Submitted By: Stanley Samuel, Founder & Marcus Lim, Co-Founder, ECOSOFTT
The pressure on businesses to improve social and environmental sustainability is increasing and irreversible. While some companies may have considered greater investments in social impact activities, many are concerned that their businesses will be disadvantaged if they do so. It is feared that distracting management from their core commercial functions could reduce operating efficiency. Redirecting scare
resources from core commercial activities might reduce shareholder returns and result in a higher cost of capital.
However, does an increased attention to sustainability inevitably come at the expense of management efficiency and financial performance? Can social impact co-exist with financial returns, or even create competitive advantages?
Challenges and Opportunities in the Water Sector
Eco Solutions for Tomorrow Today (ECOSOFTT) is a Singapore-based water company with a business model that aims to achieve both social impact and financial sustainability simultaneously. The company was founded in 2012 with the aim of addressing the massive problems of water scarcity, shortages and quality globally.
Two-thirds of the world’s population is already living in water-scare conditions and 50 per cent of diseases is related to water. In Asia, this issue affects almost 2.5 billion underprivileged people who have very limited ability to pay for water, and also a middle-class of 600 million people living in “city-like” conditions who need and can afford to pay for water supply, products or projects. The water phenomenon thus presents a huge problem and a huge market opportunity at the same time.
Technology and financial investments are critical aspects of a sustainable solution.
However, as water is a shared resource, the needs of the underprivileged communities must also be part of the equation.
Hybrid Business Model
ECOSOFTT defined its purpose as “to achieve an equilibrium between natural ecosystems, economic development and living communities”. Its business model comprises a combination of:
- For-profit activities that generate income by providing technology-based solutions for
those affected by water and have the ability to pay.
• Social impact activities targeted at those affected by water and require subsidies.
Hybrid Business Model
The business model is made up of four key pillars of activities:
• Water & wastewater technologies. These are water smart blue building solutions incorporating low cost, innovative technologies to harvest, treat, conserve and recycle water. Customers include developers, building owners, hotels, educational institutions and public sector agencies that are off-grid or on
• Professional services. These provide water audit, technical design, feasibility studies and policy advice to address water, wastewater and environmental challenges faced by policy-makers, municipals corporations, building owners and facility managers.
• Solutions for underprivileged lives. These include water supply, toilets and wastewater systems for underprivileged communities facing water and sanitation challenges. They are executed through SAAMARTH Social Services Organisation, ECOSOFTT’S social impact arm registered as an NGO.
• AQUA. Education on water and environmental issues through classroom exercises, experiments, collaborative learning and real-life projects. Over 15,000 students to date have been engaged in Singapore, Hong Kong, India and the UK in this area.
This model is unique among companies in the water industry, which typically focus only on for-profit activities. ECOSOFTT’s social impact activities are seen not as CSR projects, but core to the purpose of the company. Its first project was a social impact project for a village at the bottom of the pyramid, started before it secured the first dollar of revenue. The organisation allocates significant organisation and financial resources to these activities even during (and especially during) times of where there is a low level of commercial activities.
Social Impact and Financial Sustainability
Since its founding five years ago, ECOSOFTT has grown and delivered over 30 projects that serve over 250,000 people in Singapore, Southeast Asia, India and Hong Kong. It turned profitable in the last financial year and revenues have grown at a triple-digit pace. The company’s growth is inextricably linked to its purpose and sustainability agenda, which its stakeholders – customers, employees, local communities and investors value.
The simultaneous attention to creating social impact and financial sustainability has not made ECOSOFTT any less competitive. On the contrary, the experience shows that social impact and financial sustainability can be mutually-reinforcing. It has made ECOSOFTT more uniquely positioned in addressing the issue of water, one of the great challenges of our times.
This article was first published during the 2017 Singapore Institute of Directors Conference: The “Sustainability Imperative”