Weather is fundamental to how we deliver water and wastewater services so climate change has, and always will, be of strategic and operational importance.

Incorporating climate into long-term planning

Building on our long-standing approach to climate change mitigation and adaptation, we now integrate consideration of climate-related risks and opportunities directly into our business planning to influence strategy and behaviours throughout the organisation.

This year, we've enhanced our understanding of the sensitivity of our business risks to climate change and applied Systems Thinking to embed physical and transitional risks into both operational planning and long-term strategy development.

We now have a good understanding of the controls required to adapt to a changing climate, and are building our confidence to recognise and manage cascade impacts where multiple weather events in a short time frame can have a cumulative impact.

SUCCESSES

  • CDP is a global disclosure system for environmental reporting. Our CDP climate change rating improved from B to A- in 2020, demonstrating leadership-level reporting and disclosure. We are one of only two companies in the UK water sector achieving leadership level.
  • The Sustainability Reporting Performance report by EcoAct measures how businesses are acting and reporting on climate-related sustainability. We have been ranked in the top 20 FTSE 100 list, improving from 17th to 11th position in 2020, and are the highest ranking water company.

ACHIEVEMENTS

  • On track to deliver our climate change mitigation pledges and our public commitments.
  • Science-based targets covering all emission scopes set and submitted for validation by the Science Based Target initiative (SBTi).
  • Three 'alternative' scenarios, each one aligned to a specific emissions pathway, developed and used to support strategic planning.
  • Impact of climate change now specifically considered as part of corporate risk framework.

Six pledges to reduce our carbon footprint

We have made good progress on our six carbon pledges, which include science-based emission reduction targets and four specific pledges on how those reductions will be achieved.

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Pledge 1 is to reduce our scope 1 and 2 emissions by 42 per cent by 2030. We are on track to achieve this pledge although progress will not be linear year-on-year while we work to reverse the pressures that are driving growth in emissions.

Pledge 2 Over 94 per cent of the electricity we used in 2020/21 came from renewable technologies. From October 2021, we will meet our pledge for 100 per cent.

Pledge 3 commits us to 100 per cent green fleet by 2028. We have deployed 27 electric vehicles at operational sites, and are trialling a 44-tonne biogas-powered HGV.

Pledge 4 commits us to 1,000 hectares of peatland restoration by 2030. We have proposed five sites for green recovery catchment peatland restoration.

Pledge 5 commits us to 550 hectares of woodland creation by 2030. We have planted 9,783 woodland carbon code compliant trees, established two tree nurseries and identified hundreds of potential sites for new and ‘replanted’ woodlands.

Pledge 6 commits us to set a science-based target for our scope 3 emissions, which we have done.

Our progress this year towards fully meeting the Task Force on Climate-related Disclosures (TCFD) recommendations and the areas we will focus on in the future.

Governance

The organisation’s governance around climate-related risks and opportunities

Progress this year

  • Implemented enhancements required to reach overall ‘leadership level’ in the 2020 CDP assessment.
  • Included special report on climate-related risks in board-level risk review.
  • Created long-term strategy team with primary focus on climate change adaptation and mitigation.

Future focus

  • Further inclusion of climate-related risks and opportunities into all investment decisions, processes and governance.
  • Continue to demonstrate leadership in climate-related disclosure, for example CDP assessment.

Risk management

The processes used by the organisation to identify, assess and manage climate-related risks

Progress this year

  • Enhanced analysis of risks arising from the climate change we are already experiencing and the extent to which that might affect operations.
  • Completed a robust review to identify which corporate risks are vulnerable to climate change and quantified the impact and time sensitivity.

Future focus

  • Further formalisation of climate-related physical and transitional risks into risk management systems.
  • Embed identification of climate-related risks and opportunities throughout the organisation as business as usual.

Strategy

The actual and potential impacts of climate-related risks and opportunities of the organisation’s businesses, strategy and financial planning

Progress this year

  • Extensive preparations for the publication of our third climate change adaptation progress report later in 2021, after widespread stakeholder consultation. This report will include a review of climate impacts and how we will adapt.
  • Updated water resources and flood models to include climate scenario analysis and UKCP18 forecasts.
  • Developed company-wide scenarios to explore how multiple factors (including climate change) interact to provide a structured framework to think about future uncertainty.

Future focus

  • Whole-life costing for capital projects and appraisals to include variable carbon pricing.
  • Implement climate change resilience plans (both physical and transitional) across AMP7, incorporating natural capital solutions.
  • Build relationships with key suppliers to reduce our environmental impact by sharing best practice and collaborating on how to reduce greenhouse gas emissions.
  • Identify and evaluate climate-related opportunities.

Metrics and targets

The metrics and targets used to assess and manage relevant climate-related risks and opportunities

Progress this year

  • Completed comprehensive review of all scope 3 emissions and set ambitious science-based targets (currently being validated by SBTi).
  • Achieved A- rating in 2020 CDP assessment of targets and emission-reduction initiatives.
  • Updated drought plan triggers to minimise the impact on customers and improve our resilience to periods of prolonged dry weather.

Future focus

  • Secure SBTi validation for sciencee-based targets for all three emission scopes.
  • Implement data improvements for scope 3 emissions so more are supplier and product-based factors rather than spend based.
  • Analysis to understand cascade impacts and our resilience to them where multiple extreme weather events can occur in a single short time frame.
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