This article was first published in the November/December 2005 edition of Green Futures magazine. www.greenfutures.org.uk
Entec has been drawing out the industry’s stories. Maurice Hoban reports.
Water quality, leaks, biodiversity… what should water companies tackle first? Climate change? The City rates this planet-sized problem as one of the top priorities for the industry – third out of a choice of 17 pressing issues. NGOs, for their part, put it below their more pressing issues such as biodiversity and water conservation education.
To help get to grips with such divergent perspectives, Entec is conducting a research programme ahead of the Office of Water Services (OFWAT) consultations next April on what sustainable development means for the industry. A survey of investors and NGOs, representatives of the companies, of the environment, and of water consumers, brought out a series of suggestions, both on becoming more sustainable and on how to communicate performance.
It’s no surprise that all parties want tight regulation on the industry – a closer watch on issues ranging from leakage to pollution, affordability to climate change (the only issue mentioned by them all). But the message came through loud and clear that it’s smart rules we need. And that the water companies themselves need to be smarter in their responses. There’s no room for complacency here, even if 5 out of 25 of them are listed in the top 40 of Business in the Community’s corporate responsibility index.
The chicken and the egg
“
We want companies to recognise the business benefits of sustainable development,” one
socially responsible investment analyst told us. But, he added, “if hard
numbers are wired into the regulatory framework, the City would take sustainability
more seriously”. Respondents were split over whether companies would
be more likely to focus on the issue if it were part of OFWAT’s regulatory
framework, or if they determined their own priorities in this area and reported
on them as they saw best, as they would with any other business issue.
It’s a chicken and egg situation. Companies could be too busy ‘complying’, and collecting data to demonstrate compliance, to concentrate on making sustainability a core part of their business activities. But if they don’t, you can’t relax the regulatory requirements...
Take the high-profile effort water companies are currently putting into driving leakage down to a threshold stipulated by the regulator, as well as collecting data and analysing the problem. No one doubts that leakage needs attention, but some companies say the effort spent on the final 20% of the problem is not cost-effective. A ‘voluntary’ business-performance-led approach, on the other hand, might involve investing this effort in water efficiency campaigns instead, targeting domestic and industrial users, and – crucially – cutting the amount of water the company is using itself. But this isn’t measured by the regulator, so it gets less attention – even though it could be a more balanced approach to supply and demand.
How far should you go?
When it comes to communicating to the wider world, should water companies simply
focus on their top five issues, as some stakeholders suggest? Or would they
do best to offer ‘total disclosure’ of how they really operate – as
favoured, not surprisingly, by regulators and NGOs? Stakeholders remain divided.
One way out of this ‘regulatory versus voluntary’ impasse is
to distinguish between disclosure of necessary information around compliance
or expected practice, and communication of the issues most relevant for a
sustainable business. Companies such as United Utilities, Wessex Water and
Thames Water are beginning to demonstrate this approach, on which the second
phase of Entec’s research hopes to shed more light…
Maurice Hoban is Entec’s associate director in
corporate responsibility services.
Entec UK, 0800 371733, www.entecuk.com
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