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UK water company executives could see bonuses affected by poor performance

  • UK water company executives could see bonuses affected by poor performance

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UK’s water regulator Ofwat has suggested water companies’ bosses should not receive bonuses if the companies have a poor performance, informs The Guardian.

Sewage pollution due to water companies’ weak environmental performance has been increasingly under public scrutiny in the UK, and last November the EA and Ofwat launched an investigation into sewage treatment works after companies admitted they may be releasing unpermitted sewage discharges. Then in January a parliamentary report by the Environmental Audit Committee concluded water quality issues in rivers are a result of underinvestment and failures in monitoring, governance and enforcement. Among other sources of pollution, the Committee warned about the extent of sewage discharge and misreporting and large spills by water companies.

Calling for more assertive regulation and enforcement from Ofwat and the Environment Agency, the MPs report recommended Ofwat considers limiting the payment of bonuses to water company executives.

Ofwat’s response has come as a letter to the chairs of Remuneration Committees for all water and wastewater companies, from interim Chief Executive David Black. In it, he notes the current focus on companies’ environmental performance, particularly in relation to wastewater: “Companies' performance in some areas, most notably on the environment, risks eroding trust and confidence in the sector”. Ofwat expects to see evidence that pay outcomes do not reward poor performance, thus acting on the MPs’ recommendations. It is a preliminary warning, though the letter does not specify any penalties that might be imposed if the letter’s appeal is ignored.

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