Our responsible business commitment to trusted corporate governance
What is this commitment?
We will follow best practice on Board composition and governance. We will not issue any new debt from the Cayman Islands and will look to remove debt that is held there as soon as practicable.
Desired impact – For South East Water to demonstrate commitment to best practice corporate governance.
How have we performed?
Our governance is based on our purpose and corporate governance code which incorporates the UK Corporate Governance Code 2018 and Ofwat’s board leadership, transparency and governance objectives.
Our company purpose “To provide today’s public water service and create tomorrow’s water supply solutions, fairly and responsibly, working with others to help society and the environment to thrive” is embedded into our articles of association. This also means that our directors must act in the way they consider, in good faith, would be most likely to fulfil the purpose of the company.
With the adoption of our purpose and corporate governance framework, we also follow an approach to governance that is focused on stakeholder inclusiveness based on regular engagement and feedback for customers and stakeholder.
We set out our remuneration policy transparently in our annual report each year and we have aligned our standard of disclosure on executive remuneration to those that apply to listed companies even though we are not a listed company.
We have also published our dividend policy on our website and are publishing information on dividend every year, meeting the expectations set by our regulators.
The composition of our board and committees meets the requirements of our corporate governance code and Ofwat’s board leadership, transparency, and governance principles. Independent non-executive directors are the largest group on our board and all committee of the board are chaired by and have a majority of independent non-executive directors.
We have also set up a responsible business committee of the board with responsibility to oversee our ESG initiatives and performance.
We have not issued any debt this year and therefore no debt was issued through the legacy financing company registered in the Cayman Islands (which has always been registered in the UK for tax purposes ensuring that no tax benefits have been derived from that entity).
We have reviewed our non-financial and sustainability information statement which includes our climate-related disclosures following legislative requirements and the recommendations of the task force on climate-related financial disclosures. Our climate-related disclosures set out a qualitative assessment of climate-related risks on the business under several scenarios using the detailed analysis of climate projections and climate-related risks carried out for the purpose of our long- term delivery strategy. Our scenarios are based on a detailed analysis of climate projection and climate-related risks and combinations of risks that present specific challenges to our operations. We used spatially coherent temperature and precipitation daily timeseries in 12km grid-squares from the UKCP18 regional climate model (RCM) to better understand how climate risks differ between the Kent, Sussex and Western regions of our supply area and their potential impact on our assets and operations.
We have published our strategic direction statement setting out the priorities of the business to 2050 to fulfil the company purpose including in relation to ESG, corporate social responsibility and sustainability. Our strategic direction statement sets priorities defined following engagement with customers and stakeholders. Our strategic priorities were used to articulate the different aspects of our long-term delivery strategy and business plan which set out proposal for investment and other actions to deliver these priorities.
Our remuneration committee had been developing a revised remuneration policy and performance related pay incentive plan that will be implemented in 2025-30 with a focus on reflecting performance for customers and the environment. The revised policy sets out the principles on the structure, balance, and key characteristics of the incentive plan for 2025-30 in a way that meets the UK economic regulator’s expectations about executive remuneration.
We also adopted a revised dividend policy reflecting new obligations under the company’s licence and expectations set by our economic regulator; especially with regard to consideration of performance for customers and the environment when authorising dividends and have continued to report transparently on dividend decisions.