This policy brief shows that considering exclusively economic incentives for mitigation measures in utilities is not enough. The development of an enabling environment for mitigation in the water sector is crucial. This includes (1) climate commitments as a driver for sectoral mitigation action, (2) policy/regulation mechanisms for mitigation in the water sector, (3) access to climate-sensitive infrastructure finance, and (4) the development of capacities in utilities. The policy brief closes with recommendations for policy makers and financing institutions as well as actors who cooperate with them in the framework of international cooperation.