It is “no longer viable” for water companies to ignore assets such as natural surroundings, skills and communities in their business plans according to infrastructure services firm, Aecom. But it has warned that the success of those considerations will depend on senior level buy at water companies particularly in the finance departments.
“Natural, human and social capital are not typically included in business planning, but incorporating them into decision-making now could help shape a more financially secure water industry in the future”, said Aecom. Its warning came as the sector enters the foothills of its next price control review, PR19.
Aecom said its environmental economists and asset managers were working with the water sector to develop “ground-breaking” methodologies that include natural, social and human factors. Incorporating them in business plans will, according to Aecom, help to address some of the growing challenges faced by water companies. Those challenges include population growth, the rise of high-consuming single occupancy households and the impacts of climate change and they are accompanied by “intensifying environmental regulatory standards, the need to provide a better service to customers and the potential impact of competition in the domestic market Aecom warned.
It said that valuing natural, social and human capital will improve reporting, risk management and investment choices and produce a “significant positive impact on the communities that water companies serve.” Aecom’s director of asset management, Adrian Rees (pictured), warned that neglecting : “Very few organisations in the water sector are yet to fully take account of their investment programmes’ social and human impacts and look at how these capitals can be applied when managing assets.
Given the significant challenges faced by the industry, not factoring these additional capitals into investment choices now could have a major impact on business resilience in the longer term.
“The success of natural, human and social capital accounting will depend on the level of support the process has from senior stakeholders within a company, and the finance department is key,” Rees added.
Thames Water is amid a long-term survey of all of the trees and associated or possible habitats it owns or are near its sites. Arboricultural expert at consultancy Ground Control – which is undertaking the survey for Thames – said: “There’s limited knowledge of what Thames Water owns, or where its sites’ boundaries finish. As well as highlighting dangerous trees and recommending remedial tree work, we are creating a huge database of the trees and species, which will be accessible for years.
“One of the main positives of the survey is that it’s raising awareness of the trees. They are seen as an asset now, people are becoming more aware and it shows Thames Water is being proactive in protecting the environment, natural habitats and carrying out its duty of care.”
The survey began last year in April and is scheduled for completion next summer.