We provide the essential service that’s at the heart of daily life, health and enjoyment to 15 million customers in London and the Thames Valley area. We aim to offer our service in the most sustainable way possible. For us, that means we think about what’s right for our customers and employees, how to make our business as efficient as possible and how we can best protect the environment.
Providing the essential services of high-quality water and safe water treatment to our customers, every day, is our fundamental purpose. We are committed to being socially responsible in the communities we operate in and to the employees we rely on to deliver our services. We’re also committed to protecting the environment we all rely on and enjoy. Sustainability is crucial to the delivery of these essential services over the long term.
This Corporate Responsibility and Sustainability (CR&S) report will tell you more of the story behind our operational performance for the year ending 31 March 2019 in line with our nine sustainability themes and includes a wide range of detailed case studies showcasing what we do. More details of how we’ve done against our operational targets can be found in our Annual report and performance report, Building a better future.
We have submitted our business plan for 2020 to 2025, an important step forward in the delivery of our purpose, to build a better future for our customers, our region and our planet. As well as being based on insight from over one million customers, it comes with resounding customer and stakeholder support. There are some challenging targets in our submitted business plan around pollution incidents, leakage and customer bills.
As a responsible company with long-term shareholders, operating in a monopoly sector, we recognise we have a special duty to our customers and the environment. We’re working with Ofwat on our business plan to secure the right outcome for our 15 million customers and to build a better future.
We’ve been building on our strong performance in health, safety and wellbeing, reduced pollutions and sewer flooding. We contribute positively to the circular economy by self-generating renewable energy, recycling treated sewage biosolids to land as a fertiliser for crops and creating synthetic aggregate from a by-product of the waste treatment process.
We also signed an innovative £1.4 billion 5-year Revolving Credit Facility (RCF), which links our interest rate to annual performance against Environment, Social and Governance (ESG) metrics and became the first UK corporate to tie the interest rate on the RCF to our Infrastructure Global Real Estate Sustainability Benchmark (GRESB) score.
We have identified five strategic priorities which underpin the delivery of our vision for our customers:
- Brilliant customer engagement
- Data to insight to action
- Resilient systems and assets
- Environmental protection and enhancement
- A collaborative and capable team
2019/20 is set to be another busy year, with our key operational focus being to drive cost efficiency, reduce complaints, successfully transition all our customers to our new customer relationship management and billing platform and secure a larger reduction in leakage as we head towards the start of the next regulatory period and the delivery of our plan for 2020 to 2025.
I hope you will see in this report that we’re fully committed to driving changes that will really improve the service we provide for our customers and help protect and enhance the environment.
Interim Executive Chairman
Sustainability Director’s introduction
Becoming more sustainable is a long-term journey of discovery, not a target. There will always be more to learn and more to do as we seek to deliver better outcomes for our customers and for the environment on which all our activities depend. As this report shows, we have made progress in many areas and have ambitious plans to do more in the next investment cycle from 2020 to 2025. But the challenges facing not just water companies but the whole of humanity are so urgent that we need to step up the pace.
Climate change is without doubt the biggest long-term challenge we face. That is why we have joined other companies in our sector in setting a goal of achieving net zero carbon emissions from our operations by 2030. This is twenty years ahead of the current national target, and will require sustained effort and focus to achieve. But it is essential that we play a full part in the collective effort to reduce carbon emissions as fast as possible. At the same time, we have to adapt and prepare for the further changes in our climate that we know are inevitable, ensuring that we can provide services to our customers that are as resilient as possible under all circumstances. This is all the more important since we are custodians of the country’s oldest network and serve the UK’s capital city, home to the engine room of the economy and a rapidly growing population.
Alongside tackling climate impacts we need to adapt to working in what is becoming known as the ‘circular economy’. At one level, this means doing more of what we have always done – striving to be efficient in our use of resources, avoiding waste and recycling wherever possible. But the next level of ambition is to eliminate waste, regarding the end of every process as the starting point for the next. This includes our existing generation of renewable energy from sewage biosolids and then using what is left as a fertiliser for crops. In situations where we still need to incinerate sewage sludge we are now creating synthetic aggregate from the ash, rather than sending it to landfill.
It is encouraging that we have been able to self-generate 22% of our own electricity needs from renewable sources including sludge, wind and solar power. This helps us reduce our greenhouse gas emissions and energy costs, improves resilience by reducing our reliance on grid electricity and makes better use of valuable resources. But there is potential to do more in all these areas and further options are being explored, including a world-first trial of pyrolysis for sewage sludge, a technique with the potential to support a step-change in our ability to generate renewable energy and minimise waste.
When assessing our environmental impacts, and in seeking improvements, the starting point always needs to be our region’s rivers. The water we abstract for our customers comes from them, either directly or as a reduction in the groundwater that feeds them, and we return treated effluent to them from our sewage works. Ensuring that both these processes are carried out to the highest standards is an essential part of our role in society. Every time we fall short represents a significant failure, which is why we now have a goal to cease abstractions from vulnerable chalk streams and to reduce the number of pollution incidents to zero. We are making progress but recognize that we have much more to do in both of these areas.
Looking at rivers more widely, our Smarter Water Catchment approach is fundamentally changing the way we look at environmental protection and enhancement. Through working in partnership with NGOs, farmers, Local Authorities, the Government and other companies in our region, we want to do more to make a positive difference for the rivers we rely on and the communities who enjoy them. For example, reducing chemicals leaching from farmland into rivers improves river quality, benefits local ecosystems and means there are less contaminants to remove during treatment for drinking water.
As the owners of almost 7,000 hectares of land, we are responsible for a wide range of natural habitats and associated wildlife. Having assessed each of our sites, we have identified the 253 of greatest biodiversity value, covering a total area two and half times the size of Heathrow airport, and established their current and potential biodiversity interest. We have committed to achieving a 5% net gain against this baseline, over the next five years, through activities such as planting trees and hedgerows, changing mowing regimes to encourage wildflowers and digging new ponds.
In all these ways we are becoming more sustainable. But we will always face the challenge of spending our customers’ money as wisely as possible. This means we must be efficient in everything we do and guided by evidence of genuine need when assessing priorities. We will always strive to do our job as responsibly as possible, in line with the long-term interests of our customers and the environment. But we know that being responsible is not sufficient. We also need to be responsive and to deliver public value in everything we do. I hope you will find this report of interest. And if we are missing something, or falling short, do let us know.
Richard Aylard CVO
Becoming more sustainable
We’re on a journey of becoming a more sustainable business. Sustainability is an increasingly important consideration as we seek to strike a balance between the level of service we provide to our customers, our impact on the environment and communities, the cost of customer bills and future investment in the business. We’re proud of the progress we’ve made in the last year and continue to work hard to deliver the desired results for our customers and the environment.
Our commitment to becoming more sustainable is visible in our sustainability policy, with all our business activities underpinned by our nine sustainability themes:
- Water, a precious resource
- Providing sustainable drainage
- Climate change adaptation
- Mitigating climate change
- Ensuring responsible operations
- Enhancing customer inclusion
- Delivering efficient operations
- Sustainable and safe workforce
- Long-term sustainable investment
This Corporate Responsibility and Sustainability (CR&S) Report provides an update on our progress across these themes and emerging sustainability and corporate responsibility response. Our Sustainability Director, Richard Aylard, and the Executive team have responsibility for the creation and delivery of our sustainability policy, with oversight from our Board.
We monitor our business and operational performance carefully against our 2015-20 business plan outcomes, using performance commitments. Our performance is monitored by our board of directors and senior management on a monthly basis to help us make effective decisions. Take a look at our performance in our Annual Report and Annual Performance Report 2018/19.
External sustainability benchmarking
As well as our regulatory and financial submissions, our Environment, Social and Governance (ESG) performance is independently benchmarked to provide insights into our sustainability performance. We have again been recognised for our commitment to sustainability by the influential Global Real Estate Sustainability Benchmark for Infrastructure (GRESB) survey. GRESB is an independent external ESG benchmark which assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide.
In the latest GRESB report, we retained our top five-star status. We came first out of seven participating water and sewerage companies in the world, and sixth out of 236 companies in Europe. Overall, we were ranked 13th out of 393 world infrastructure firms. We scored 86 out of 100, the same as last year, which puts us in the top three per cent.
Customer and stakeholder engagement
Our activities have significant impacts on our customers, stakeholders and the environment. We recognise that the stakeholders who represent these interests have a wide range of views and expectations and we aim to engage with them, understand the needs and expectations and respond to their feedback. We're constantly engaging with customers, political representatives, Non-Governmental Organisations (NGOs), community groups and other key stakeholders through a variety of channels:
- Meeting with them both formally and informally to understand their concerns
- Carrying out public consultations on our key projects and plans
- Communicating and explaining our plans for both large and small engineering projects
- Working in partnership with stakeholders to explore issues and deliver projects
Our work includes one-to-one briefings, round-table discussions, undertaking surveys, facilitating focus groups, online consultations, and site visits. Discussions cover strategic issues, such as market reform in the water industry and water resource management, as well as topics of local interest. Our long-term engagement programme can be found on pages 75 – 77 in our Annual Report and Annual Performance Report 2018/19.
Annual stakeholder review 2018
Each year we host a stakeholder review to provide an opportunity for our stakeholders to raise issues of interest and concerns about any aspect of our business. Around 100 stakeholders attended our 2018 event and had the opportunity to hear first-hand how the business has performed over the past 12 months and to feed back to our senior management teams, the Board and executive team. Anne Heal, chair of Thames Water’s Customer Challenge Group, spoke directly about her team’s work in holding the business to account and praised the company for listening to customers and, crucially, acting upon much of what it has heard. At the question and answer session, the executive team were joined by non-executive director Alistair Buchanan who gave his initial impressions of the business. Attendees also attended more detailed sessions on helping customers who need it, the company’s role as a custodian of the environment, and building water and wastewater resilience.
Shaping our long-term plans
What our customers want defines what we do and it’s important that we build and develop our long-term plans around customer feedback. In September 2018, we submitted our business plan for 2020 to 2025 – otherwise known as Price Review 19 – which was based on insight from one million customers. The plan is set to deliver a comprehensive package for our customers, based on what they have asked for. A revised plan was resubmitted in April 2019, balancing feedback from Ofwat, customers and other stakeholders. Through engagement and review, we work to ensure that all material issues to the successful delivery of water and wastewater services are captured and considered. We received support for our revised plan from a wide range of organisations, including environment NGOs, developers, business lobby groups, local authorities and organisations representing customers in vulnerable circumstances.
We’ve also submitted our statutory Water Resources Management Plan which sets out how we will provide a secure and sustainable supply of water for our customers 80 years into the future and support economic growth. More information about our Water Resource Management Planning.
Engaging with public debate
It’s been another busy year in UK politics and at a national level we’ve been working hard to actively contribute to the debate around key issues for us including the government’s 25 Year Environment Plan, the UK’s decision to exit the European Union (EU) and the debate on the future ownership of the industry.
Given the uncertainty around Brexit, making sure we’re ready to protect our customers and the environment, whatever the outcome, has been a priority throughout the year. We’ve been preparing in two main ways:
- We have been working to minimise any potential short-term impacts on our operations and support functions following our exit of the EU. We have taken a leading role in governmental, regulatory and cross-industry discussions, and carried out a full review of our systems to ensure any potential impacts are mitigated.
- We have been playing an active role in policy discussions and replied to several government consultations this year, most notably the Environment Bill. EU environmental legislation has helped improve the state of the environment in the UK, in particular its rivers, and we want to see the same if not better standards implemented in law as and when we leave the EU.
We’re committed to reducing our reliance on single-use plastic in the business, reducing its impact on the environment as well as helping the UK achieve its target of eliminating all avoidable plastic waste no later than 2042. Read about how we're making a start on the plastics challenge. Playing our part in the plastic revolution, we’re working with our customers to promote the benefits of consuming our high-quality tap water instead of using water bottled in single-use plastics. In partnership with the Mayor of London, we are in the process of installing 100 drinking water fountains across the capital allowing Londoners and visitors to refill their own re-usable bottles with free top-quality tap water while reducing plastic waste. Find out more about the drinking water fountains.
Following years of raising awareness of the problems associated with flushing the wrong things down toilets and drains, we’re delighted to see the launch of the “fine to flush” standard and the first product from Natracare that meets the standard, with others being tested. The new standard gives clear guidance to manufacturers and consumers about which products are and are not safe to flush. In conjunction with our Bin it, don’t block it campaign we believe the standard will drive a reduction in the use of plastic-based wet wipes, which not only clog our sewers, but pollute rivers and oceans.