Reducing Uncertainty in Corporate Water Impact: The Role of Results-Based Contracting for Drinking Water Supply

Briefing Note | January 2024

Duncan McNicholl and Rob Hope | University of Oxford and Uptime Global

Corporate commitments to water stewardship, environmental sustainability and social impact are creating new opportunities to finance drinking water services. However, companies face challenges in ensuring that their investments deliver measurable, lasting benefits, particularly in rural areas where infrastructure failures, limited maintenance funding and weak monitoring systems can undermine outcomes.

Published in January 2024, Reducing Uncertainty in Corporate Water Impact examines how results-based contracts (RBCs) provide companies with a transparent, cost-effective and scalable approach to funding reliable drinking water services.

Developed by Uptime Global and the University of Oxford, the paper explores how standardised contracts, professional service providers and independent verification can reduce financial uncertainty while delivering measurable benefits to rural communities.

How Results-Based Contracting Supports Corporate Water Stewardship

Results-based contracts link corporate funding to the verified delivery of drinking water services.

Under this approach, professional service providers are responsible for operating and maintaining water infrastructure, while corporate funders make payments in arrears based on agreed performance outcomes.

For corporate water stewardship programmes, contracts can link funding to the volume of drinking water reliably delivered to users. This provides a measurable basis for reporting water benefits while supporting the ongoing operation and maintenance of rural water infrastructure.

The paper identifies three principal benefits:

Reduced implementation risk: Companies fund verified service delivery results, reducing exposure to construction delays, budget overruns and unrealised project outcomes.
Lower transaction costs: Standardised contracts simplify procurement, financial management and reporting across multiple service providers and geographical locations.
Transparent results: Independently verified water volumes and service reliability provide a consistent basis for measuring and reporting performance.

This approach enables companies to support sustained service delivery through a familiar contractual structure, rather than relying on assumptions about the long-term performance of infrastructure investments.

The Role of Data Integrity

Independent verification is central to the credibility of results-based contracts.

Corporate water commitments require reliable evidence that funded activities have delivered the outcomes claimed. Without effective monitoring, companies face uncertainty over reported results and potential financial and reputational risks.

Uptime's data integrity methodology provides three complementary stages of assurance.

1. Screening

Before entering a contract, Uptime evaluates professional service providers, their operating environments and their data management systems.

Historical performance records are reviewed to assess data quality and determine whether the proposed contract is appropriate.

2. Quarterly validation

Service providers submit standardised performance data, including information on infrastructure reliability, water volumes and local revenue.

Uptime compares these submissions against historical records, identifies unusual results and requires clarification of significant discrepancies before payments are approved.

3. Annual verification

Independent data audits examine supporting documentation from a representative sample of waterpoints and piped schemes.

Site visits provide additional checks on infrastructure functionality, service delivery and reported performance.

Together, these processes provide corporate funders with credible evidence of drinking water benefits and strengthen accountability across the contracting process.

Results-Based Contracts as a Corporate Financing Instrument

The paper explains how results-based contracts can be integrated into established corporate procurement and financial systems.

Companies can agree to fund a defined quantity of drinking water services at an established price, with payments made after results are verified.

This model provides several practical advantages:

Procurement: Standardised agreements allow comparison of the cost of delivering measurable water benefits.
Financial management: Payments can be processed against purchase orders and verified service delivery.
Legal arrangements: Contracts define clear performance requirements and payment conditions.
Impact reporting: Water volumes and reliability provide quantifiable outcomes that can be aggregated across multiple programmes.
Programme management: Professional service providers retain responsibility for operational delivery, reducing the need for corporate funders to manage activities directly.

Uptime's contracting model also allows companies to support drinking water services across different countries through a single funding intermediary, the Uptime Catalyst Facility.

Corporate Applications in Practice

The briefing note presents examples of corporate partnerships in Africa and Asia that demonstrate how results-based funding can support water stewardship commitments.

Apple: Verified Volumetric Water Benefits in India

In 2023, Apple entered into an agreement with the Uptime Catalyst Facility to support the generation of volumetric water benefits associated with drinking water services in India.

Under the agreement, Apple provides funding linked to verified volumes of drinking water consumed from professionally managed water kiosks.

Payments are made quarterly in arrears against confirmed water volumes, providing a measurable basis for supporting Apple's freshwater replenishment commitments.

The model demonstrates how results-based contracts can support corporate water stewardship through transparent and independently verified drinking water outcomes.

The Coca-Cola Foundation: Supporting Sustainable Drinking Water Services

The Coca-Cola Foundation began supporting results-based contracts through the Uptime Catalyst Facility in 2023, building on its existing commitments to water stewardship and impact accountability.

The partnership emphasises the importance of long-term drinking water service performance, including infrastructure reliability, water volumes, estimated population served and the operating subsidies required to sustain services.

By linking funding to measurable outcomes, the approach supports continued service delivery and provides evidence of the benefits generated through corporate investment.

Key Findings

1. Results-based funding can reduce uncertainty for corporate funders

Payments linked to independently verified service delivery reduce reliance on assumptions about project completion and future infrastructure performance.

This allows companies to direct financial support towards measurable drinking water outcomes while reducing certain implementation and reporting risks.

2. Professional service providers support long-term sustainability

The effectiveness of results-based contracts depends on capable professional service providers responsible for maintenance, repairs and operational performance.

Predictable funding linked to results helps these organisations plan services and maintain infrastructure over time.

3. Rural water services can be supported at relatively low cost

The paper reports that, between 2020 and 2022, rural water users covered approximately one-third of operating service costs across Uptime's early results-based contracts.

Results-based disbursements during this period amounted to less than USD 1 per person annually.

These findings illustrate the potential for relatively modest operating subsidies to support reliable drinking water services for rural populations.

4. Standardised contracts create opportunities for scale

A shared contracting framework allows corporate funding to support multiple service providers and geographical regions.

By aggregating verified results and funding flows through the Uptime Catalyst Facility, companies can support drinking water services at different scales while maintaining a consistent approach to reporting and accountability.

Implications for Corporate Water Stewardship

The paper argues that corporate funding can play an important catalytic role in improving the sustainability of rural drinking water services.

Results-based contracts provide a practical mechanism for companies seeking to support environmental, social and governance commitments, corporate social responsibility programmes, Sustainable Development Goal 6 and broader water stewardship objectives.

By financing verified service delivery, companies can help maintain existing drinking water infrastructure and extend reliable services to communities that may otherwise face prolonged breakdowns or inadequate maintenance.

The approach also creates opportunities to report quantified drinking water benefits, including volumetric water benefits, alongside wider potential contributions to health, education, gender equality and rural livelihoods.

Conclusion

Reducing Uncertainty in Corporate Water Impact demonstrates how results-based contracting can provide companies with a credible and scalable mechanism for funding rural drinking water services.

By combining standardised contracts, professional service providers and independent verification, the model reduces uncertainty over funded outcomes and provides transparent evidence of performance.

The paper highlights the potential for corporate and philanthropic funding to support long-term drinking water service delivery, particularly in rural areas where local revenue is insufficient to cover operating costs.

This approach offers a pathway for companies to translate water stewardship commitments into measurable, sustained benefits for rural communities.