In recent years, the implementation of Environmental, Social, and Governance (ESG) best practices in businesses has gained global attention. 

While some companies are eager to adopt these practices, skeptics question their feasibility. 

In Brazil, public entities have traditionally provided water and sanitation services. However, the Basic Sanitation Framework Law introduced in 2020 has encouraged the participation of private companies in this sector. 

This has led to a surge of private capital entering the sanitation market, providing the necessary investment to universalize services within the sector.

Challenges and Solutions

The entry of private companies into the sector brought several challenges, including the poor condition of many water and sanitation assets, insufficient network coverage, and excessive water losses due to leakages and illegal abstraction. 

Moreover, as the new law embedded universalization targets in contracts with private operators, companies must address the complexities of operating in irregular, vulnerable urban communities, known in Brazil as favelas.

These areas pose the following risks:

• Lack of Formal Governance: Residents may not be able to follow established regulations, as organized crime groups may exert considerable influence over daily life.
• Conflict and Rivalry: Operators can be exposed to tensions between rival factions while providing essential services.
• Security Concerns: Organized crime groups might control strategic access points, which creates security risks for anyone operating in these areas.
• Suspicion Toward Non-Residents: Outsiders, including water and sanitation company personnel, might met with suspicion due to the prevailing distrust and monitoring of activities.

To address these challenges, private sanitation operators developed a series of tailored strategies organized into a Multi-Layered Framework of social and environmental programs to ensure safe and effective service delivery while respecting the unique context of favelas.

The Framework 

This instrument comprises several mutually supportive programs that address different but complementary issues to ensure that stakeholders have promoted and recognized sufficient trust and project acceptance. 

These programs include Stakeholder Engagement, Innovation: Tailored Solutions, Local Job Generation, Community Censuses, Social Tariffs, Environmental Improvements, Financial Inclusion via Water Bills, and Mobility Improvements.

Beyond the Framework, the sector's commitment to ESG principles has led to the development of innovative technologies to reduce water loss and improve water quality. 

For instance, smart meters and real-time data analytics have enabled more efficient water usage and leak detection. 

Additionally, the adoption of advanced wastewater treatment technologies has improved the quality of discharged water and opened possibilities for water reuse in industrial processes, agriculture, and even for potable purposes after further treatment.

Community Engagement 

A vital component of the strategy is the community's active engagement, which includes identifying leaders, establishing contact channels, maintaining regular communications, and responding to grievances swiftly. 

This enables companies to build trust and ultimately act efficiently in these vulnerable areas. 

• Stakeholder Engagement: The main objective is to know relevant stakeholders and establish regular communication routines to build trust and prevent conflicts.  
• Tailored Solutions: An innovative approach that includes
  • installing pipeline networks on precarious terrains; 
  • using hydrometer systems that require minimal space; 
  • replacing illegal pipelines with streamlined distribution systems; 
  • suspended pipelines to enable easy maintenance; and 
  • innovative pipeline-laying methods.
• Local Job Generation: Hiring local people increases community acceptance of projects. Also, residents working in or near their neighborhoods can easily detect potential conflict.
• Community Censuses: This is a pre-requisite to preparing detailed plans for expanding water and sanitation networks to achieve universalization in the provision of services.
• Social Tariffs: Sanitation companies work with their social teams to reduce the cost of the services to make them accessible when compared with the hidden costs of illegal water abstraction.
• Environmental Improvements: Implementing sewage networks removes raw effluents, promoting rapid environmental recovery of streams and rivers.
• Financial Inclusion: The new water bills are used as 'proof-of-address' to purchase goods and services in installments to which they did not have access before, thus promoting financial inclusion.
• Mobility Improvements: Adequate water and sanitation networks replace improvised connections, releasing space on the streets for people's circulation.

Relevant Lessons

The success of these initiatives demonstrates that sustainable practices can lead to tangible improvements in service delivery and community well-being. 

As the world grapples with climate change and resource scarcity challenges, Brazil's experience offers more relevant lessons than ever.

The actions reported by the private water and sanitation sector in Brazil clearly demonstrate ESG strategies aligned with company targets is perfectly possible and even desirable. 

The Framework shows its potential to ensure continual acceptance and trust by local communities, enabling the business to perform its operational role and fulfill the universalization commitment.