In our strategy Time to Act, Together we set out a vision for a water sector that delivers more social and environmental value through its core services – creating value for communities and the environment in everything it does. Over the past two years we have been working with the industry to develop an approach which supports companies in this whilst also challenging them to ensure they continue to meet their responsibilities and obligations.
We have developed a set of principles to help guide companies in exploring and delivering better social and environmental outcomes, recognising that this is a complex area with multiple stakeholders, judgements and trade-offs. Our principles are intended to provide a framework, some parameters and flexibility to enable companies to develop the best solutions.
As we develop our approach to PR24, we intend to embed the principles – alongside the best value approach – in our PR24 draft methodology in July 2022. We have also applied the principles to our work on innovation, and plan to embed the principles across all areas of Ofwat’s work, just as we expect companies to embed the principles across all areas of their business.
As the principles make clear, it is central to our approach that companies should seek to create further social and environmental value in the course of delivering their core services. This does not need to cost customers more. And this is also about understanding what customers care about and how the core services companies deliver – and doing things differently – can achieve improvements in those areas. The current work around nature-based solutions is a clear example of where community interests necessitate ‘doing things differently’. That is what our approach to creating social and environmental value is all about.
The final principles
|Principle 1||Companies should seek to create further social and environmental value in the course of delivering their core services, beyond the minimum required to meet statutory obligations. Social and environmental value may be created both in direct service provision and through the supply chain.|
|Principle 2||Social and environmental benefits should be measurable, lasting and important to customers and communities. Mechanisms used to guide activity and drive decision-making should support this, for example through setting and using company purpose, wide external engagement and explicit consideration of non-financial benefits.|
|Principle 3||Companies should be open with information and insights on operational performance and impacts (both good and bad). This will support stakeholder engagement, facilitate collaboration and help identify opportunities for delivering additional social and environmental value.|
|Principle 4||Delivery of social and environmental value outcomes should not come at greater cost to customers without customer support.|
|Principle 5||Companies should consider where and how they can collaborate with others to optimise solutions and maximise benefits, seeking to align stakeholder interests where possible, and leveraging a fair share of third-party contributions where needed. Companies’ public value activities should not displace other organisations who are better placed to act.|
|Principle 6||Companies should take account of their capability, performance and circumstances in considering the scope for delivering greater social and environmental value.|