Running our company for the long term
The Board’s role is to ensure the long term-success of Severn Trent.
Maintaining the highest standards of governance is integral to the effective delivery of our strategy. It ensures that the Board take decisions that create sustainable long-term value for the mutual benefit of our customers, the communities we serve, our employees and shareholders.
The effectiveness of the Board is reviewed at least annually, and conducted according to the guidance set out in the 2018 UK Corporate Governance Code and Financial Reporting Council’s Guidance on Board Effectiveness (PDF).
Evaluating Board performance
The Severn Trent Governance Framework
The Board is supported by the Severn Trent Governance Framework.
The Governance Framework includes the Board, Severn Trent Executive Committee and their respective Committees. In line with the code, the board delegates certain roles and responsibilities to its various committees. Our Leadership Team page explains each Committee’s role and composition.
Ethics and compliance
Our Audit Committee oversees whistleblowing, bribery and data protection matters, assessing and developing the adequacy and effectiveness
of our policies and procedures.
We align our business practices to the ten principles of the United Nation's Global Compact.
All Severn Trent employees are encouraged to raise ethics and compliance concerns through their line manager or senior management. However, we recognise that employees may feel inhibited in certain circumstances.
If this should be the case, employees are encouraged to use our confidential and independent whistleblowing helpline or email service, operated by Safecall, an independent company which specialises in handling concerns at work.
The service is available internationally and Safecall provides a translation service, allowing any employee, wherever they are in the world, to access it.
All investigations are carried out independently and reported directly through to the Audit and Corporate Responsibility Committees.
We promise that if you raise a concern under this policy, you will not be at risk of losing your job or suffering any form of retribution as a result, even if you were mistaken.
Our Group Financial Crime Policy prohibits bribery and corruption in all our business dealings, regardless of the country or culture we work in.
We carry out risk reviews to identify employees at high risk, and make sure we provide them with support and guidance. All employees of Severn Trent Business Services must complete an online training module and examination to make sure they understand and comply with the policy.
The Audit Committee carries out an annual review of our systems and controls to detect and prevent bribery and corruption.
Reports of any ethical or compliance issues are given to the Board by the committee chairs at the start of every meeting, with any serious allegations being directly reported to the Board.
We operate a speak-up policy and a Doing the Right Thing programme to encourage our employees to voice any concerns about behaviours or practices not in line with our values. This can be done anonymously.
Concerns can be raised through normal reporting lines, directly to senior executive level or through our independently operated whistleblowing helpline.
All allegations are investigated and reported to the Board or its Committees.
In 2019 to 2020, 30 Speak Up cases were raised across the Severn Trent Group.
Following internal investigations, 30% of cases were found to be partly substantiated and 7% of cases were found to be substantiated and viewed as Code of Conduct breaches.
For example, dishonest behaviour, health and safety and breaches of policy.
This indicates that our culture fosters an environment in which employees are encouraged to report any concerns and believe we will act on them.
Remuneration and reward
Creating an awesome place to work is one of our key strategic priorities, and one of the ways we aim to achieve this is by fairly rewarding our employees.
The majority of our employees receive fixed elements of remuneration. That’s things like their salary, benefits and pension.
We also reward and incentivise our team members through an all-employee bonus scheme, with common targets and weightings which introduces an element of variable pay for everyone.
In line with most organisations, the proportion of variable pay increases for senior management and executives. This can include the annual bonus scheme and participation in the Long Term Incentive Plan.
We have a consistent bonus scheme design throughout the organisation, from the front line to Executive Directors, ensuring that every employee is incentivised and rewarded to deliver the same objectives.
Our core remuneration elements
The core remuneration elements apply differently to each group of employees in our business.
|Eligibility||Number of employees covered||Remuneration element||How it works|
|All employees||7,087 (as 31 March 2021)||Salary||
Salaries are set to reflect the market value of the role, and to aid recruitment and retention.
Employees who are not on a training rate of pay (such as apprentices) receive at least the voluntary
All employees are eligible to participate in our flexible benefits scheme which we believe is one of the best in the industry and which is designed to support a positive work-life balance.
42% of our employees choose to tailor their benefits via our flexible benefits scheme. They have also saved over £109,000 through our employee discount partnerships since the scheme was launched.
We offer a market leading defined contribution pension scheme and double any contributions that employees make (up to a maximum of 15% of salary).
When colleagues get closer to retirement, we provide education and support to help plan for the next stage of their lives.
We are proud that 99% of our employees are members of the pension scheme and 62% pay contributions above the minimum of 3%.
All of our people share in our success by participating in our all-employee bonus plan, ensuring all employees are aligned with the same measures and rewarded for achieving our key objectives.
For this year the bonus paid out £1,029 to our frontline employees in Severn Trent Water Limited and
|Save As You Earn||
Offering the opportunity to participate in our Sharesave scheme encourages employee engagement and reinforces our strong performance culture, enabling all colleagues to share in the long-term success of the Company whilst also aligning participants with shareholder interests.
Our Sharesave scheme gives employees an opportunity to save up to £500 per month over three to five years, with the option to buy Severn Trent Plc shares at a discounted rate at the end of the period.
|Management and senior management||356||
Long Term Incentive Plan
A proportion of this population participate in the Long Term Incentive Plan by annual Invitation
The LTIP reinforces delivery of long-term creation of value and sector outperformance and progress towards our net-zero ambitions. The retention of shares by Executive Directors for the longer-term also supports a shared ownership culture in the Group.
|Executive Committee and Executive Directors||9||
Shareholding guidelines as a percentage of salary
Chief Executive Officer: 300%
Chief Financial Officer: 200%
Executive Committee: 100%
|Supports alignment of Executives’ interests with shareholders.|
|Our Supply Chain||
All colleagues across Severn Trent are paid in line with the real Living Wage, for which we hold accreditation.
We expect this of all new contracts within our supply chain and detail this within our Sustainable Supply Chain Charter
Collaborating with our suppliers
Over £1.25 billion is invested in our supply chain each year and around 1,700 partners help us to deliver our sustainable operations.
Our supply chain partners – predominately UK-based companies – provide a diverse range of services including the supply of chemicals for treating water, the construction of sewage treatment works, and maintaining our sites and offices.
Between 2020 and 2025, we will move towards a model that will increase engagement with more small and medium enterprises. We’ll also look at bringing some business activity in-house to provide us with greater control over issues like our carbon emissions.
Environmental, social and governance benchmarking
We're constantly assessing our performance against our peers, working with benchmarking organisations to make sure we're leading the way wherever we can and our supply chain partners meet those same standards.
Working together to build a sustainable, ethical supply chain
We know we have to manage the impact of our business on the environment and maximise benefits to our customers and wider society.
Our supply chain is key to helping us deliver our social purpose and key sustainability commitments, such as our triple carbon pledge, 15% leakage reduction target, biodiversity and environmental plans, and maximising the benefits to our customers and wider society.
We want to grow resilience, confidence and transparency in our supply chain, and go beyond compliance to develop mutually beneficial relationships with our partners.
Improving sustainability within the supply chain
Our responsibilities to our suppliers
We’re committed to treating all stakeholders in our supply chain fairly and ethically.
Setting expectations through the Sustainable Supply Chain Charter
We expect our supply chain to both live by and reflect our values, and as such all suppliers are required to adhere to our code of conduct.
Through our Sustainable Supply Chain Charter, we set clear expectations of our suppliers. Compliance with this charter is stipulated in our standard contractual terms and conditions.
Supply chain partners are required to deliver measurable outcomes against our sustainability ambitions for:
- single-use plastics
- community engagement
- social mobility
All of our prioritised suppliers have signed the Sustainable Supply Chain Charter, and they account for approximately 56% of our supply chain spend.
Meeting environmental and social commitments
Combating modern slavery in an ethical supply chain
No instances of Modern Slavery have been raised within our business or supply chain. We’re fully committed to protecting every individual’s human rights and to complying with the Modern Slavery Act 2015.
We will never tolerate the use of child or forced labour and we firmly believe that nobody should be hurt or made unwell as a result of the work we do, or services we provide.
Protecting the environment in a sustainable supply chain
We assess every supplier’s environmental management at tender stage, and throughout contract management. We judge each supplier on a case-by-case basis, and our decision
depends on the nature of the work planned and its environmental impact.
Suppliers considered to have a high environmental impact may be assessed on categories including:
- environmental policy and management
- environmental certification
- pollution incidents
- carbon consumption
- water consumption and waste.
Their responses to questions on these topics, and others, contribute to their overall score and ultimately the successful award of contract.