When Ofwat published its Time to act, together strategy in 2019 it stated: “Companies will need to be run with a clear purpose, adding wider public value for customers and communities as well as for shareholders.”
To conclude our ‘Social Purpose’ week we invited Ofwat to contribute: here is what Jenny Block, (General Counsel at Ofwat) had to say.
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Understanding purpose is a critical issue for the water sector, and it was great to see Dr Stephanie Brown’s thoughtful piece on Social Purpose in the Autumn issue of the Institute of Water Magazine.
In our strategy ‘Time to act, together: Ofwat’s strategy‘ we outlined Ofwat’s ambition for water companies to provide greater public value, delivering more for customers, society and the environment and Ofwat’s regulatory regime reflects the importance of social and environmental value to companies and other stakeholders in a number of ways.
On purpose in particular, our Board Leadership, Transparency and Governance (BLTG) principles set out that a company’s purpose, strategy and values should reflect the needs of all those it serves, as doing so will ultimately deliver better outcomes for all: the company, customers, the environment, and investors. We are pleased to see that all companies now have a clearly stated purpose and explain the importance of their purpose in delivering an essential public service.
In December 2020, we published A discussion paper on public value in the water sector which we followed up in July 2021 with A supporting set of principles to underpin how water companies can deliver greater public value. Our principles-based approach aims to provide a framework for the activities and behaviours we want to see companies adopting, whilst allowing for the flexibility that will be required to help deliver practical approaches tailored to regional and local circumstances. One of the principles, which references the mechanisms used to guide activity and drive decision-making, recognises social purpose as one of the primary drivers of company activity in this area.
The draft principles published in July looked to explore a number of areas that we were pleased to see are also touched on in Dr Brown’s article.
Our principles consider:
- the scope of public value, focused on environmental and social impact
- delivering social and environmental benefits that are measurable, lasting and important to customers and communities
- transparency of information and insight on performance
- ensuring public value outcomes do not come at greater cost to customers without clear customer support
- collaboration with others to optimise solutions and maximise benefits, and leveraging a fair share of third-party funding
- not displacing other organisations who are better placed to act and deliver public value
- taking account of capability and circumstances in the delivery of additional public value
Following further engagement over the summer (and broad endorsement of our approach) we are currently reflecting on the comments received and aim to finalise Ofwat’s Principles on Public Value in the new year. In the meantime, we’re working to consider how best to integrate the principles across all of Ofwat’s work, including in the context of PR24.
