Why stakeholder engagement matters

Our purpose is to provide great service to customers and communities in the North West, creating long-term value for all of our stakeholders. To create this value, it is important to understand our stakeholders and what matters to them.

The provision of water and wastewater services creates a deep connection between the company and the communities we serve. Our work generates value for the North West economy, for example through job creation and delivering environmental improvements, which underpin the region’s tourist economy.

We rely on shareholders to finance our activities, and we agree commitments with economic, quality and environmental regulators about what we will deliver within given time frames.

Politicians and the media can influence our priorities and the perceptions of our stakeholders. During the year there has been increased focus on the water sector, from several perspectives including corporate governance, resilience and levels of leakage.

We recognise that we do not operate in isolation and it is not our decision alone to determine what the region needs us to deliver. This is why it is essential we engage with stakeholders across the North West, so we can identify shared solutions to shared challenges.

Understanding what matters to stakeholders will only be achieved by building strong, constructive relationships and engaging regularly. We value the diverse perspectives that a broad range of stakeholders, representing different and often competing interests, can bring to our decision-making.

The relationships we build are subject to robust governance to ensure the insights generated are taken into account in decisionmaking at executive and board level. Read more on Statutory and other information. This is important to building trust. The board’s corporate responsibility committee meets four times a year and stakeholder engagement is one of its standing agenda items. The chair of the independent customer challenge group, YourVoice, attends board meetings to provide its perspective.

The following pages detail how we engage with, and are influenced by, each of our key stakeholder groups, and the value we create for them. Our analysis of what matters most to stakeholders, and how these issues affect our ability to create long-term value in line with our purpose statement, is set out in our material issues matrix.

Strategic themes

Best service to customers

At the lowest sustainable cost

In a responsible manner

Material issues

External factor

Internal factor

Both external and internal factor

Shareholders

How we engage with and are influenced by shareholders

It is important that shareholders have confidence in the company and how it is managed, given their investment in the business. By providing updates on our strategy and performance, we can assist in their understanding and decision-making. Similarly, engagement with shareholders gives us a broad insight into their priorities, which influences our own decision-making and our strategic direction.

Through our investor relations programme, we actively engage with shareholders and sellside analysts who write research reports on our company and industry. Details of this can be found in Corporate governance report. Regular engagement activities are supplemented by ad hoc events, such as the webcasts held this year in relation to the price review process for the 2020–25 period. We complete several investor-led indices on environmental, social and governance matters, such as the Dow Jones Sustainability Index.

Top three material issues for shareholders*

Customer service and operational performance

Political and regulatory environment

Financial risk management

How we create value for shareholders

Short-term

  • Since many of our shareholders are pension funds, charities and employees, the income we provide through dividends is relied on by millions of people every year
  • We are committed to high ethical standards of business conduct, strong corporate governance and acting with integrity so shareholders can have confidence in the way we do business
  • We maintain a high level of quality and transparency, enabling shareholders to have trust and confidence in what we report. This was recognised by Ofwat, which has rated us in its top 'selfassurance' category three years in a row

Long-term

  • Our shareholders have placed their money into our business as a long-term investment and we provide an appropriate sustainable return through a combination of short-term dividend income and long-term growth
  • We plan far into the future and invest in our infrastructure to ensure the sustainability of the business and the services we provide
  • We manage risk prudently so shareholders can have confidence in our stability and resilience in the round
  • Our innovation culture drives continuous improvements, enabling us to be at the frontier of our industry and ahead of peers

Link to strategic themes

Our regulatory return varies dependent on our performance for customers, aligning shareholders’ interests with delivering the best service to customers

By reducing costs in a sustainable way through innovation and efficiency, we can target outperformance of our allowed expenditure in the long term without compromising operational performance

Our strong corporate governance, prudent risk management, and clear and transparent reporting help create a lower risk investment and build trust

Customers

How we engage with and are influenced by customers

To deliver a great service in a way that customers value, we need to listen and engage with them in building new solutions. We engage with customers through a variety of channels, including webchat, text and social media. We get feedback on customer interactions every day, and conduct more detailed weekly research on key themes that are important to them. We have changed how we communicate and deliver services based on customer feedback, such as the introduction of our customer app and redesign of customer bills. Our business plan for 2020–25 was shaped by unprecedented levels of customer engagement.

The independent customer challenge group, ‘YourVoice’, aims to ensure customers are at the heart of our business planning engagement, and the Chair regularly attends our board meetings. YourVoice continues to provide challenge and critical support on our delivery of commitments for the 2015–20 period as well as contributing to our business plan for 2020–25.

Top three material issues for customers*

Customer service and operational performance

Affordability and vulnerability

Leakage and water efficiency

How we create value for customers

Short-term

  • We focus on delivering a reliable service so customers can simply get on with their lives and not have to worry about their water and wastewater services
  • When they do need to contact us, we provide a helpful service, talking and listening to customers so we can understand and meet their expectations
  • We maintain bills that are good value for money through innovation and efficiency
  • Where customers are struggling with affordability and vulnerability, we provide tailored support through Priority Services and payment assistance schemes

Long-term

  • Our water and wastewater services make a major contribution to the long-term health and wellbeing of customers in our region
  • Through long-term financing and the regulatory framework, we are delivering multi-million pound infrastructure projects, to improve our services and resilience for the long term. We ensure the cost of this is shared fairly and affordably between those that benefit now and in the future
  • We focus on earning the trust of customers, for example by keeping personal details safe and through transparent reporting, to ensure they can have complete peace of mind

Link to strategic themes

Engaging with customers helps us understand what they value most so that we can target our services accordingly

By achieving sustainable cost reductions we can provide an efficient service, keeping bills low and enabling us to help vulnerable customers

Customers value a company they can trust, and they care about protecting vulnerable people in society. They value the support we provide through our many assistance schemes

Communities

How we engage with and are influenced by communities

Our work puts us at the heart of local communities, places where customers and employees live and work. When communities come together, whether that is around a particular issue or location, they can often make powerful representations to the company. We seek to develop strong relationships based on mutual trust, respect and an understanding of the impact our work has on everyday lives. We play a constructive role in tackling issues through engagement and investment, and by identifying the water-related issues that matter most to communities we can develop solutions in partnership with them.

We engage through facilitated workshops and community partnerships, such as the North West Hardship Hub to help customers in vulnerable circumstances. Read more on Working together to support those in need. Issues raised by communities can present opportunities to improve what we do or to help others, while others can be complex and difficult to handle, with competing interests between different stakeholder groups, and require time and effort to work through.

Top three material issues for communities*

Land management and access

Community investment

Trust, transparency and legitimacy

How we create value for communities

Short-term

  • We look after beautiful landscapes and beaches and open our land to the public, which supports the regional tourism industry and gives communities the health and wellbeing benefits through access to relaxation and recreation
  • We encourage employees to volunteer on projects that address local issues, helping to create better places and stronger communities
  • Working in partnership with others means we can accomplish more together to tackle mutual issues, such as partnering to develop employability skills for those who need it most

Long-term

  • The health and wellbeing benefits through our provision of access to nature for recreation and relaxation helps reduce the burden on health services
  • We make a significant contribution to the regional economy through our activities, the people we employ, and the money we spend in our supply chain
  • We work with teachers and children to raise awareness about water and the natural environment, giving the next generation an understanding of the true value water brings and how we can all play our part in protecting the services nature provides

Link to strategic themes

Customers live and work in the local communities we serve and so they value the work we do to tackle issues together

By operating at the lowest sustainable cost we are able to continue investing in local communities for the long term

As they encompass a breadth and depth of people, communities bring a variety of views and issues to our attention, helping us find the most balanced approach in the best interests of all

Employees

How we engage with and are influenced by employees

Our employees are the face of the company and we could not deliver our services without them. It is essential we build productive relationships based on trust, develop our employees and keep them engaged and motivated so we can meet the stretching objectives we set ourselves. Employees know our business better than anyone, with a diverse range of views and experience, making them well placed to identify opportunities for improvement.

We have a highly engaged workforce who take pride in their work, value opportunities to learn new skills, and maintain an open and honest dialogue with unions and the business. Line managers play a vital role in supporting employees, with regular one-to-one meetings, and our engagement survey regularly scores above the UK norm. Our new ‘employee voice’ will ensure their perspective is heard by the board. We have employee-led networks such as for gender, LGBT and disability, and encourage employees to share innovative ideas via many forums.

Top three material issues for employees*

Health, safety and wellbeing

Diverse and skilled workforce

Employee relations

How we create value for employees

Short-term

  • We have a strong focus on health, safety and wellbeing. We firmly believe that nothing we do is worth getting hurt for, and we aim to ensure all employees go home safe and well at the end of the day
  • We invest in training and development to enable our employees to grow their skills and to help keep them motivated
  • Listening to our employees helps create an engaged workforce, increasing job satisfaction, and through employee communications and conferences we update our people on business developments so they feel part of a team

Long-term

  • Looking after the health, safety and wellbeing of our employees in the short term, by encouraging them to lead fitter and healthier lives and work in ways that reduce accidents, creates long-term health benefits which, in turn, reduces the burden on healthcare services
  • Health, safety and wellbeing extends to mental as well as physical health, and we promote awareness of stress and other mental health issues, promoting an allround healthy lifestyle in the long term
  • We provide pension offerings that help support employees in later life

Link to strategic themes

Well-trained, engaged and motivated employees who take pride in their work have the ability and drive to deliver the best service to customers

Encouraging innovative ideas from employees can lead to cost reductions, and improving employee satisfaction reduces turnover which ensures training and development costs are efficient

We take a responsible approach to protecting the health, safety and wellbeing of our employees

Environment

How we engage with and are influenced by the environment

We rely on the environment as one of our key resources so it is important for the sustainability of our business that we protect and enhance it. For example, climate change will affect how much water is available and stakeholders are concerned about the resilience of supplies and look to water companies to adapt and take the necessary steps to reduce flood risk.

Given the environment has no voice of its own, we engage with interested groups such as environmental regulators, non-governmental organisations, customers and communities. We conduct facilitated workshops with stakeholders to understand their priorities and have undertaken a large number of customer research projects. We work with environmental partners across the North West to identify new ways to deliver improvements, and engage with several groups to explore opportunities to deliver shared environmental outcomes.

Top three material issues for environment*

Resilience

Environmental impacts

Climate change

How we create value for the environment

Short-term

  • We meet increasingly stringent environmental consent levels, which help to improve the quality of rivers and bathing waters and so support tourism in the region
  • We manage our land in a way that safeguards habitats for indigenous wildlife, as well as protecting wildlife that makes its home in rivers and other water bodies
  • We have invested in new infrastructure, such as our West East Link Main, to allow us to transfer water around the region more efficiently to avoid depletion of individual water sources

Long-term

  • Our investment in renewable energy generation is reducing our carbon footprint and contribution to climate change
  • We innovate and invest in new technologies to solve environmental challenges for future generations
  • We are working on campaigns to educate the public and younger generations on water usage to protect this valuable resource and reduce usage over time
  • We plan far ahead to ensure our activities and investment enhance the long-term resilience of the environment

Link to strategic themes

Customers care about the environment so providing the best service to customers involves protecting the places they live and love

Many of the ways we protect the environment also help us reduce cost, for example renewable energy generation reduces our energy costs as well as our carbon footprint

We manage water and wastewater in a responsible way that protects the environment and enhances its resilience

Suppliers

How we engage with and are influenced by suppliers

As well as employees, we rely on suppliers to deliver our services, and the availability of goods and services in the market influences our strategy and how we operate. Good relationships with suppliers help ensure projects are delivered on time, to good quality, at efficient costs, and can bring innovative approaches and solutions that create shared value.

We engage through supplier workshops, including targeted sessions on innovation, and suppliers sign up to our sustainable supply chain charter and support the commitments set out within it, as they recognise the importance of acting responsibly. They often suggest new ways we can meet some of our own responsible business targets. Feedback from suppliers revealed it can be difficult to access the company, especially when they have new products and services that could help us be more efficient and deliver better service. We established our Innovation Lab to help address this issue.

Top three material issues for suppliers*

NW regional economy

Responsible supply chain

Human rights

How we create value for suppliers

Short-term

  • We spend significant amounts with our suppliers each year to help deliver maintenance and enhancement projects across our asset base, and this helps support thousands of jobs in our region
  • By investing in our infrastructure we are helping to keep the economy flowing. We generate jobs through our capital programme and provide income for workers in the region
  • While our operations and suppliers are mainly UK and European, they work closely with us to address human rights, in particular modern slavery

Long-term

  • Supporting jobs through our supply chain in the short term catalyses the development of skills and jobs in the North West, providing a stimulus to benefit the regional economy in the long term
  • Working together to develop innovations and new technologies means we can identify solutions that will make our services better in the future
  • We act with integrity, giving suppliers confidence in the way we do business, which translates to transparency and fairness for our suppliers

Link to strategic themes

Working on our behalf, suppliers are a face for our business. Ensuring they are motivated to deliver good quality work is enormously important to us when delivering the best service to customers

Ensuring our suppliers deliver efficient cost is integral to delivering a sustainable low cost for customers, and the shared value of developing innovations together with suppliers can assist with this

Working with responsible suppliers helps us achieve more and succeed together in tackling environmental and social issues

Politicians

How we engage with and are influenced by politicians

Politicians influence the long-term national water strategy and environmental priorities, as well as other matters that affect how all businesses operate. Engagement with national and local government, as well as elected representatives and devolved administrations, on topics of public interest helps us to understand their issues so we can seek solutions to shared environmental, social, economic and governance issues.

We engage with regional and national politicians in different political parties on topics of shared interest. We play an active role in trade association Water UK.

Top three material issues for politicians

Political and regulatory environment

Leakage and water efficiency

Trust, transparency and legitimacy

Regulators

How we engage with and are influenced by regulators

Through proactive, constructive engagement with economic, quality and environmental regulators, we agree to deliver commitments over specified time frames. Read more about our regulatory environment on Our marketplace page. We actively engage to shape the policy and regulatory framework within which we operate, covering customer, economic, environmental, social and governance matters. These priorities need to be balanced and viewed over a long-term horizon and maintaining relationships is key to this. The priorities and objectives of regulators can change over time so active engagement to provide our perspective around future policy is important to us.

We hold regular meetings with all our regulators, including working on joint projects such as Natural Course, which aims to build capacity to protect and improve the North West water environment.

Top three material issues for regulators

Political and regulatory environment

Resilience

Trust, transparency and legitimacy

Media

How we engage with and are influenced by the media

The media is intrinsically linked with all our other stakeholders, being influenced by the issues that matter to those stakeholders as well as influencing them through what it reports. It is through the media, and increasingly its social media platforms, that many of our stakeholders receive their information about us and our activities.

Given the essential nature of our services, it is important that coverage is fair, balanced and accurate, and this requires effective two-way dialogue between the company and the media. This is achieved through proactive engagement by our media team, which is available 24/7, providing content to media outlets, as well as dedicated resources to drive proactive messaging on social media channels.

Top three material issues for the media

Political and regulatory environment

Leakage and water efficiency

Social media

Strategic themes

Best service to customers

At the lowest sustainable cost

In a responsible manner

Material issues

External factor

Internal factor

Both external and internal factor

Managing our material issues

Our approach to materiality

Understanding what matters most to our stakeholders is a fundamental part of our planning and day-to-day service delivery. We consider these stakeholder priorities alongside our own assessment of what has the biggest impact on the company and its ability to create value, and the output is presented in the material issues matrix below.

This stakeholder materiality assessment informs decisions about what we report in documents such as this Annual Report. Setting out issues in this way helps ensure we understand key stakeholder priorities and consider their interests in strategic decisionmaking, helping us create long-term value.

In defining the strategic relevance of an issue to the company, we have adopted the integrated reporting framework definition of materiality, which states: “A matter is material if it could substantively affect the organisation’s ability to create value in the short, medium or long term”. Value, in this context, may be created internally (for the company, shareholders and employees) and there can be external value (for customers, communities, suppliers and the environment). Value may also be financial or non-financial.

Our assessment of the level of interest to stakeholders is based on a balance of views obtained from customers, shareholders, regulators, communities, and subject matter experts from the company on an ongoing basis, as well as the extensive insights gathered for the regulatory price review process.

We have cross-referenced and aligned these issues with our principal risks and uncertainties, and our approach was reviewed by responsible business consultancy Corporate Citizenship, which commented that “alignment with UU’s way of creating value gives life and credibility to the materiality matrix” and this sends a very distinctive message about our business model and what we value.

Material issues matrix

We consolidated feedback from our various stakeholder groups, as detailed above, which resulted in a list of 26 material issues. These issues are impacted by factors that may be external, internal or both — for example, affordability and vulnerability affects customers due to external social and economic factors, and the support services we provide those customers with are an internal factor, so this issue is impacted by both. The 26 issues are plotted on the matrix below, from lower to higher in terms of level of interest to stakeholders and how much it can affect our ability to create value.

External factors

5 Political and regulatory environment

10 Climate change

12 Cyber security

15 NW regional economy

17 Natural resources

21 Social media

24 Land management and access

26 Human rights

Internal factors

2 Resilience

8 Financial risk management

9 Corporate governance and business conduct

11 Innovation

14 Data security

16 Energy use

18 Responsible supply chain

19 Health, safety and wellbeing

22 Employee relations

25 Community investment

Both external and internal factors

1 Trust, transparency and legitimacy

3 Customer service and operational performance

4 Leakage and water efficiency

6 Affordability and vulnerability

7 Sewer flooding

13 Environmental impacts

20 Competitive markets

23 Diverse and skilled workforce

Business insight:

Alerting communities to what not to flush

Read the Business Insight

Business insight:

Collaborating with the community to improve reservoir safety

Read the Business Insight

Business insight:

Creating a healthy workplace

Read the Business Insight

Business insight:

Co-ordinating our efforts to fight moorland fires

Read the Business Insight

Business insight:

Accelerating the drive for new ideas

Read the Business Insight

Business insight:

Working together to support those in need

Read the Business Insight