United Utilities PLC was created from the merger of North West Water and Norweb in November 1995. Its principal activities are managing and operating the regulated electricity distribution, water and wastewater networks in north-west England, a region with a population of around 7 million people.
As well as operating utility networks in the north-west, the group also owns two support services businesses: United Utilities Contract Solutions and Vertex. These businesses apply the group's core skills of infrastructure management and business process management in the provision of services to others. For example, Contract Solutions manages water networks in Wales for Dwr Cymru Welsh Water. Around the world it is providing and improving water services in Australia, Bulgaria, Canada, Estonia, India, the Philippines and Poland. It employs over 17,000 people across its three businesses.
Corporate social responsibility or corporate responsibility (CR) as United Utilities call it is important as it helps the business take active responsibility for the management of its impact on society and the environment. This is managed through the identification and management of the company’s impacts, both positive and negative; through the development of active partnerships and initiatives addressing focus areas, for example, drinking water quality; and encouraging employee involvement in communities
This case study focuses on United Utilities partnership approach to water catchment management.
The company engages in CR for a number of reasons. These include the need to respond to requests from investors (particularly the social responsible investment community), NGOs and the requirements arising from UK government and EU policy/regulation. A key component of its CR work involves engagement with stakeholders to understand their perspectives. Maintaining goodwill with them is seen as a key driver as the water industry is often disrupted through required maintenance and they need their support during these times.
United Utilities has two-fifths of all of England’s water catchments (areas which have the natural ability to store rainwater, for example in bogs). The requirement to improve and maintain water quantity and quality was a key driver in this case study. Increased regulation through the EU water framework directive meant that water companies have had to look at ways to deliver new requirements by undertaking a more sustainable approach.
United Utilities is an important landowner owning 57,000 ha of land in the Lake District, two reservoirs north of the Peak District and the Forest of Bowland. The land was inherited from compulsory land purchasing made in the 19XXs and is mostly rented out to sheep farmers and commercial forestry. The land has high landscape value and is important for conservation, for example it contains sites of special scientific interest and nationally important populations of birds such as the Golden Eagle, Hen Harriers and Twite. It is also important for amenities, tourism as well as being an important water catchment area.
The land is mainly upland moorland and suffers from soil erosion caused by years of poor management by its tenants. The erosion has led to water colouring which needs treatment before it can be supplied to the public. There has also been a loss of both biodiversity and soil quality meaning farming productivity has also suffered.
To address the poor water quality United Utilities developed the Sustainable Catchment and Management Project (SCaMP) with the conservation organisation RSPB. SCaMP is a five-year scheme, started in 2005 and covers United Utilities’ estates in Bowland and the Peak District. The RSPB and United Utilities work with farmers, land managers, local authorities and government to influence how water catchment areas are managed. They are also working with tenants and farmers to develop long-term plans that will benefit business, wildlife and water quality. These specific farm plans incorporate advice from other partners such Rural Futures in Lancashire and the Peak District National Park Authority.
The scheme currently includes more than 30 large tenanted farms, as well as other grazing licences and bare land lets. Examples of the work undertaken include:
- Restoring blanket bogs by blocking drainage ditches
- Restoring areas of eroded and exposed peat
- Restoring heather, hay meadow and woodland habitats
- Providing new waste management facilities to reduce run-off pollution of water courses
- Fencing to keep livestock away from areas such as rivers and streams and from special habitats.
Funding to enable and carry out the new management approaches has come from agri-environment schemes such as the Environmental Stewardship Scheme, United Utilities (£15 million over three years) and from Ofwat. Ofwat are the economic regulator for the water and sewerage industry in England and Wales and they need to approve any investment United Utilities make. Ofwat are interested in how the scheme is improving water quantity as well as improving the environment and how it might be applied to other water catchment areas.
This work contributes to a vision (whose vision – ask ) for the region in 2010 that includes: the restoration and maintenance of habitats thereby halting the declining population of birds; economically viable farming that helps maintain and enhance these special habitats and water, as well as improving water quality.
Other approaches had been tried before SCaMP and provided some useful learnings. For example in 2000 United Utilities ran the sustainable farm project with RSPB which explored the de-stocking of sheep and the planting of wildlife plants. At the same time another project, Moors of the Future, with the Peak District National Park Authority, investigated different ways to reduce moorland erosion. In 2003/04 the projects were evaluated and both the RSPB and United Utilities started to look at ways to extend the projects, and as a result SCaMP was born.
Developing SCaMP was not easy, many challenges had to be overcome. Ofwat agreed that an investment programme for the management of the environment and improving water quality was important, but said that the customers should not pay. This meant United Utilities needed to create the case for government support, as well as the business case, to its own board for the investment. “The board needed convincing about investing more than £15million over three years” said Dan Walmlsey, CSR Manager for United Utilities. “An economist helped develop the business case that finally won over the board”.
However the real tipping point for both board support and the realisation that SCaMP could actually happen came when a number of influential organisations (RSPB, English Nature and the National Park Authorities) supported the project and started to lobby the UK Government Department for the Environment Food and Rural Affairs (DEFRA) for funding. DEFRA look after water and the environment as part of their remit. The lobbying was successful and DEFRA are funding it through their agri-environment schemes.
The business benefits
The main business benefit is the improvement of water quality from the water catchment areas, which means their customers get a better product that needs less treatment, so saving money. “We can never do without treatment works – they keep the water safe to drink – but by managing our land as best we can, we can avoid adding more and more levels of treatment to our works,” said Dan Walmsley.
There has also been a reputational benefit through being able to demonstrate a track record in innovation to improve water quality and quantity management.
The project has created the platform to discuss key issues, this in turn has built credibility and trust with those involved and it has helped improve relations with DEFRA. It has forged new ways of working and better understanding of its partners, especially the RSPB. The business has also benefited from RSPB’s specialist knowledge of conservation and land management.
The reaction by the media and public has been noticed, but nothing negative has been said. Typically this response is not uncommon and generally means the water company is doing something right!
Why is it CSR?
Despite the driver of the EU Water Framework Directive, the approach taken by United Utilities demonstrates it is CSR as it was under no obligation to restore upland habitat and support economic farming or biodiversity conservation. The case study demonstrated that through looking at bigger picture - the needs to transform upland moorland management - it is possible to use CSR as a tool to meet business objectives.
United Utilities hope that by 2010 the project will prove that the concept works. Assuming this is the case it will continue to fund the project and it is hoped that it will become a model case study for major landowners (both public and private) to follow suit.
For more information on United Utilities please contact Bruce Bendell by email email@example.com.
© Article 13 and CBI – CSR Case Study Series, September 2006
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