AG INSIGHT | 15/08/2019
Becoming a public interest company – defining success by the social and environmental value we deliver
Andy Brown, Head of Sustainability at Anglian Water, explores the transition to becoming a public interest company.
Over the last few years, there has been a growing sense of distrust in big business. Many questions have rightly been asked about how water companies in particular operate and behave on key issues; like dividends, tax, corporate governance, and environmental and social impacts. Particularly in light of the collapses of companies like Carillion and BHS, it is all the more important that responsible businesses demonstrate that they are acting in the public interest. But how can people be confident that we mean it?
I have worked in the water industry for the past 22 years, delivering projects on biodiversity, climate change, environmental protection and, most recently, on embedding sustainability (environmental, social and financial) into the heart of Anglian Water’s business strategy.
Focusing on building the ‘capitals’
I genuinely believe that a business built to enhance the ‘six capitals’ (people, natural, financial, intellectual, manufactured and social) will be more successful. It will be a more attractive place to work, it will have better relationships with its customers and the communities it serves, and it will generate stronger financial returns over the long term. That’s the essence of our Love Every Drop approach.
With the help of all our employees, our supply chain, many other partnerships and of course our customers, we have been able to make some great progress.
– On the way to net-zero greenhouse gas emissions: the carbon footprint of our capital projects has been reduced by 58% since 2010, and the greenhouse gases from our operations are down 29% since 2015.
– Safeguarding precious habitats: with 99% of our designated Sites of Special Scientific Interest in favourable condition.
– Protecting river water quality: by building new natural wetland treatment solutions in partnership with the Rivers Trust and farmers. We have a couple of these now, such as the first of its kind at Ingoldisthorpe in Norfolk, and we propose to build 34 more in the next five-year period.
– The best place to work in the UK: as voted for by our employees in Glassdoor’s recent awards.
– Supporting customers and communities around our region: such as our education programme that involves over 30,000 young people every year. We also came top for customer service across this five-year period.
Locking public interest in for the long-term
Our track record is something of which I can be proud. But this could easily be lost if decisions were taken to change our strategic direction, one that focused on the short term rather. So if we believe that sustainability leads to long term success, why not lock that into our DNA? This is exactly the debate that Anglian Water’s board and investors have been having over the past few months. Last month, our Board took the fundamental step of agreeing to change our Articles of Association in order to legally enshrine public interest objectives within the company’s constitution.
Anglian Water is the first water company, and the first utility, to take such a step. We think this will make us by far the largest public interest company in the UK. We hope many others will follow our lead, as we think it is the right model – not just for water companies – but any company that wants to call itself a truly responsible business.
The Board has also committed to sign up to a set of Responsible Business Principles and to report annually on its performance against a social, environmental and ethical criteria. We will invite independent, external assurance of how we live up to our principles. We are currently developing these principles and standards in conjunction with our customers, employees and other stakeholders.
Why this matters
Embedding public interest objectives in the company’s constitution will mean our board must take account of the wider impact Anglian Water has on our customers, communities and the environment, as well as continuing to deliver a fair return for our pension fund shareholders.
We believe it will also change the nature of investors wanting to buy in to our company, in a good way. Our articles can’t be changed unless there’s a three-quarters majority of shareholders, and investors seeking profit alone will likely look elsewhere. We want investors who will support our business for the long-term, who share our values.
While it’s a big step forward, it’s also the next natural step of the journey we’ve been on for a number years. We know as a water company we occupy a special place in society, as monopoly providers of an essential service. We believe something fundamental has to change in the water industry if we are to maintain our legitimacy.
This model we propose combines the best of the private sector – investment, efficiency and great customer service – within a legally-binding public purpose framework.
Andy Brown is Head of Sustainability at Anglian Water Services