Water regulator Ofwat has today (1 August) made it compulsory for all companies to meet new objectives about board leadership, transparency and governance.
The licence modifications will include the need to establish a purpose, strategy and set of values. Company boards must be satisfied that these and its culture “reflect the needs of all those it serves”.
All 17 of the water companies in England and Wales, as well as Thames super sewer builder Tideway, have agreed to modify their licences following an industry consultation.
Aileen Armstrong, senior director of finance and governance at Ofwat said: “These changes are part of our wider package of reform to rebuild trust and confidence in the water sector and safeguard the interests of customers.
“The corporate behaviour of some companies, along with significant service failures, has damaged trust in the sector, so it is only right that company boards, through their leadership, take ownership of how they meet these objectives.
“These should inspire companies to take full responsibility for understanding and delivering what is right for their customers and the environment, and place those needs at the heart of their business.”
First introduced in 2014, Ofwat launched a review of its principles last year, following “public concerns raised over corporate behaviours” in the water sector.
Speaking ahead of the consultation, Ofwat chairman Jonson Cox said: “Water is a vital public service like no other. Holding a licence to provide water is a privilege.
“It is only right that those at the top of water companies should be fully accountable for how their business is run and that water companies themselves are held to higher standards than any ordinary business.