Ofwat has published its annual report detailing how water companies have performed against the objectives of the Board Leadership, transparency and governance principles (the principles) based on the information provided in their 2019-20 annual reporting.
The report found a lot of good examples of how companies are meeting the objectives of the principles but that there is scope for companies to improve or go further.
This year all companies clearly stated their purpose and explained the importance of their purpose in delivering an essential public service. However, there is scope for annual reporting in future years to incorporate a greater focus on the impact of the purpose and of it being embedded through its strategy, values and culture.
Companies generally need to do more to be clearer about how their dividend policies are applied in practice when making decisions on declaring dividends.
While all companies acknowledged the issue of diversity at board level, the degree of recognition varied across companies.
Aileen Armstrong, Senior Director at Ofwat said: “Board Leadership, Transparency and Governance Objectives in companies’ licences reflect the special responsibilities regulated water companies have in providing an essential public service. We have seen examples of good practice, but also areas where there is room for improvement.
“We want to make sure companies live up to, and continually evolve in line with, the highest standards of governance. And companies need to be transparent about how they are doing that.”