Lorne LargeTo make sure our customers have a reliable water and wastewater service in the future, we have to continually look ahead, and anticipate economic, environmental, social and regulatory changes.

While it can be hard to predict what the future holds, there are some broad trends which we know are set to feature prominently in the years to come.

This section was extensively updated in our 2013 CR Report and many of the issues we commented upon back then remain relevant.

Economic challenges

The UK economy continues to recover, but we still anticipate that tough economic conditions will persist for several more years in the North West.

With one of the largest populations of economically deprived households in the country, we expect a large number of customers to continue to find it difficult to pay their water bills. We are committed to retaining a range of payment support options, so that households are not left without help.

We also recognise the need to make wise investment decisions, which will deliver the greatest value for customers, while ensuring that bills are kept affordable.

Cash flow has never been more important to our suppliers, and we must retain our commitment to prompt payments to support stability.

We also appreciate the important role we play in contributing to the wider economic prosperity of the North West, through jobs, training and spending across the supply chain. We will continue to seek to maximise these benefits for the region, working in partnerships with others where it makes sense to do so.

The environment

The North West boasts some of the most beautiful scenery in the country and we will continue to protect these environments and meet the requirements of new environmental legislation.

Climate change will continue to be one of the overriding environmental issues facing water companies in the years ahead, as suppliers seek ways to tackle the extreme rainfall and prolonged dry spells which are becoming an increasingly common feature of weather patterns.

We will continue to place greater emphasis on working in partnership with other organisations to tackle the root causes of flooding.

Although we expect our water resources to remain relatively resilient across most of the region, we are committed to finding a sustainable solution to West Cumbria’s supply needs, where it will no longer be practical to abstract water in large quantities from local sources.

Meeting the objectives of the Water Framework Directive (that all waters must fully comply with good ecological status by 2027) and addressing water quality issues in Safeguard Zones (areas of land that collect water that ultimately will be treated but that are at risk of failing drinking water protection objectives) will prove challenging in the coming years as the measures required to meet these standards are not within our direct control. Increasingly, it is the actions of others that have the greatest impact and we will need to work hard to influence a variety of parties to consider adopting water friendly practices. A good example of this is the actions we are taking in collaboration with others to improve the quality of the region’s bathing waters.

There has been continued interest in the concept ‘natural capital’, where companies place an economic value on the services provided by nature in the decisions they take. Very few companies currently do this and it is something we want to understand so we are confident we are investing in projects that bring wider benefits. We are engaging with the Government’s Natural Capital Committee and HRH Prince of Wales’ Accounting for Sustainability to share our experiences of so-called ‘triple bottom line accounting’, which quantifies environmental, as well as economic successes, and what insight it gives to strategic decision making.

Our CFO is a member of the Ecosystem Market Taskforce, a body set up by the Government to advise on the opportunities for UK businesses from products, services, investment vehicles and markets which value and protect the services nature provides. In its original 2013 report, the Taskforce identified 10 specific water related actions, such as more funding from pillar 2 of the Common Agricultural Policy to invest in water friendly farming. One year on, the Taskforce concluded that much more remains to be done not just on water, but also on its other recommendations.

Elsewhere, we remain committed to reducing our reliance on virgin materials, generating more of our own renewable energy, and to maintaining and enhancing the region’s wildlife habitats and areas of outstanding beauty, which are a key driver of tourism. We recognise that there is more we can do to address resource efficiency and this will be a feature of our thinking in the coming months – for example, can we challenge our project teams to design out waste entirely?

Social changes

Demographic changes will undoubtedly have an impact on how we deliver our services in the future. For example, it is estimated that the number of households in the North West of England will increase from 3 million to over 3.5 million in the next 25 years.

We will need to tailor our approach to an ageing regional population, as our customers live for longer.

The continued evolution of social media and digital technology, meanwhile, will have implications for how we interact with our customers. How will our service provision be different?

We will keep abreast of social trends and issues, and deliver programmes which promote social and economic wellbeing. We currently focus on helping youth unemployment as one of the more pressing social issues of the day and as we look to the future, we will engage with stakeholders to examine which social issues link to our business objectives and where we can make a meaningful contribution.

Governance

With public trust in big business currently at a low ebb, we understand the importance of robust governance arrangements and transparent reporting.

For example, we are compliant with the UK Corporate Governance Code and we continue to actively seek ways to improve the quality and reach of our reporting.

We expect that the scrutiny of companies who make large profits and the tax they pay will continue and we will remain committed to complying with what we believe to be both the letter and spirit of the law.

Elsewhere, we need to monitor and respond to perennial challenges, such as the need to ensure our supply chain shares our own responsible standards, and the importance of continuing to increase the proportion of women in our workforce.

There has been much comment about the idea of integrated reporting, where organisations bring together into a single document an overview for stakeholders on how they generate value environmentally and socially, as well as economically, and how decisions are made that take all three into account. Against the principles set out in the integrated reporting framework, we concluded that our own Annual Report meets many of the principles and demonstrates how United Utilities takes actions that are environmentally sustainable, economically beneficial and socially responsible.

Our Board sub-committee, the Corporate Responsibility Committee, meets twice a year to consider key issues surrounding governance and transparency.

If you would like to send us a comment about this report, please email our Head of Sustainability, Chris Matthews