Impact entrepreneurship

Impact entrepreneurs are purposefully driving progress toward the UN Sustainable Development Goals (SDGs). From digital tools to long-term capacity building services, we are extending the value of EY knowledge to help their life-changing businesses achieve greater scale and impact. 

The better the question. The better the answer. The better the world works.

How entrepreneurs can transform access to safe water

With the right support, impact entrepreneurs and investors can play a bigger role in bringing safe, affordable drinking water to millions.

The better the question. The better the answer. The better the world works.

How can a trickle become a torrent?

Scaling safe water enterprises (SWEs) as a better answer to the water crisis.

Imagine a life without safe drinking water. It isn’t easy. Most of us take for granted that we can just turn on a tap and fill a glass. But that’s not an option for roughly one in four of the world’s population — the 2.1 billion people who still lack access to safe drinking water today.

With half of all hospital beds in low-income countries occupied by people with water-borne diseases, it’s hard to overstate the importance of reaching the UN Sustainable Development Goal (SDG) of equitable access to safe, affordable drinking water for all by 2030.

While the current rate of change isn’t fast enough to hit this 2030 target, EY sees grounds for optimism in the growing number of entrepreneurial SWEs innovating new models for the provision of safe water in underserved communities.

Seeing that same potential, Unilever engaged an EY team to help it develop a deeper understanding of these new models, and their economic and operational viability. Having already served nearly 100b liters of safe drinking water to more than 55m people through its Pureit Brand, it wanted to know which models, with the right focus and investment, might be capable of bringing safe water within reach of hundreds of millions more people.

Shanty town polluted stream
The better the question. The better the answer. The better the world works.

Redefining ROI for clean water

Shedding new light on the capital efficiency of SWEs with a “magic metric” that better enables investment for scale.

Unilever needed to evaluate an SWE’s capacity to scale and become truly self-sustaining. The challenge was the lack of frameworks or methodologies for analysing SWEs’ business model dynamics. Additionally, in a nascent sector with myriad approaches adapted to local market conditions, different models could not be compared “like-for-like.”

When those models could range from an Indian SWE using chlorination to treat water with another in the Americas using reverse osmosis (RO) and shouldering dramatically higher costs, how can you find a way of comparing apples with apples?

One way, it turns out, is to invent an entirely new metric — one that not only helps faciliate direct comparison between different SWE models, but also a radical reframing of how to evaluate SWEs’ growth potential and worthiness of investment.

Impact Return on Invested Capital

That new metric is Impact Return on Invested Capital — or IROC — which, in the case of safe water, represents the number of people whose daily water needs can be met per thousand dollars of invested capital.

What makes this new perspective so valuable and important is that more traditional investor metrics, such as Return on Invested Capital (ROIC), are insufficient to assess the capital efficiency of SWEs. For example, ROIC doesn’t take into account the purposeful trade-offs SWEs make, often intentionally running as close to breakeven as possible in order to lower prices for customers.

With innovation clearly essential to achieving equitable access to safe drinking water for all, the world cannot afford to overlook any model with the potential to accelerate that access. Combining both IROC and ROIC lenses opens up a new and broader approach for building and evaluating business and investment cases that help guard against that eventuality.

EY’s impressive combination of strategic insights, analytical rigour and pragmatism have been critical in positioning Unilever to pursue a number of valuable partnerships.
Clive Allison
Global Director, Innovation & New Business Models, Unilever
Boy water station truck
The better the question. The better the answer. The better the world works.

Changing lives with safe drinking water

SWEs are bringing safe, affordable drinking water to millions.

Using IROC to blend perspectives and create a balanced scorecard is but one of seven insights distilled from EY’s award-nominated analysis of the business model dynamics of several of the world’s leading SWEs across India, Africa and Latin America.

Consolidated in How can a trickle become a torrent? — a joint report with Unilever, launched at World Water Week in Stockholm last August — these insights help illuminate a path to SWEs serving hundreds of millions of people and dramatically accelerating progress toward the goal of equitable access to safe drinking water for all.

Scale is critical

As well as highlighting the need for investors who are prepared to take a more balanced view of SWEs’ potential to generate returns, the report also illustrates the criticality of scale to achieving true sustainability; and how scale, in turn, depends on finding the best “fit” to a particular blend of market conditions.

For example, while RO may be the “gold standard” for water purification, what people can afford to pay for water automatically rules it out as a scalable, sustainable option in certain parts of the world. It may even be unnecessary in locations where making water potable only requires removal of biological pathogens. Taken together, these insights feed advice that SWEs should take care not to overengineer their business models.

With this and other powerful and practical tips, EY and Unilever hope to advance investors’ understanding of, and confidence in, the SWE sector: to illustrate more viable paths to scale; to stimulate greater investment; and to direct further capacity-building support behind high-potential SWEs.

The ones whose businesses form the basis of our report are already serving more than 15m people. It’s our shared belief that we’ve barely scratched the surface of what these — and others like them — could achieve. With the right focus and support, they have the potential to bring bring safe, affordable water within reach of millions more people living at the base of the pyramid.

Clean water Africa India

What EY can do for you

Underscoring the EY Ripples vision to positively impact one billion lives by 2030 is the belief that a better working world is one where everyone can contribute to and share in the benefits of sustainable economic growth.

With billions of people still excluded from access to decent work, opportunities, and goods and services, a special breed of innovators we call “impact entrepreneurs” are at the heart of how we seek to drive sustainable inclusive growth globally.

Impact enterprises are purposefully driving progress toward the UN Sustainable Development Goals (SDGs). All over the world — especially in poor and marginalized communities — these entrepreneurs are at the forefront of innovating better answers to global problems.

We extend the value of EY knowledge to provide a range of services to help impact enterprises scale and bolster their success in the critical early stages of growth:

EY professional services

EY professionals provide hands-on or virtual services and support to help impact entrepreneurs improve their businesses’ resilience, productivity and capacity to scale sustainably. These not-for-profit projects range in duration from a few weeks to several months. Over 500 projects with impact enterprises have been completed in over 60 countries, focused on scaling and promoting off-grid renewable energy, clean water and sanitation, sustainable products, gender equality and other SDG-aligned missions. Interested impact enterprises can request more information and apply for EY professional services support here.

Skills development and coaching

EY collaborates with leading impact investors and entrepreneurship networks, such as Acumen and Endeavor, to provide a variety of skills development and coaching programs for impact entrepreneurs. These typically feature a combination of practical training, peer discussion, and individual or group coaching. Designed with the busy entrepreneur in mind, coaching and mentoring programs focus on common barriers to growth and range from half-day workshops to recurring monthly sessions.

The work EY does to help social enterprises scale their businesses and grow their impact can be truly catalytic. It’s encouraging to see a professional services organization like EY leading on this important work.
Jacqueline Novogratz
Founder and Chief Executive Officer, Acumen

Digital tools and resources

Resources such as EY Velocity and EY Finance Navigator are self-service tools that impact entrepreneurs can use to build financial plans, make cash flow projections and understand the drivers of growth for their businesses. EY teams also develop webinars and recorded coaching sessions for impact entrepreneurs – meaning anyone with internet access can benefit from EY guidance.

Impact entrepreneurs are already changing millions of lives by making it their business to tackle social and environmental challenges. By working with them, we’re helping them to impact millions more.

Supporting business through COVID-19

COVID-19 is an unfolding event, bringing uncertainty to every business. To help navigate these unprecedented times, find the latest EY insights on responding to volatility and building enterprise resilience here.

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