The company
Dwr Cymru Welsh Water, a water and sewerage company that serves three million people in Wales and bordering regions of England, employs 165 people directly and a further 3,000 staff through specialist contract partners. It has an annual turnover of circa £550 million.
Welsh Water has been owned, financed and managed by Glas Cymru since 2001 and its operations—like those of all water companies —are regulated by Ofwat. The company operates under a unique not-for-profit business model whereby all financial surpluses are reinvested for the benefit of its customers.
Welsh Water exists to provide an efficient and sustainable service in the best interests of its customers. Its vision, or ‘banner’ as the company refers to it, is ‘to be recognised by our customers as the best water company in the UK’. To achieve this, Welsh Water has committed to:
achieve significantly lower bills than would any other company; continue to be upper quartile in industry league tables of service performance; and deliver successful long-term asset management in the best interests of future customers and the environment.
This case study focuses on Welsh Water’s unique sustainable business model and how it delivers CSR in itself and through its education programme – ‘Living and Learning with Water’.
The drivers
Welsh Water’s unique business model, which differentiates the company from others in the sector, adopts a long-term and sustainable approach to doing business in the best interests of its customers and seeks to contribute positively to sustainable development in the company’s operational area.
Welsh Water’s environmental education programme helps to raise the company’s profile and to achieve core elements of the business strategy by educating and informing local people about water and its conservation.
Taking action
Welsh Water is a private single purpose company with no shareholders. Reducing financing costs and delivering its annual ‘customer dividend’, which reduces customers’ bills, are central elements of Glas Cymru’s business strategy for Welsh Water. Since 2001, the company has returned £98 million as ‘customer dividends’. Over the same period it has reduced the amount to which the company is leveraged from the original 91% of borrowing, to below 75%, close to its 70% target.
In describing the business model, Richard Curtis, Company Secretary of Welsh Water, says it has given the company “new legitimacy with our key stakeholders which in today’s regulatory environment is beneficial for the business, our customers and the environment”.
When Welsh Water changed ownership in 2001, its board reinforced the company’s commitment to environmental education. The education programme as it exists today took flight in 1997. It started out with one classroom in one centre reaching 3,500 pupils and has since grown to five classrooms in four centres, with a reach of 12,500 pupils per annum.
The programme was developed with education and environment experts. It is principally aimed at Key Stage 2 pupils and addresses a number of curriculum areas, including geography, science, maths, English, sustainable development and global citizenship which includes water conservation.
Building on the success of the education centres, Welsh Water has since further developed its education strategy to include education resources, online learning and education partnerships.
In 2004, the company distributed its interactive bilingual CD-ROM ‘Waterworld Explorers’ to 1,693 schools – benefiting more than 150,000 school children – in its operational area. Welsh Water’s close relationship with the education sector meant the company was able to coincide distribution with the launch of whiteboard technology in schools, making it a frontrunner in the region.
In 2005, the dedicated education website – www.livingandlearningwithwater.com – was launched to feature information on the education centres, partners and resources forming part of Welsh Water’s education programme. There is also a selection of interactive water-related games for children and a wealth of links to other water-related education websites.
Always seeking to enhance delivery of the programme, Welsh Water has established rewarding partnerships with The National Botanic Garden of Wales, The National Wetlands Centre Wales, Techniquest and The Hereford Waterworks Museum. A recent initiative saw Welsh Water supply Techniquest with a water display giving children hands on experience of different water reduction techniques in households and gardens, for example, the water efficiency of taking a shower rather than having a bath.
In the last ten years, £750k discretionary investment has been secured for the education programme and the associated teacher secondment programme. The return on the investment is measured by the number of children that have benefited – over 70,000 in total, not to mention those who have been exposed to the other educational resources. More than 70 teachers have also gained valuable professional development through secondment opportunities.
The business benefits
Ofwat statistics which benchmark Welsh Water against its competitors reveal that the company has made significant improvements since it began to operate under its unique business model. In 2001, the company had the second highest bill but now bills are much closer to the UK water industry average bill. Over the same period, the company has risen in the Ofwat customer service ranking from seventh in 2001 to now being a top quartile performing company.
Welsh Water has created a profile for itself, meaning that increasingly its customers understand that backlash directed towards other water companies in relation to shareholder dividends and leakage targets does not apply to the regions it administers.
‘Living and Learning with Water’ has enhanced the public face of Welsh Water, helping customers to recognise what the company does and the challenges it faces, and the education and sustainability strategy helped Welsh Water receive a ‘Business In The Community Award’ as 2007 Wales Regional Company of the Year. Welsh Water has also won three environment awards and sixteen education awards since initiating the programme. The number of customer complaints which do not relate to service failure has also reduced as customer understanding has improved.
Delivering a sustainable future is an implicit part of the company’s structure. By bringing to life the water cycle and reinforcing the value of this resource for children and connecting the programme to the National Curriculum, Welsh Water is going some way to achieving these objectives. Its efforts are having a ripple effect within communities as water efficiency is becoming better understood and cost savings are being made in customer households.
Why is it CSR?
The philosophy underlying the company’s business model means the principles of CSR are inherent “in the gene structure of the business”.
Welsh Water is providing its free education programme on top of its everyday service. Closely linked to the company’s business strategy, its environmental education programme supports the education sector’s objectives and teaches children (who in turn influence their families) sustainable habits, bringing better health and an improved environment.
What next?
Welsh Water aims to keep ‘Living and Learning with Water’ fresh and to find innovative ways of meeting the demand which currently outstrips available resources. To enable them to do this the company assesses every visit and acts upon feedback received in visitor questionnaires to improve the quality of service being provided.
Having recently secured the board’s support, the plan is to drive more value out of current partnerships and develop new ones. This includes a recently launched peripatetic outreach education resource, designed to target remote schools and support education provision at partner sites and in the community.
Welsh Water has committed to keep their education programme teacher-led and driven with continued opportunities for teacher placements and INSET days.
For more information on Welsh Water and the Living and Learning with Water programme, please contact Richard Curtis at richard.curtis@dwrcymru.com or visit www.dwrcymru.com.
© Article 13 and CBI – CSR Case Study Series, September 2007
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