Study: Factories need to invest in water and toilets to drive health, wealth and business

Desk Report: First-of-its-kind research released today by WaterAid shows when companies invest in water, sanitation and hygiene (WASH) for their employees, their business thrives. Productivity increases, health, morale and loyalty improve, absenteeism reduces, punctuality enhances and staff turnover lowers – ultimately driving business profits.

The new data, released in two reports titled ‘Boosting business: why investing in water, sanitation and hygiene pays off’, supported by HSBC, was carried out in the apparel and leather industries across six workplaces in India and Bangladesh over a two-year period. The reports include projections for the next ten years.

It is the first time that the impacts from WASH investment on both employees and businesses has been documented and analysed, and where the return on investment (ROI) has been so well-evidenced, according to WaterAid.

With trends showing that consumers increasingly care how their clothing is made and seek out products and brands that prioritise employee welfare, the health of employees should be on top of any business leaders’ mind, and investment in WASH should become a core part of companies’ Economic, Social and Governance (ESG) strategies and action, WaterAid said.

Key report findings include:
• The investment in WASH led to a host of business benefits and trends both for employees and management.
In India:
o Employees’ access to drinking water rose by 30%, and to handwashing stations by 13%. The availability of toilets at home increased by 10 percentage points (from 70% to 80%).
o Absenteeism fell by 29%, and 83% of employees said they had improved their handwashing behaviour.
In Bangladesh:
o In employees’ communities, almost a third of the households (31%) now have safely managed water, and 26% of households now have decent toilets, compared with zero access for both of these before the project.
o Absenteeism fell by 15%, punctuality improved by 5%, and attrition decreased by 2%.
o A climate resilient rainwater harvester installed by Fakir Fashion (one of the ready-made garment factories) provided significant environmental benefits and cost savings in terms of water supply and treatment.
• Productivity is the most influential and important indicator contributing to ROI across the six workplaces. For example, in Bangladesh productivity showed a great improvement across the three factories, resulting in the biggest business benefit – an estimated $7.8 million (738 million BDT) over ten years with a continued investment in WASH.
• Assuming a continued investment in WASH over a ten-year period, the factories in Bangladesh showed an estimated overall ROI of $6.79 for every $1 invested (ranging from -$9 to $30); in India, the figure showed an overall ROI of $2 for every $1 invested (ranging from -$2 to $8).

While the ROI for each of the six workplaces varied, depending on a range of factors – such as the impacts of COVID-19, product ‘value’ and previous WASH standards – the benefits for both employees and companies are staggeringly clear, WaterAid said.

Ruth Loftus, project lead and WaterAid’s Senior Private Sector Advisor said: “These investments increase health and productivity of employees, increase worker morale, reduce absenteeism and help prevent diseases – all of which mean lower operational costs, ultimately enhancing a company’s bottom line and delivering on their ESG commitments.

“There’s a compelling case for factory management to pick up the gauntlet and invest in taps, toilets and good hygiene for their employees. The participating factories are showcasing the business benefits, generating a return on their investment, aligning with regulation and reputational expectations and potentially driving change for millions of people through the companies they supply – many of which are global brands.”

India is the fifth largest exporter of leather goods globally and has an estimated 3,000 tanneries providing jobs for more than four million people. Bangladesh is the world’s second-largest apparel exporter, with its ready-made garments sector accounting for 83% of the country’s export earnings.

Kings International Ltd tannery in Unnao, northern India, where which processes hides into finished leather, struggled with employee absenteeism, particularly during monsoons when flooding causes contamination of water sources, leading to poor hygiene and a rise in diarrhoea and dysentery cases.

The factory joined WaterAid’s project, installing toilets and handwashing points, and renovating water stations. Hygiene messages and jingles were also played near the toilets, and hygiene promotional films were screened in the common room; all of which the employees keenly told their friends and family about at home.

“This truly is a ground-breaking project, as evidence of the impact on businesses investing in such a basic thing as water and toilets has been largely anecdotal – until now. “As climate change is set to drive erratic weather events such as flooding, droughts and cyclones, investing in WASH is fundamental to safeguarding people already living on the frontline of climate change, and to building robust, sustainable businesses.”