Ofwat is to consult on improvements to its 2014 principles for board leadership, transparency and governance, including potential changes to water companies’ licences.
The consultation forms part of a programme of work set out by Ofwat in April 2018 to enable and challenge companies to rebuild legitimacy and put customers at the heart of their businesses.
Ofwat will consult on a number of proposed revisions to the Principles and companies’ licences, including:
- A new principle for company purpose, values and culture that is consistent with the role of monopoly provider of an essential public service;
- A licence requirement for all water companies to meet Ofwat’s principles; and,
- A licence requirement for independent non-executive directors to be the single largest group on boards.
Introduced in 2014, Ofwat’s Principles aim to bring the water sector in line with the high standards of corporate governance expected of a monopoly provider of an essential public service.
Ofwat’s Chairman, Jonson Cox said:
“Water is a vital public service like no other. Holding a licence to provide water is a privilege. It is only right that those at the top of water companies should be fully accountable for how their business is run and that water companies themselves are held to higher standards than any ordinary business.
The revised principles we are consulting on will continue to drive the highest standards of board leadership and decision-making across the water sector, which in turn forms part of our ongoing work to make sure that water companies put customers at the heart of everything they do.”