Dr Catherine Bell, chair of the corporate responsibility committee
- The committee comprises three directors appointed by the board, two of whom are independent non-executive directors
- The company secretary attends all meetings of the committee
- The corporate affairs director, who has responsibility for company reputation, and the business services director, who has responsibility for human resources, regularly attend meetings
- Senior operational managers attend the committee to report on the environmental and social impact of major investment programmes and projects
- The corporate responsibility committee has existed for over seven years
Terms of reference – corporate.unitedutilities.com/corporate-governance
Corporate responsibility members
Catherine Bell (chair)
board of directors' biographies
I am pleased to report on the corporate responsibility committee's (CRC) key areas of focus over the past 12 months.
For some time, the CRC has been taking a close look at the critical factors in building trust and confidence with customers and other stakeholders over the long-term. This was brought into sharp focus following the Lancashire water quality incident in summer 2015 (see case study) and the December 2015 winter floods in Cumbria, Lancashire and Greater Manchester (see case study).
The committee closely examined the independent research and other views gathered about the water quality incident and how it was handled. The CRC considered how the company had understood customer views and factored these into its response. The committee was pleased to note specific actions in relation to those customers considered as vulnerable, or with additional needs, as well as support for Lancashire community groups. At the time of writing, with the DWI report yet to be published, it remains the case that longer-term customer views are contingent on the outcome of the ongoing investigation.
Following the winter floods, the CRC examined how the company responds to flooding and resilience risks. The committee will return to this regularly given the pending government and regulators' reviews of resilience, and importance of setting the right framework for investment decisions.
More broadly, the committee continued to monitor the company's progress in delivering its objectives to provide the best service to customers, at the lowest sustainable cost, in a responsible manner. I can report that over 75 per cent of the stretching targets, tracked by the committee to measure the company's CR performance, were achieved by the end of the 2010–2015 investment period.
As delivery of the 2015–2020 plan gathers momentum, the committee discussed how the CR agenda and United Utilities' strategic intentions for the next five years should be aligned. The CRC approved a new, challenging corporate responsibility scorecard for 2015–2020, recognising the importance of setting targets for the long term and providing transparency to employees and external stakeholders on the company's responsible business performance. Progress will be reported on the company's website.
In reviewing progress, the CRC considered a wide range of topics. These included cross-cutting themes such as governance, reputation, communication, stakeholder engagement and performance reporting through to specific topics such as diversity and inclusion, priority customers, carbon mitigation and community investment.
The CRC encourages the company's use of independently and externally assessed national and international benchmarks to measure its responsible business performance. The committee is again delighted that the company has retained 'World Class' status in the Dow Jones Sustainability index for the eighth consecutive year and, for the second consecutive year, leads the multi-utility and water sector. The company also performed strongly in the Carbon Disclosure Project, scoring over 97 per cent.
I have found it a real privilege to oversee the company's responsible business agenda for the past seven years. As I prepare to hand over chairmanship of the CRC to Stephen Carter, I know that he will ensure it continues to champion this topic on behalf of the board. Acting responsibly helps United Utilities to be a successful long-term business for both shareholders and customers. I wish Stephen, and the company, every success.
Dr Catherine Bell
Chair of the corporate responsibility committee
Main responsibilities of the committee
The board approved a modified set of terms of reference for the CRC in April 2016. The main duties are to:
- Consider and recommend to the board the broad corporate responsibility (CR) policy taking into account the company's desired CR positioning
- Keep under review the group's approach to CR and ensure it is in alignment with the group strategy
- Review CR issues and objectives material to the group's stakeholders and identify and monitor the extent to which they are reflected in group strategies, plans and policies
- Monitor and review the status of the company's reputation and examine the contribution the group's corporate responsibility activities make towards protecting and enhancing this
- Monitor and review compliance with the board's CR policy and scrutinise the effectiveness of the delivery of the CR policy requirements
- Develop and recommend to the board CR targets and key performance indicators and receive and review reports on progress towards the achievement of such targets and indicators
- Review all approved specific giving where the aggregate financial contribution exceeds £100,000 over the period of the proposed funding and to review all community giving expenditure annually
- Review the profile of the charitable donations directed by the United Utilities Trust Fund
What has been on the committee's agenda during the year
In carrying out its duties, in the past 12 months the CRC has paid particular attention to:
- governance – the committee and board agreed to amend its terms of reference to acknowledge how the CRC has increasingly focused on the close relationship between the CR agenda and reputation, a theme also noted in the committee's annual evaluation;
- trust and reputation – how the company addressed the challenges of trust and transparency, especially after a year in which major events took place, notably the water quality incident and the winter floods. The committee conducted a deep dive into evidence gathered on customer views and also reviewed the key reputational risks facing the company;
- communicating responsible business – how strong external communication of the company's corporate responsibility achievements will be a central part of building positive relationships with its broad range of stakeholders; and
- measuring and reporting CR performance – the CRC reviewed the company's CR scorecard for 2014/15, noting strengthening performance on the majority of measures. The continued use of such metrics to demonstrate tangible delivery of responsible business performance was agreed and a scorecard for 2015 to 2020 was approved.
Specific topics included:
- resilience to climate change – in light of the December 2015 floods, the CRC examined the company's approach. The committee encouraged close scrutiny of the opportunities and risks for the company and the wider sector, consequent upon government and regulators' reviews of resilience;
- carbon strategy and targets – the committee approved a new more ambitious carbon target, recognising that, as for all companies, the outcome could be affected by government decisions on the UK energy mix and energy-related taxation and incentives;
- diversity and inclusion – progress made by the company to improve the diversity of its workforce was examined, in particular, how the focus on women has had a positive impact. The CRC noted limited progress with black and minority ethnic employees, a challenge given the company's main areas of activity are not located in ethnically diverse locations. The appointment of a senior director as diversity champion was acknowledged, as was the company's attainment of a Bronze Award in Race for Opportunity;
- priority customers – the CRC noted with approval a comprehensive new policy for engagement with vulnerable customers, launched as a new service proposition in May 2016 called 'Priority Services'. The committee supported the provision of a holistic service to customers with needs categorised as: physical, mental health, financial, language and life events; and
- community strategy and spend – the committee discussed an updated framework for community investment and supported the intention that it would help prioritise investment objectives, emphasising the need for a flexible approach to accommodate changing circumstances.
Looking to the next year, the CRC will:
- review progress in delivering responsible business targets set out to 2020;
- continue its focus on the interaction between CR, communications and reputation, including a regular look at key reputational risks and the company's approach to stakeholder engagement;
- review progress in delivering a number of CR strategies including:
- natural environment strategy and the company's approach to natural capital;
- resilience and climate change;
- sustainable supply chain;
- waste and resource efficiency;
- debt and affordability;
- priority customers;
- talent and young people;
- diversity and inclusion; and
- the company's approach to community investment.
- consider other matters such as integrated reporting in the 2016/17 annual report and the nature of environmental and social training for board members.