For many years now, UK water companies have been under fire for their environmental performance. Much of this is justified – indeed, the Environment Agency’s periodic review into the state of English waters has found just 14% meet ‘good ecological status’, a figure that has not changed since 2009.
It is clear the sector needs to evolve. However, there are also reasons to be optimistic about the future of this critical piece of the UK’s infrastructure, and the role investors can play in accelerating change.
Partnerships for change
It goes without saying the water sector is complex. Water companies face a multitude of challenges that can vary depending on population served, geographical terrain and water scarcity in the region. Like other industries, there is a variance in how companies perform and it is clear some have fallen short due to poor management, historical underinvestment and poor environmental performance.
See also: Testing the water: Engagement is evolving
Our engagement with a significant cross section of the industry, however, has revealed a passion for improvement in some areas and instances of good practice that are having an impact. Partnerships with a wide range of interested stakeholders are bearing fruit, and we are seeing signs of improvement from the sector leaders – who are investing more in infrastructure upgrades, technological advancements such as artificial intelligence and nature-based solutions. Continued investor engagement can, and will, accelerate this momentum.
However, its important to recognise the industry operates within a regulatory environment that also requires change. The current system, overseen by Ofwat and the Environment Agency, has historically rewarded leading companies while penalising laggards, further widening the gap between best and worst performers. Additionally, budget cuts to the Environment Agency raise concerns about its ability to provide adequate monitoring. Addressing these challenges is key to turning around the performance of the sector.
Read the full article in PA Future’s June 2024 digital magazine.
