So Matt, let's start with you. How did you get involved in water access work? Tell us about water.org and what its focus is.
I decided to focus on water about 20 years ago because I was learning about extreme poverty and realized that water undergirded kind of every issue and nobody was really talking about it. I think in the developed world it's hard for us because it's very unrelatable. We're never very far away from a clean drink of water. You know, the water in our kitchen sink, our bathroom sink, the water in our toilet is cleaner than 2 billion people have access to on the planet. So, I started to get involved and relatively quickly realized that charity wasn't going to solve the problem and I needed to really partner with the preeminent expert in the space and that led me to Gary White and Gary and I founded water.org in '09. And that's just been a journey. You know, we were doing direct impact work, drilling wells, and we were very good at that. But Gary came up with this innovation that we call water credit. He was essentially spending his life in these communities and observing how things went, realized that people were already paying for water, that the poorest people on earth are in fact paying more than the middle class or the nice hotels that we would go stay in because they weren't connected to the system. So, in many of these places the municipality would be pumping water right under the feet of people in a slum, but they weren't connected to the system. So, they were buying water every day. They had no savings, but they had enough money day-to-day to buy from a water vendor.
And that's itself a missed economic opportunity, right? Because you're spending time going to buy water.
Exactly. Or going to scavenge for water in other ways, which is hugely time-consuming. It disproportionately affects women and girls. The water collection is left to them. So, girls aren't in school. And it's just terribly inefficient and Gary realized that because there was actually money in the system, people could pay for a connection. They just didn't have the savings. So, he basically repurposed the ideas pioneered by Muhammad Yunus at the Grameen Bank and started thinking about micro-loaning for water and that was a big thought leap for the microfinance institutions because it's not an income-generating loan. Kind of one of their classic loans would be, you know, you take money out for a sewing machine, you pay for the sewing machine and then you're able to work with that to earn an income and pay the loan back and that makes sense to a banker. But this was actually an income-enhancing loan because you're actually buying somebody's time back and connecting them to a system and knowing that with that extra productivity they're going to be able to pay the loan off. They didn't believe him or us at first.
And what was the benefit of doing that relative to digging and maintaining wells?
Well, the benefit is that there are a number of benefits. One, half of water systems fail within 5 years because of the nature in which they arrive in these communities. They're kind of bestowed in this kind of charitable beneficence kind of like, you're welcome. And with a loan, nobody takes out a loan for something they don't want. So, people are going to get the solution that they know they need. So, it works a lot better and essentially we had to underwrite these things at the beginning to pilot it and prove it. We brought some of the MFI partners along. Cut to in 2012 we reached our first million people through this system and now we're reaching a million people every 6 weeks. So, we've reached 85 million people with access to safe water and sanitation. And if we had stayed with just the well drilling, it would have taken us 600 years just to get to where we are. So, this is scaling really fast. It's really successful. I should say most importantly that the loans pay back at 98%. And these are the most economically vulnerable women, 90% of our borrowers are women, on the planet and it just shows that people are ready to solve their own problems and all we needed to do was nudge the market towards them and get out of their way and they would do the rest. So, we've done over 15 million of these loans. So, these are very real numbers. 98% is a very real number and so we've been able to accelerate this in a number of ways. We created something called water equity because our partners, this is about 12 years ago, we were in India and we were kind of informally polling all these MFIs and they reported to us that access to affordable capital was their biggest bottleneck. Like there was so much demand for these loans. And so that gave us the idea to create an asset manager which we did called water equity, which is to pull in a giant wave of capital to put it against the problem.
Exactly. Exactly. So, anyway, we have had incredible corporate partners along the way and two of them are here to talk about our latest initiative, but that was just to kind of level set.
Yeah, that's where we're starting.
Yeah, that's kind of what water.org is, looking for these innovative solutions that make sense for the communities in which they are working and are going to solve this problem in our lifetime. So, Richard, tell us a little bit about why you think water and sort of water scarcity issues haven't become more prominent in culture and what are you doing to address that?
Well, first of all, as Gap, our company started with a purpose around bridging the generation gap, celebrating our shared humanity, originality, and individuality. And that's graduated into a bigger purpose or a higher purpose around bridging gaps to create a better world. And so when we look at that as a lofty goal and our responsibility towards it as an industry, we're a very thirsty industry. Understanding the impact that water has not only in the communities in which we do business in but what we wear, you know, and how much water it takes to do what we do. So, it's a responsibility and it's a responsibility that we take very seriously. We have been water stewards in our industry and done a lot of really good impactful programs that have created progress, which we celebrate, but it's certainly not perfection. And so we acknowledge that and in the quest to continue to make the type of progress we need to solve the world's problems in association with water usage, we do a lot but about 2 years ago we met Matt. I met Matt and Gary. In our dialogue, what I was most inspired by, which hopefully you all experience firsthand, is the authenticity and the expertise around true quest to solve this challenge. And as we as a thirsty industry and as we as a purposeful organization decide who we're going to partner with and how best to make meaningful impact, we were incredibly inspired by their work and the model that was created, which has a degree of business-friendly dialogue around investing, getting a return, but the impact that we can make with that is so much greater than the actual financing itself. And that spoke to Gap. That spoke to our people. It spoke to our cause and it spoke to us as industry leaders to take a stand and support water.org and water equity and Matt and Gary's quest. In the dialogue, however, one of the conversations that we had was, you know, there's so much really good here and to some extent it gets pretty lofty pretty quickly and you lose the sort of common sense of how important water really is. And when we talk about our purpose around bridging gaps, the reality that Matt just mentioned, which is the impact is 2.1 billion people don't have access to clean water. That's a big gap between us. That activates Gap's purpose in a really powerful way. And so, as marketers, as consumer product dialogue leaders, we felt like we could help create a movement that would bring more awareness, more engagement, more companies, more partners to help solve this incredibly challenging problem. And when you hear from Gary and Matt, you realize this is a solvable problem. And so, how do we create a campaign that becomes a movement that really galvanizes the issue at the consumer level? How do we inspire brands such as ourselves and platforms such as the one next to me to create product and programs and content that gets people more aware and the simple ways that they can participate in that. And so, we're incredibly excited. Just yesterday, I think it was, we sent a release out that announced our campaign called Get Blue, which is essentially the name of what we believe will be a movement that brings more awareness to the challenges that we all have in solving the water issues and particularly the one around access with safe water. And so, we're going to have extraordinary product around it.
What will it look like in practice? Where will we all see it in the long run?
Think Red. Yeah, think Red. We were really inspired by that and Gap was one of the original members of that effort. And Richard's being humble. He came in to meet with us like a whirling dervish. I mean, it was unbelievable. It was one of the best meetings we've ever had because of his energy and his enthusiasm and he was like, 'No, we have to figure what can we do?' And he convened this group of companies to troubleshoot that and that's kind of this idea came out of that.
So, what we're really trying to create is a movement.
And so, the sales from these products will then lead into money flowing to...
That's right. That's right. We have four kind of founding partners that we, you know, Gap and Amazon, Starbucks and Ecolab. And we call them our four horsemen. And we're really trying to build an army. It's not an exclusive crowd. It's quite the opposite. We're trying to build a whole team of these companies to come in to give consumers an opportunity to engage with this and make a difference. You know, it's $5 in our programming. In traditional well drilling programming it's $25 or more to get somebody clean water for life. In our programming it's $5 because of the nature of the loans that get recycled and go out of that that drives the philanthropic cost per person reach down. So, we're at $5 all over the world. And so, you know, that's something that a consumer can understand. It's a one-to-one relationship with someone on the other side of the world that you're getting water for life. And for Gap, that'll look like products presumably. For Amazon, what will your involvement look like?
Yeah, we're super excited about Get Blue. So, we have had a long-standing relationship with water.org. Cara's our board chair. And so, yeah, I'm thrilled to be able to be a part of it. We've had so many exciting projects along the way. I mean, there's so many compelling things as you can tell. Matt's expertise and long-standing history and being so deep in the issues and the work that water.org has done all over the world to really understand what communities need. We were very compelled by their understanding of putting the community first and letting the community drive the solutions. Letting the people tell us what they need. So, we're a customer obsessed company. That resonated with us. You have to find these partners that really meet our cultural fit. So, I think you spoke very well to that, Richard. And for us when we were looking at water solutions and understanding we have also a business that is thirsty, right? In many ways. We have a data center business where we need water for cooling in our data centers. We have a grocery business with Whole Foods. So, we have agricultural commodity supply chains. We have products that we make in clothing. I could go on, but we are a large business that we use water in many different ways around the world. We need water in the communities where we live and work and operate. So, we understand the responsibility that we have. We have water positive goals. We are going to be water positive for our data center business by 2030. In India where there's water scarcity, we've made a commitment to be water positive by 2027.
For the non-experts, what does water positive mean?
To return more water to the communities where we operate than what we use. And so, one of the ways that we were looking for a partner like water.org to help with these projects, but we also want to really invest in people's water access for all the reasons that Matt described. When you look at the statistics and one in four people in the world don't have access to clean water. That's astounding. And there are solutions available. So, I think bridging also these gaps to say, 'What can we do for our customers to also become involved in that?' And give people a connection to this issue. We think that Get Blue is an awesome idea that will allow our customers to get involved. So, we want to mobilize global brands who have products and services that they can put into action and they can give customers an ability to buy a product or service or a company like Ecolab that's more B2B that can also create ways for their business partners to become involved. And they can give people a way to get connected to this issue that is so important to many of us around the world. And you can purchase a product that will be branded Get Blue or that will benefit people who then can, as Matt said, benefit from this through the services that water.org provides and then they can get access to the services that they need and they determine are right for them through water.org. So, I think this is a really exciting idea when you think of what happened with Bono and Red and all of that's happened over the years that benefited AIDS and malaria and all the money that was raised there. We think this is a huge unlock for what will happen with Get Blue and water. And I think many people can now see how important it is for not only businesses to operate, communities to operate, but just personal health for people and livelihoods and what we'll do for people over the world.
Yeah, I think Matt acknowledged, which I thank you by the way, that Gap was a founding partner in the Red campaign. What did you learn from that that applies here?
Well, I think bluntly, I represent a heritage brand. I represent a company that was built on purpose. And we take a lot of pride in reflecting on that heritage. And as the leader of the company, it's my duty to continue that heritage and continue to make that impact while of course running a business that has a public company nature to it and shareholder value. But we do believe as the origins of the company that purpose and profit are symbiotic. And the more profitable we are, the more purposeful we can be. And the more purposeful we are, the more profitable we can be. And I think today's dialogue, particularly with the next generation, cares about the brands in the context of how they do what they do. And that really does matter. And so, we believe that there's a movement that we can create. And Get Blue in particular, when you step back, you know, we're made of water. I mean, it's not controversial. It's actually neutral ground. And in today's world where there's lots of differences and dialogue that needs to be had to work out those differences, there's no debate around water in terms of its need, its impact, and its importance. And so, what I hope is that this is an example of a catalyst of a conversation that bridges gaps in a meaningful way. This should be bigger than Red. There's no controversy around water. There's no dialogue to be had around whether you agree or disagree. We need it. We're part of it. It is part of the business communities' need and necessities. And it's human.
Have you found that consumers are willing to pay more for goods that are made sustainably?
I think what we found is there's willingness. I do think at the end of the day we have to deliver the best product at the best price no matter how that fits. But consumers are starting to feel more willing to pay a bit more. But regardless of that, they do make choices in the context of who you are, how your values are executed, and what your brand represents. And so, I do think that there is an element of that that is inherent today, but I think it's going to get more and more interesting.
I have data on that. We have a program called Climate Pledge Friendly. So, we have a number of different eco labels that we've looked at and we started, you know, there are 800 eco labels out there. And so, we actually went in and did a program where we looked at them and now we do the scientific work on the back end for the customer. And there's a green leaf on the Amazon site. You can filter your shopping by that. And so, we have over the last four years certified a number of products on our site. You can earn a green leaf. They're external third-party standards. They're not ours. But we hold a very high bar for those standards for products to earn that on the Amazon site. And then Harvard Business Review published a study about products that have that green leaf and earn the Climate Pledge Friendly certification on the site. It's a 12% GMS lift, global merchandise sales lift. And even higher in Europe. And so, we have the data to show that people when given an easy opportunity to shop sustainably, customers will shop sustainably.
