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August 23, 2022

Apparel companies could “thrive” with investment in water and sanitation

Apparel and leather businesses in India and Bangladesh could “thrive” if companies invested in water, sanitation and hygiene, new data shows.

By Michelle Russell

Research released by global charity WaterAid shows when companies invest in water, sanitation and hygiene (WASH) for their employees, their businesses thrive. 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, WaterAid says 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.

Data from the research shows that, assuming a continued investment in WASH over a ten-year period, the factories surveyed in Bangladesh showed an estimated overall ROI of US$6.79 for every $1 invested (ranging from -$9 to $30); in India, the figure showed an overall ROI of US$2 for every $1 invested (ranging from -$2 to $8).

The key to success is to deliver these basic essentials not just in the workplaces, but also in employees’ communities and throughout business supply chains, the report claims.

Key findings include:

In India:

  • 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%).
  • Absenteeism fell by 29%, and 83% of employees said they had improved their handwashing behaviour.

In Bangladesh:

  • 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.
  • Absenteeism fell by 15%, punctuality improved by 5%, and attrition decreased by 2%.
  • 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 $7.8m over ten years with a continued investment in WASH.

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.

Delivering on ESG commitments

“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,” said Ruth Loftus, project lead and WaterAid’s senior private sector advisor.

“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.

“The human stories reveal the less tangible, yet priceless value of investing in decent WASH facilities in communities and in the workplace. Now for example, the largely women workforce in the clothing factories can learn about menstrual health and hygiene, they can access period products, and share new advice with family and friends.”

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.

“In my locality, we didn’t have access to clean water and the only toilet was unhygienic, always shared with many. When we finally got a toilet in our community and running water and a hand washing station in our factory, it was a massive relief for us that we [no longer] have to stand in a queue for hours. We learned good hygiene and to take care of our menstrual cycle – this is something we were not able to talk about with our mothers. Now there is no shame. Now I don’t lose money for my absenteeism […] and the money I had to spend for medical reasons is now going to my son’s education.”

Staff across all six workplaces surveyed were pleased with the impact of the WASH investments, with 100% of employees across the three ready-made garment factories saying the facilities had brought positive changes, and 83% thought the project had significantly contributed to better health in their communities.

“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,” added Tim Wainwright, chief executive of WaterAid. “With health and profit in mind, the ‘Boosting business: why investing in water, sanitation and hygiene pays off’ prove to businesses that now is the time to put the wellbeing of millions of factory workers at the heart of their business strategies. “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. The business landscape is changing and with the provenance of products becoming increasingly important to the consumer, business leaders now have huge potential to make a significant difference to the lives of millions.”

Click here to download the reports.

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