Corporate governance report

Promoting a diverse and inclusive culture

Quick fact

Sir David Higgins met the independence criteria as set out in provision 10 of the 2018 UK Corporate Governance Code (the code) when he was appointed.

The board is proud to serve customers in the North West and keen to work with organisations operating in our region that share our values.

Letter from the Chair

Dear shareholder

As I write, and cast my thoughts back to the early part of the year, our way of life and world of work was still very much dominated by restrictions associated with the pandemic. By the end of our financial year, we have transitioned at pace in some respects to the normality of our working lives before COVID-19. Virtual board meetings became a necessity during the pandemic, and, notwithstanding the usual electronic hiccups that we are all now so familiar with, provided an efficient alternative enabling us to ensure the usual governance mechanisms were adhered to. Still, it is good now to be again sitting alongside colleagues in meetings – and to be joined by Liam Butterworth, who was appointed as an independent non-executive director in January 2022.

Quick fact

The code requires that at least half of the board, excluding the Chair, should be non-executive directors whom the board considers to be independent. At 31 March 2022, seven out of the remaining nine directors were independent non-executive directors.

Listening to our employees

Our Employee Voice panel (the panel) is chaired by Alison Goligher. The panel’s work has been insightful in helping the board understand how management was responding to employees’ needs and wellbeing during the pandemic. Having myself attended a meeting of the panel during the year, as did Kath Cates and Paulette Rowe, I saw first-hand that Alison’s style as chair encourages open and interactive debate and meetings are very well attended. Panel meetings provide a rich source of employee-derived information for Alison to bring back to contribute to board discussions, and a view on whether there is any misalignment between the culture that the board sees and hears about from interactions and reporting by management, and the culture at grassroots level within the business.

The panel was involved in the planning and implementation of the hybrid working model which has now been applied to suitable roles across the organisation, a move undoubtedly accelerated as an outcome of the pandemic and now very much an important element for prospective employees in the employment market.

Proving our purpose

Throughout last year our employees were unstinting in their efforts to support our purpose to provide great water and more for the North West. The board extends its gratitude for their considerable commitment in serving customers, particularly during the additional challenges of the pandemic. We experienced unprecedented household consumption of water, putting immense pressure on water stocks, particularly in the Lake District during the summer of 2021, adding to the impact on our operational teams.

Diversity, equality and inclusion

As a board we are mindful of the benefits across the organisation of being a diverse, equitable and inclusive employer, and seek to bring about change to the demographics of our employees so that they better represent the traditionally overlooked groups within the communities we serve. The progress against our plans that has been achieved during the year is set out on pages 44 to 45 of the annual report. There are a number of limiting factors to the pace of change, particularly given the locations of our major hubs of employment, the large number of traditionally male-dominated STEM roles in the business and our low rate of employee churn, but we are working hard to make the group an attractive employer across the gender and ethnic spectrum.

We have recently updated our board diversity policy, explicitly setting out my role, as Chair of the board, of collectively fostering an inclusive and belonging environment in the boardroom, enabling open and frank contributions from all board members. The policy was further amended: increasing the target for female representation on the board to at least 40 per cent and by including a target for the appointment of a female to one of the senior board positions.

Quick fact

The company secretary attends all board and committee meetings and advises the Chair on governance matters. The company secretariat team provides administrative support.

We have included climate-related financial disclosures consistent with the recommendations and recommended disclosures of the Task Force on Climate related Financial Disclosures.

Sir David Higgins, Chair

Environmental, social and governance (ESG)

In the annual report we have included climate-related financial disclosures consistent with the recommendations and recommended disclosures of the Task Force on Climate-related Financial Disclosures (TCFD). For a number of years we have reported against the TCFD, and for the first time at the forthcoming 2022 annual general meeting in July, the notice of meeting includes a resolution seeking an advisory vote on our climate-related financial reporting. Our stakeholders and other interested parties are increasingly seeking more reassurance on our environmental credentials. Proposing a resolution to shareholders at the annual general meeting, on an advisory basis, seems a logical next step as part of our strategy to deliver our services in an environmentally sustainable, economically beneficial and socially responsible manner. Furthermore, as part of the remuneration committee’s review of the directors’ remuneration policy, opportunities were sought to better reflect environmental matters in our executive remuneration arrangements. From 2022, our long-term incentives will include carbon measures, and in the new policy that will be put to shareholders for approval at the AGM there is an increased focus on environmental outcomes.

Quick fact

The directors’ biographies include specific reasons why each director’s contribution is, and continues to be, important to the company’s long-term sustainable success.

As a regionally-based company we are keen to develop strong collaborative working relationships with organisations that share our values and work in our geographic region, such as the joint initiative recently announced with The Rivers Trust, as part of our plan for Better Rivers: Better North West. Along with ensuring our operations progressively reduce impact to river health, our plan includes creating more opportunities for everyone to enjoy rivers and waterways.

In the corporate governance report we have set out how the board has applied the principles and reported against the provisions of the 2018 UK Corporate Governance Code (the code).

Quick fact

All directors are subject to annual election at the annual general meeting (AGM) held in July. The board concluded, following the completion of the evaluation of the effectiveness of the board, that each director continues to contribute effectively.

Looking ahead

With the second year of the 2020–25 asset management period behind us, the board is beginning to focus on the early stages of the next price review process for the 2025–30 asset management period. Louise Beardmore will take the lead in the creation of the company’s PR24 business plan, following her appointment as CEO designate with effect from 1 May 2022.

After 12 years, and leading the transformation of the group into one of the top performing water and wastewater businesses, Steve Mogford has expressed his wish to step down from the board and retire in early 2023. Until that time, he will continue to lead the business and in doing so provide a transition period for the leadership to pass to Louise.

In my time as Chair, I have found Steve to be a remarkable individual, and I look forward to continue working with him over the coming months.

Both Mark Clare and Stephen Carter will step down at the conclusion of the 2022 AGM, on behalf of the board I wish to thank them both for their valuable support and wish them well for the future.

Sir David Higgins


Quick fact

The board recommends that shareholders vote in favour of those directors standing for a further term at the forthcoming AGM, as they will be doing in respect of their individual shareholdings.

Annual Report cover