Sustainability
Running our company for the long term
44% female board memebers
top to bottom reward alignment
paid in tax
Board leadership
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 key theme highlighted in the 2019/20 evaluation was positive Board discussion dynamics. It was noted that all Directors fostered a culture of open, constructive debate, undertaken by a respectful and cohesive, and appropriately challenging Board.
The evaluation also concluded that the Board, its Committee Chairs and Committees were effective and that all Directors were considered to have demonstrated considerable commitment and time to their roles, well in excess of that required by the Charter of Expectations notwithstanding any other positions held by them outside of Severn Trent.
As part of the evaluation, full consideration was given to the number of external positions held by the Non-Executive Directors. Directors’ other appointments were reviewed, including the time commitment required for each. The Nominations Committee did not identify any instances of overboarding and confirms that all individual Directors have sufficient time to commit to their appointment as a Director of Severn Trent Plc.
Our regulator, Ofwat, introduced principles for Board leadership, transparency and governance in 2014, and the Board have embraced these wholeheartedly. It places emphasis on the importance of strong Board leadership and the special responsibilities attached to regulated monopoly companies providing an essential public service.
The composition of the Board is subject to regular review by the Nominations Committee, which considers the balance of skills,
experience and independence of the Board in accordance with the Severn Trent Board Diversity Policy (PDF).
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.
Corporate Sustainability Committee
Our Corporate Sustainability Committee is responsible for setting the Group’s overall approach to corporate sustainability, and oversees our performance against sustainability targets and related key performance indicators.
We explain the committee’s role and how it functions in our Corporate sustainability Committee’s terms of reference (PDF).
This month we launch our first Sustainable Procurement Statement which you can read online (PDF).
Risk management
Risk management is embedded in our everyday activities. Across the Severn Trent group, we manage risks within the overall Governance Framework which includes clear accountabilities, delegated authority limits and reward policies. These are designed to provide employees with a holistic view of effective risk management.
We recognise that uncertainty can manifest itself as both negative and positive impacts. Our goal is to minimise the threats and maximise the opportunities for the benefit of our customers, shareholders, employees, supply partners and the environment.
On behalf of the Board, the Audit Committee assesses the effectiveness of our Enterprise Risk Management process and internal controls to identify, assess, mitigate and manage risk.
Policies
At the heart of Severn Trent’s culture is a closely held set of values set out in our Code of Conduct (PDF) which we have called Doing the Right Thing.
These values embody the principles by which we operate. They provide a consistent framework for responsible business practices.
To make sure we're always Doing the Right Thing, our Code is supported by
a number of policies that guide our workforce and suppliers. These policies codify how we identify and deal with suspected wrongdoing, fraud or malpractice, how to maintain the highest standards of safety, and how to apply good ethics and sound judgment.
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.
Stakeholder engagement
As a business within a regulated industry, it’s vital we regularly and productively engage with all our stakeholders.
We work together to make sure we provide the best possible service, at the highest possible standards.
To achieve this, we work closely with:
- Ofwat
- The Drinking Water Inspectorate
- Consumer Council for Water
- Customers and communities we serve
- Employees
- Environment Agency
- Natural Resources Wales
- Natural England
- Health and Safety Executive
We consult with these groups on all of our major business decisions, discussing and formulating future plans with representatives from each organisation and demographic to ensure we meet their needs and requirements.
You can discover what we’ve discussed with our stakeholders in the last year in our latest annual report (PDF).
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 |
| Benefits |
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. |
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| Pension | 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%. |
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| Annual bonus | 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 |
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| 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. |
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| 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 |
The remuneration committee
The Remuneration Committee is responsible for making decisions on executive pay for all members of the Severn Trent Executive Committee.
When making decisions, the Committee considers wider workforce remuneration, conditions and how remuneration aligns with Company performance.
The Committee also take the context of our 2021 remuneration policy (PDF)into account when making decisions. The policy is designed to attract, retain and motivate leaders, ensuring they are focused on delivering business priorities within a framework designed to promote the long term success of the Company.
The remuneration policy is underpinned across the Severn Trent Group by our remuneration principles (PDF).
You can also read or download our 2018 remuneration policy (PDF).
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.
of our prioritised suppliers have signed up to Sustainable Supply Chain Charter, helping ensure an ethical supply chain
2018 Modern Slavery Statement ranked 16th in Business & Human Rights Resource Centre FTSE100 review
of the business have completed a bespoke modern slavery e-learning module, teaching teams how to spot signs of exploitation
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.
Our Sustainable Procurement Statement
We’re pleased to share our first Sustainable Procurement Statement; outlining our commitment, approach and ambitions for the future. It is supported by our Sustainable Supply Chain Charter which sets out the key principles and behaviours we expect all suppliers to live by and reflect through their work with us.
Improving sustainability within the supply chain
Our approach to improving sustainability within the supply chain is an important theme throughout our business plan.
We want to take the things we learn and develop and share that with other organisations that want to build towards best practice.
By collaborating with our supply chain we mitigate risk, create additional value for shareholders and protect the environment.
Our responsibilities to our suppliers
We’re committed to treating all stakeholders in our supply chain fairly and ethically.
Making prompt payments to our suppliers
We have been a signatory of the Prompt Payment Code since 2012, committing us to paying suppliers on time, giving clear guidance on payment terms, and encouraging good practice throughout thesupply chain.
We take great pride in paying our suppliers fairly, and we endeavour to pay all suppliers in line with agreed payment terms. Our approach to invoice management is critical to this, with a focus on utilising self-bill arrangements and e-invoicing to improve efficiency wherever possible.
In 2019/20, 97% of payments were paid within 60 days across Severn Trent Group, which is ahead of our target of 95%. On average, our suppliers are paid within 30 days of us receiving their invoice, placing us in the top half of companies who are required to report to the Government on their payment practices.
Through our procurement policy (PDF) we make sure we allow payment terms that accommodate all organisations, regardless of their size and commercial position.
As a CIPS Ethics Mark holder, we are committed to ethical procurement; ensuring all colleagues who select and manage suppliers are trained in ethical sourcing and supplier management, and that we adopt ethical values in the way in which we source and manage our suppliers.
Helping small and medium enterprises develop
We have a responsibility to educate and build capability within our Supply Chain – particularly small and medium enterprises – ensuring they are equipped to deliver our corporate responsibility ambitions.
We identify opportunities for external collaboration to make sure we harness the insight and expertise of our partners.
We often do this through Supplier Forums, where we meet with many of our suppliers and together we address key sustainability issues, share ideas, drive collaboration and learn from best practise.
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:
- carbon
- waste
- 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
Environmental and social Key Performance Indicators are agreed for individual contracts depending on the nature of the contract.
These could be indicators based on performance in areas including leakage, community impact and biodiversity.
A dedicated contract management team responsible for managing key strategic contracts ensures supplier performance is monitored and improvements are made where necessary.
We have a dedicated supplier engagement online forum that allows colleagues and contractors to provide supplier feedback, including on environmental and social issues. This information forms part of our monitoring and evaluation of their performance.
In 2018 we employed a Supply Chain Corporate Sustainability Specialist, supported by our Group Commercial Director, to develop our approach and drive improvements in this area.
Progress against our Sustainable Supply Chain Strategy is reported to senior management quarterly and to our Corporate Sustainability Committee once a year.
Making sure supplier standards match our own
To make sure our partners meet our high standards and assurance, new suppliers must meet environmental and social criteria set out in our Pre-Qualification Questionnaire during the tendering process.
We want to know how organisations we work with promote a sustainable environment and whether they have any environmental management systems, such as ISO 14001:2015.
We always recommend supply chain partners conform to ISO 14001:2015.
If suppliers do not meet the ISO standard, we ask a series of questions to ensure they meet an appropriate environmental standard.
If potential suppliers fail to reach this standard, their overall score will be impacted.
We want to work with companies who are or who are willing to work towards lowering water consumption, reducing carbon emissions, improving recycling and reducing waste.
Compliance with our Sustainable Supply Chain Charter and with the Modern Slavery Act 2015 are included as compulsory measures in all new tenders and supplier terms and conditions.
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.
We recognise Modern Slavery as a growing issue, and the important role we can play in helping to eradicate it.
We were the first utility company to sign up to the Slave Free Alliance, an organisation set up by Hope for Justice to champion issues around Modern Slavery.
This provides us with 24-hour access to the expertise and professional resources to support our supply chain in tackling Modern Slavery, whilst ensuring our own approach is robust and in-line with best practice.
We’re taking a risk based approach, and due diligence and assessments form a key part of managing this risk within our supply chain, ensuring additional checks on those deemed high risk.
Raising awareness and training is also key. We’ve developed a bespoke training programme to ensure all our employees are aware of what modern slavery is, how to spot the signs and how to report it.
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.
A plan to reach zero carbon by 2030
We’ve committed to zero operational carbon by 2030. That means switching to 100% electric vehicles and 100% renewable energy, and working with our supply chain is essential to achieve this.
Our commitment will roll out gradually to all our vehicles:
- Cars: from now on, we will purchase only electric cars, reaching 100% in use by 2026 in line with our fleet replacement programme.
- Vans: in 2020 we will start purchasing small electric vans for shorter trips. We expect suitable larger models to become available in the next few years, and plan to be buying only electric vans from 2023 onwards. We’ll also explore how we can weight our fleet toward smaller vans – for example, by carrying less kit – to speed up this process.
- HGVs and tankers: based on today’s outlook, electric options may not be available by 2030, so we are working with electric vehicle suppliers to speed up this process. We are also exploring alternative low-carbon options such as hydrogen and biogas – fuels that we may be able to produce from our own operations
To support our commitment to 100% electric vehicles, we are installing over 300 charge points across 65 sites over the next 18 months.
Minimising waste and plastics
Waste minimisation is increasingly becoming a focus at Severn Trent. we strive for zero waste, reducing packaging and volumes of waste
by using innovation and changing consumer behaviour.
We recognise that our supply chain generates a lot of this waste, and we work closely with our supplier partners to reduce this.
As part of waste management we are committed to reducing single use plastic use, and working together with regulators and other companies,the water industry have committed to reduce plastic (PDF) by the equivalent of 4 billion plastic bottles, which our supply chain play a significant role in.
