and sanitation in emerging markets. WaterEquity’s model is simple yet powerful: We provide debt capital to financial institutions to help scale their water and sanitation microloan portfolios. These microloans then enable low-income consumers to install water and sanitation solutions in their homes, such as a water connection or toilet. On the whole, we are enabling millions of people to have access to these life-saving resources and seeking to end the global water crisis in our lifetimes.
During our rapid growth, climate change has been one concern among many. People might lack safe water and sanitation because of a drought or flood, or it might be because of poverty or broken infrastructure. Becoming resilient to the effects of climate change has loomed larger every year, though, in the lives of many people who take out water and sanitation microloans. And because our model, by design, keeps all the power for change in the hands of these households, their concerns are inevitably WaterEquity’s too.
Climate change has this way of interacting with every other pattern of vulnerability, hitting first and hardest the people that we serve through philanthropy and impact investment. Does that mean the converse is also true: that our efforts help people face those impacts? We always believed so, but we also had a lot of uncertainty. Action that spurs development, even in the communities that need it most, often spurs carbon emissions too.
Don’t just look for a climate pitch for what you already do. Some organizations are content to reframe the things they do as climate action. That is no longer acceptable, if it ever was.
In 2019, Water.org asked the Pacific Institute’s climate experts to delve into the implications of climate change for water technologies and financing, especially for low-income and marginalized populations. The resulting study mapped out how water supply and sanitation systems contribute to and are affected by climate change and how the right choices can benefit everyone through water and energy-efficiency improvements that are affordable and resilient to a changing climate.
Water.org then commissioned a metastudy of internal and external evidence, which included surveys of partner microfinance lenders and loan recipients on the climate changes they were already seeing. Among lenders, two-thirds mentioned declining rainfall, and nearly as many spoke about floods. One-third of recipients of water supply loans, and 18 percent receiving sanitation loans, said that they chose their improvements based on the climate-change impacts they had experienced. The metastudy found that these microloan-funded investments generally do increase the resilience of services to climate change. For example, a household that previously gathered water from an unreliable open lake or stream can upgrade to a piped connection or a protected well with a storage tank.
In short, people knew what they were doing, and we had every reason to let them build their own climate adaptations with the capital invested through WaterEquity. Our action in financing universal access to water and sanitation is—we can confidently say—urgent climate action.
Along the way, another problem loomed: Household water and sewer connections are only as good as the utility systems they connect to. Unfortunately, many utilities in the Global South are low in climate resilience and high in emissions. In fact, the energy used to transport and treat water accounts for 1.8 percent of all carbon emissions. Sanitation is responsible for 4.7 percent of methane emissions, which vary depending on how sewage is treated.
Many of these utilities also lack the capital to do better. Little climate finance has reached here, and while commercial infrastructure finance is booming in the energy and transportation sectors, only 1.9 percent is going to water and sanitation. So while we keep scaling up accessible finance at the household level, WaterEquity’s new investment strategy focusing on water and climate resilience has also started evaluating investments in water and sanitation systems that generate lower emissions and are better able to buffer their customers from climate change.
Becoming Climate-Committed
Stepping into climate action has felt natural for WaterEquity and was, surely, just a matter of time, given the interconnectivity between climate and water. But it still took some conscious choices to go from climate-adjacent to climate-committed. Here are some lessons we learned.
Don’t be afraid to join. For all the action you can see, many more gaps exist. | It is easy to imagine that there is a big agenda for what needs to be done, if only the next UN Conference of the Parties (COP 28) can mobilize enough will and money. But even the major climate funders are new here, and nobody is sitting on a master plan. A thousand areas exist where those organizations not directly involved in climate solutions can get involved—particularly in the local challenges of adaptation. As for the global fight, mitigation and adaptation may even happen without any of us, but not in ways we can accept: Too many of the world’s people will be left behind in the gaps. We know because it’s already happening.
Ask the experts. | Although the progression of WaterEquity into funding climate action has seemed organic, the pivot points resulted from conversations and collaborations that we’ve initiated in recent years. Don’t underestimate the potential of opening conversations with people deep in the field of climate research. They offer opportunities to learn from their admirable commitment to evidence and collaborate on the next phase of collective action. If you have questions about where your work fits in, find other organizations with the climate experience and evidence to offer answers—they are eager to share.
Ask the other experts. | We believe the solutions that work are likely to grow from communities at the base of the economic pyramid, so be sure that you understand the climate from their point of view, too. An ideal solution in one place may not look so good in another, and the reasons are probably obvious to people who live there. And if you’re working with actors at a higher level in the system, as WaterEquity now is with utilities, listen to their voices of experience.
Don’t just look for a climate pitch for what you already do. | Some organizations are content to reframe the things they do as climate action. That is no longer acceptable, if it ever was. In WaterEquity’s case, we first asked if what we do is truly part of the solution—and thankfully found good evidence that we’re on the right side. Then we sought ways to do more, such as addressing leaks in utilities pipes. Now we continue gathering evidence to find out how much more we can do, following the principle that we can’t manage what we don’t measure.
Stay in a collaborative mindset and catalyze climate impact through collective action. | Climate action is growing fast, but not as fast as the consequences of climate change. The number of organizations with a central climate agenda is still smaller than the multitude operating just on the other side of the door, and those organizations in the next room are not, and have never been, peripheral. The work they do is either part of the solution or part of the problem.
Like all social innovation, the solution doesn’t belong to any one entity. Rather, the actions of different partners knit together into something big, resulting in meaningful change. Challenging ourselves to think at that scale forces us to be creative, be intentional, and respect the evidence. That is the payoff of being in and staying in conversations around big issues, including the biggest issue of our age.
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