Our external environment
What we do and how we do it is influenced by a number of factors external to our business, all of which must be considered and managed. We monitor developments and trends in our external environment and adapt our plans as needed to respond.
Political environment
This includes regional and national politicians as well as policymakers. We must understand the key policy issues affecting our industry.
Natural environment
We must be resilient to changes such as climate change and population growth, and ensure our impact on the natural environment is positive.
Economic environment
The economy impacts our financing costs through market rate movements such as interest rates and inflation, and customers’ ability to pay their bills.
Regulatory environment
Regulators set minimum standards for customer service, drinking water and environmental performance, and market reform can drive change in the long term.
Technology and innovation
New technology and innovations can create opportunities for improvements in service and efficiency, and also risks such as cyber attacks.
Stakeholders
Our work and the huge areas of land we manage impact a wide variety of stakeholders and we consult them to help develop and execute our plans.
Key resources
We are reliant on each of the six capitals to deliver our purpose, and we strive to have a positive impact on those capitals through our activities in order to support our ongoing relationship with them for mutual benefit in the long term.
Natural capital
We rely on water sources, such as reservoirs, rivers and boreholes, from which abstraction licences permit us to take water in a safe and sustainable way to be treated and supplied to customers. We rely on natural watercourses to take wastewater back into the environment. We use bioresources from wastewater and break it down into biogas (which we use to generate renewable energy) and biosolids (which we treat to provide a high-quality fertiliser for farmers). We face risks from both severe dry weather, when we must manage resilience of water supply, and from severe rainfall, when we must cope with the risk of flooding.
Human capital
Our people are essential in delivering services for customers. We believe the most effective decision-making comes from a diverse range of people who feel encouraged to share their views. Having a skilled, engaged and motivated team of employees, suppliers and contractors is fundamental to the performance we deliver and to employee retention, which helps ensure efficient training and better performance.
Manufactured capital
Our network assets and treatment works are essential to delivering our services for customers and protecting public health. Our energy assets enable us to generate renewable energy, which helps reduce costs and minimise our environmental impact. It is important we have the right systems and procedures in place to monitor and control our assets efficiently and effectively.
Many of our assets are very long term in nature, such as our impounding reservoirs that can last hundreds of years. We must invest to maintain these assets in good condition so they can continue to provide for customers in the long term. We need to make improvements to ensure we can meet the needs of a growing population, and increasingly high quality standards and tighter environmental consents driven by our quality and environmental regulators.
Financial capital
As a result of the long-term nature of our assets, and the need to ensure affordability by spreading the cost fairly between the generations of customers that benefit, it is necessary to raise financing to fund investment in building, maintaining and improving our assets, networks and services. It is important that we are able to raise finance when needed to preserve adequate liquidity, and that we manage financial risks such as our exposure to movements in interest rates and inflation, to ensure we maintain long-term financial resilience.
Social capital
We work with several capital delivery partners, often on large infrastructure projects that can span multiple years, and these partner organisations form part of the public face of our business. It is important that we build constructive working relationships with our supply chain partners to ensure the smooth delivery of projects and a good all-round service for customers.
Maintaining positive relationships with other stakeholders is really important, such as regulators and community bodies across our region.
Intellectual capital
The knowledge and systems we have across our business are critical to effectively running our treatment works and maintaining our assets to ensure a long-term resilient service.
It is important that we keep up to date with new advances in technology. With a growing population, changing climate, finite resources and space constraints, we need to find innovative solutions to help us deliver the best service to customers, protect and enhance the environment, and keep bills affordable.
Our approach to generating value
Our approach to generating value
Strategy
Our six strategic priorities help us deliver our purpose and drive sustainable long-term improvements for customers, the environment and society, at an efficient cost. We use adaptive planning across short, medium and long-term horizons to ensure flexibility and resilience.
Key differentiators
- Our rigorous planning over multiple horizons
- Our multi-stakeholder approach to value creation
Governance
We are committed to responsible business, factoring ESG matters and stakeholder priorities into decision making at all levels of the business, and executive remuneration is linked to performance against customer, environmental and financial targets.
Key differentiators
- Our integrated thinking
- Our diverse and inclusive culture
- Our holistic remuneration approach
Risks and opportunities
We have a robust framework for identifying, assessing and managing risks and opportunities, with regular monitoring as well as longer-term plans to enhance our resilience to climate change. Our pioneering Systems Thinking approach and culture of innovation help us to maximise opportunities to work better, safer, and more efficiently.
Key differentiators
- Our pioneering Systems Thinking approach
- Our culture of innovation
Metrics and targets
We monitor and measure our performance against a range of operational metrics for each of the stakeholders we create value for, as well as financial metrics covering the income statement, balance sheet, and investor returns.
Key differentiators
- Our multi-stakeholder value creation approach
- Our strong credit ratings and low dependency pension schemes with no pension deficit
Strategy
Our six strategic priorities help us deliver our purpose and drive sustainable long-term improvements for customers, the environment and society, at an efficient cost. We use adaptive planning across short, medium and long-term horizons to ensure flexibility and resilience.
Key differentiators
- Our rigorous planning over multiple horizons
- Our multi-stakeholder approach to value creation
Governance
We are committed to responsible business, factoring ESG matters and stakeholder priorities into decisionmaking at all levels of the business, and executive remuneration is linked to performance against customer, environmental and financial targets.
Key differentiators
- Our integrated thinking
- Our diverse and inclusive culture
- Our holistic remuneration approach
Risks and opportunities
We have a robust framework for identifying, assessing and managing risks and opportunities, with regular monitoring as well as longer-term plans to enhance our resilience to climate change. Our pioneering Systems Thinking approach and culture of innovation help us to maximise opportunities to work better, safer, and more efficiently.
Key differentiators
- Our pioneering Systems Thinking approach
- Our culture of innovation
Metrics and targets
We monitor and measure our performance against a range of operational metrics for each of the stakeholders we create value for, as well as financial metrics covering the income statement, balance sheet, and investor returns.
Key differentiators
- Our multi-stakeholder value creation approach
- Our strong credit ratings and low dependency pension schemes with no pension deficit
The value we generate for our stakeholders
We deliver our water and wastewater services responsibly and sustainably, which supports long-term value creation for all our stakeholders.
How we operate to provide great water and more for the North West
1. Collect and treat
Providing great water:
We collect raw water from open reservoirs, lakes, rivers and boreholes. We then treat it in one of our 86 water treatment works to ensure it is safe and clean for customers to drink.
For a stronger, greener and healthier North West:
We own and manage 56,000 hectares of land. We are optimising the use of this land to protect water quality, create natural carbon sinks by restoring peatland and planting woodland, and explore potential clean energy development. We manage our land and water resources in a sustainable way, protecting and enhancing local habitats, and open our land to the public to enjoy nature and its health and wellbeing benefits.
Reservoirs are the biggest source of water in the North West, and we have more than any other UK water company. They are quick to fill when it rains, but are more vulnerable periods of dry weather than ground water sources. They provide great tasting water, but have high maintenance needs and the raw water requires more treatment than some other water sources.
Relevant material issues
- Water resources and leakage
- Drinking water quality
- Climate change
- Land management, access and recreation
Relevant principal risks
- Water service
- Supply chain and programme delivery
- Resource
1. Collect and treat
Providing great water:
We collect raw water from open reservoirs, lakes, rivers and boreholes. We then treat it in one of our 86 water treatment works to ensure it is safe and clean for customers to drink.
For a stronger, greener and healthier North West:
We own and manage 56,000 hectares of land. We are optimising the use of this land to protect water quality, create natural carbon sinks by restoring peatland and planting woodland, and explore potential clean energy development. We manage our land and water resources in a sustainable way, protecting and enhancing local habitats, and open our land to the public to enjoy nature and its health and wellbeing benefits.
Reservoirs are the biggest source of water in the North West, and we have more than any other UK water company. They are quick to fill when it rains, but are more vulnerable periods of dry weather than ground water sources. They provide great tasting water, but have high maintenance needs and the raw water requires more treatment than some other water sources.
Relevant material issues
- Water resources and leakage
- Drinking water quality
- Climate change
- Land management, access and recreation
Relevant principal risks
- Water service
- Supply chain and programme delivery
- Resource
Generate
Providing great water:
We minimise waste from our operations, including by turning sludge byproduct into compost for farmers and capturing gas to generate renewable energy from bioresources.
For a stronger, greener and healthier North West:
Self-generation helps us to reduce our carbon footprint and save energy costs, and the remaining electricity needs that we purchase are 100 per cent renewable.
We are closely following the developments in the interpretation of Farming Rules for Water, and the impact this could have on our provision of compost for farmers throughout the year.
Relevant material issues
- Energy management
- Environmental impacts
Relevant principal risks
- Health, safety and environmental
- Supply chain and programme delivery
- Resource
3. Remove and clean
Providing great water:
We operate 79,000 kilometres of wastewater pipes to transport wastewater from sewers to one of our 584 wastewater treatment works, where it requires separation and treatment before it is returned to the natural environment.
Combined sewers take a mix of wastewater and rainwater to be cleaned. In excessive rainfall, when sewer capacity is overloaded, storm overflows are activated, using a separate pipe to allow this heavily diluted mix to flow directly into rivers or the sea to help prevent flooding of streets, homes and businesses.
For a stronger, greener and healthier North West:
Urban rainfall in our region is 40 per cent higher than the average for the rest of England and Wales, and 54 per cent of our sewers take combined waste and rainwater, compared to an average of 33 per cent. This means more water runs into our sewers than other parts of the country, creating a much bigger challenge for reducing the use of storm overflows in the North West. We are already investing substantial amounts in AMP7, supporting our target of at least a one-third sustainable reduction in the number of overflow activations, improving 184 kilometres of rivers. Our ambitious plans for AMP8 target even more significant improvements.
Relevant material issues
- Recycling biosolids to land
- Customer service and operational performance
- Storm overflows
- Climate change
Relevant principal risks
- Wastewater service
- Political and regulatory
- Health, safety and environmental
- Supply chain and programme delivery
3. Remove and clean
Providing great water:
We operate 79,000 kilometres of wastewater pipes to transport wastewater from sewers to one of our 584 wastewater treatment works, where it requires separation and treatment before it is returned to the natural environment.
Combined sewers take a mix of wastewater and rainwater to be cleaned. In excessive rainfall, when sewer capacity is overloaded, storm overflows are activated, using a separate pipe to allow this heavily diluted mix to flow directly into rivers or the sea to help prevent flooding of streets, homes and businesses.
For a stronger, greener and healthier North West:
Urban rainfall in our region is 40 per cent higher than the average for the rest of England and Wales, and 54 per cent of our sewers take combined waste and rainwater, compared to an average of 33 per cent. This means more water runs into our sewers than other parts of the country, creating a much bigger challenge for reducing the use of storm overflows in the North West. We are already investing substantial amounts in AMP7, supporting our target of at least a one-third sustainable reduction in the number of overflow activations, improving 184 kilometres of rivers. Our ambitious plans for AMP8 target even more significant improvements.
Relevant material issues
- Recycling biosolids to land
- Customer service and operational performance
- Storm overflows
- Climate change
Relevant principal risks
- Wastewater service
- Political and regulatory
- Health, safety and environmental
- Supply chain and programme delivery
2. Store and deliver
Providing great water:
The treated water goes to one of our covered storage reservoirs, ready to be delivered to customers’ taps when they need it. We deliver an average of 1.8 billion litres of water every day to 7.4 million people and businesses, using 43,000 kilometres of water pipes.
For a stronger, greener and healthier North West:
Our integrated supply network enables us to move water around the region as needed. Along with production planning and optimisation of storage levels ahead of anticipated demand increases, and a fleet of alternative supply vehicles, this helps us to deliver a more resilient water supply. We use sensors and artificial intelligence, and have dedicated teams to detect and fix leaks across our pipes as well as helping customers identify leaks on their property, which can save them money on their bills as well as reducing water losses. Our Haweswater Aqueduct uses gravity to transfer water from Cumbria to Manchester, helping to reduce our carbon footprint from energy-intensive pumping.
Relevant material issues
- Water resources and leakage
- Customer service and operational performance
- Drinking water quality
Relevant principal risks
- Water service
- Supply chain and programme delivery
Retail
Providing great water:
United Utilities Water Ltd provides metering, billing and customer services for household customers in the North West. Business customers choose a water retailer, and our joint venture, Water Plus, operates in the competitive non-household retail market.
For a stronger, greener and healthier North West:
Our region has the most areas of extreme deprivation in the country. We have an extensive range of affordability and vulnerability schemes, and are helping more than 330,000 customers with £280 million1 of support in AMP7.
1 50% company funded
Relevant material issues
- Customer service and operational performance
- Affordability and vulnerability
Relevant principal risks
- Retail and commercial
- Security
- Resource
4. Return
Providing great water:
Once the water is clean enough to meet stringent environmental consents, we return it through rivers and streams so that the water cycle can begin again.
For a stronger, greener and healthier North West:
We have a long coastline and 25 designated coastal bathing waters across the North West. We are meeting 24 of 25 standards for these bathing waters and we are industry leading in minimising pollution, with zero serious pollution incidents in three of the last four years.
We are going above and beyond our regulatory commitments to improve river health, with the commitments in our Better Rivers: Better North West programme and additional investment in the 2020-25 period to deliver improvements faster. We are recruiting a team of river rangers to help us look after the local rivers and streams in our communities, and exploring other new ways of working such as how we can work with farmers to reduce the impact of runoff, and the use of naturebased solutions and partnerships with groups such as The Rivers Trust, to ensure we are pursuing the best ways to improve the natural environment and river and bathing water quality across the region.
Relevant material issues
- Political and regulatory environment
- Natural capital and biodiversity
Relevant principal risks
- Health, safety and environmental
- Conduct and compliance
How we look for opportunities
We embrace technology and seek innovative solutions to create opportunities that help us tackle the challenges we face and continue improving performance.
We also do not operate in isolation and we recognise that working with others can create significant opportunities to identify and develop better solutions.
Culture
Our core values drive an innovative culture, and we encourage innovation at all levels inside the business, such as our CEO Challenge programme where graduates work in groups to find novel ways to tackle challenges that we face as a business and present these back for consideration and implementation.
Innovation Lab
Our Innovation Lab, currently undergoing its fifth programme, encourages suppliers to bring us innovative ideas and allows them to test solutions in a live environment, helping us find solutions where we may not otherwise have looked.
AMP7 innovation fund
Recognising the service and efficiency improvements that innovation can offer, Ofwat has established an innovation fund through which companies bid for funding for innovative projects.
We have been involved in successful bids to influence over £80 million of projects, leading on seven totalling £28.2 million. This includes the Catchment Systems Thinking Cooperative where we are working with others to revolutionise the way crucial data about the water environment is shared, with a particular focus on river health. We have already delivered one leading project and expect to complete a second in 2023.
Love Windermere
We are a part of the Love Windermere partnership, led by the Environment Agency, which is working to better understand the factors affecting water quality and develop long-term plans to maintain and improve water quality in the lake while balancing the needs of nature, the community and the local economy
This plan will set out a road map for environmental protection that could be replicated across the UK, and considers the way that farmland is managed around the lake, how rainwater drains from built-up areas, and the way that wastewater systems and private septic tanks are managed.
Affordability and vulnerability summits, and the Hardship Hub
This year we hosted our first vulnerability summit and fourth affordability summit, bringing together a mix of organisations from across the North West, including debt advice charities, the Department for Work and Pensions (DWP), councils, housing associations and other utility companies, to discuss what more can be done to support people who are struggling. Our first affordability summit led us to develop the Hardship Hub, a platform that helps debt advisers gain and share knowledge on local support schemes, allowing them to help people more quickly and easily.
Diversity and inclusion summit
In April 2022 we hosted our first diversity and inclusion summit, bringing lots of organisations and businesses together to share ideas and best practice to help grow more inclusive workplaces and communities across the North West.
Severn-Thames transfer scheme
Working with others goes beyond our region, and we are collaborating with other water companies on a national water trading scheme as part of the national strategy for managing the risk posed by increasing dry weather, and doing so in a way that minimises the carbon impact.
Future rivers forum
We partnered with The Rivers Trust to host a Future Rivers Forum in November 2022, looking at how we can address the challenges that face rivers in the North West, such as climate change, population growth and pollution. This is a problem that cannot be solved in silos; it needs practical, collaborative action. Industry leaders from a variety of sectors worked together to produce solutions and tangible actions that will progressively reduce negative impacts to river health. This is one of many areas where we are working with others to improve river water quality, including recruiting river rangers through our Better Rivers plan.
Culture
Our core values drive an innovative culture, and we encourage innovation at all levels inside the business, such as our CEO Challenge programme where graduates work in groups to find novel ways to tackle challenges that we face as a business and present these back for consideration and implementation.
Innovation lab
Our Innovation Lab, currently undergoing its fifth programme, encourages suppliers to bring us innovative ideas and allows them to test solutions in a live environment, helping us find solutions where we may not otherwise have looked.
AMP7 innovation fund
Recognising the service and efficiency improvements that innovation can offer, Ofwat has established an innovation fund through which companies bid for funding for innovative projects.
We have been involved in successful bids to influence over £80 million of projects, leading on seven totalling £28.2 million. This includes the Catchment Systems Thinking Cooperative where we are working with others to revolutionise the way crucial data about the water environment is shared, with a particular focus on river health. We have already delivered one leading project and expect to complete a second in 2023.
Love Windermere
We are a part of the Love Windermere partnership, led by the Environment Agency, which is working to better understand the factors affecting water quality and develop long-term plans to maintain and improve water quality in the lake while balancing the needs of nature, the community and the local economy
This plan will set out a road map for environmental protection that could be replicated across the UK, and considers the way that farmland is managed around the lake, how rainwater drains from built-up areas, and the way that wastewater systems and private septic tanks are managed.
Affordability and vulnerability summits, and the Hardship Hub
This year we hosted our first vulnerability summit and fourth affordability summit, bringing together a mix of organisations from across the North West, including debt advice charities, the Department for Work and Pensions (DWP), councils, housing associations and other utility companies, to discuss what more can be done to support people who are struggling. Our first affordability summit led us to develop the Hardship Hub, a platform that helps debt advisers gain and share knowledge on local support schemes, allowing them to help people more quickly and easily.
Diversity and inclusion summit
In April 2022 we hosted our first diversity and inclusion summit, bringing lots of organisations and businesses together to share ideas and best practice to help grow more inclusive workplaces and communities across the North West.
Severn-Thames transfer scheme
Working with others goes beyond our region, and we are collaborating with other water companies on a national water trading scheme as part of the national strategy for managing the risk posed by increasing dry weather, and doing so in a way that minimises the carbon impact.
Future rivers forum
We partnered with The Rivers Trust to host a Future Rivers Forum in November 2022, looking at how we can address the challenges that face rivers in the North West, such as climate change, population growth and pollution. This is a problem that cannot be solved in silos; it needs practical, collaborative action. Industry leaders from a variety of sectors worked together to produce solutions and tangible actions that will progressively reduce negative impacts to river health. This is one of many areas where we are working with others to improve river water quality, including recruiting river rangers through our Better Rivers plan.
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