Yorkshire Water: taking sustainability into the mainstream

22 February 2021: Towards a backdrop of harder regulation, Yorkshire Water is blazing a path in terms of demonstrating sustainable enterprise practices and social worth. Rachel Willcox speaks to its CEO, Liz Barber ACA.

Whenever you’re a utility offering important water providers to greater than 5 million folks and 100,000 companies, sustainability is a matter you merely can’t afford to disregard. 

Liz Barber, CEO of Yorkshire Water and father or mother firm Kelda Group, admits her private sustainability mission coincides with rising company momentum on sustainability – not simply at Yorkshire Water however throughout enterprise typically. Luckily Barber, the previous chair of Accounting for Sustainability’s CFO Network, says the enterprise advantages of sustainability make it a simple promote each internally and to broader stakeholders.

Barber had been Group Director of Finance and Regulation for eight years and took the highest job in September 2019 at a time when the water sector was beneath strain to rebuild belief, following an onslaught of criticism about shareholder dividends and government pay in opposition to a backdrop of service failures.

The backlash prompted regulator Ofwat to take a more durable line and in 2019 licenses have been modified to incorporate targets for board management, transparency and governance together with establishing a objective, technique and set of values. Water firms at the moment are required to report on how rules are met via annual reporting, as a part of wider reforms to rebuild belief and confidence within the water sector.

“We’ve acquired nobody guilty however ourselves,” Barber admits. “As a sector, we misplaced our method in demonstrating that we’re right here for public worth and subsequently we earn that licence – it’s not a present – and it’s important to hold incomes to maintain it. Social objective is important to underpinning the monopoly licence all of us have. There’ll at all times be a time lag between what we do and what folks understand however I do assume in a post-COVID world it gives us with a chance to do and be seen to do the best factor for society as an entire.”

Turning sustainability rhetoric into actuality 

As CFO, Barber’s focus had been on elevating sustainable bonds and making headway on measuring sustainability, resulting in the event of a decision-making framework to “optimise a capital programme round sustainable options.” Since assuming the CEO function, Barber says she’s been working intently with chairman Anthony Rabin and Dame Julia Unwin, the chairman of its social worth committee, to show the sustainability rhetoric and ambition into actuality. “We’ve got established our company objective, which is to make Yorkshire an amazing place to be, now and at all times,” Barber explains. 

Nevertheless, speak is affordable and Barber, a former EY companion, admits embedding sustainability into the organisation’s imaginative and prescient, behaviours and marketing strategy is an enormous problem. “That has to move via to how we mobilise our assets, how we handle our enterprise and report our KPIs.” Equally selecting the place to focus its assets in a method that finest meets each company and sustainability targets stays a piece in progress. “The arduous factor is saying no. We have to know we’re fulfilling our objective and never get overly distracted as a result of there’s a lot that could possibly be finished.”

In contrast to some company accountability committees doing good issues across the edges, Barber says its social worth committee has performed a pivotal function in aligning strategic objective with sustainability targets and serving to to supply a filter for the large vary of potential sustainability tasks it might pursue.

The reply shouldn’t be essentially to do a lot of good issues in all places, Barber believes. “The easiest way to ship our broader social objective is in partnership with others. It’s a Joseph Rowntree Basis idea of the anchor establishment – we will ship the very best worth by linking with companions to share assets and experience to get the very best outcomes.” 

It really works with varied companions together with public our bodies similar to Hull Metropolis Council and the Setting Company, in addition to landowners – Yorkshire Water facilitates the Yorkshire Land Anchor Community, a bunch of round 50 landowners embody the Nationwide Belief and the Crown Property who between them cowl greater than a 3rd of Yorkshire’s land space – to debate how adjustments to land administration may also help tackle local weather change. As devolution gathers tempo, engagement with the native authorities on points similar to flood and environmental resilience is gathering tempo.

Finance has a beneficial function to play on the sustainability journey

The previous couple of years have seen a rising urge for food for sustainability throughout the monetary markets, she says, and for good motive. “Should you’re pondering sustainably, you’re trying to the long-term challenges and also you’re resilient to them upfront. For buyers, it means their returns are extra dependable in the long term.”

Yorkshire Water arrange its sustainable finance framework two years in the past, “so any time we subject a bond it’s by definition a sustainable bond.” The emergence of organisations which can be solely concerned with financing sustainable organisations is a good alternative and Barber would love it to be extra mainstream. “Will probably be fascinating to see how credit standing businesses issue this into their pondering,” she says.

Within the meantime, Barber says finance has a beneficial function to play in serving to organisations on the sustainability journey. “It’s an thrilling shift for the occupation as a result of accountants have at all times been the measure of the robustness and resilience of the organisation and the conscience of the board. It’s permitting them to broaden their pondering and their affect.” 

Nevertheless, she’s additionally acutely aware that many accountants are nervous about venturing from the comparatively protected confines of economic capital in direction of measuring different much less tangible types of capital together with human and societal. Whereas part 172 of the Firms Act means firms already should report on wider non-financial measures on the entrance finish of a set of accounts, the emergence of sustainability requirements is each desired and inevitable, Barber believes.

“I might say don’t wait for the standard to emerge earlier than you begin to measure it as a result of the hole will grow to be too massive. Begin with the descriptions. There are requirements round measuring carbon emissions, for instance. Become familiar with them and be curious. Don’t be scared.” 

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