Potemkin exercise in independent scrutiny at UK water & sewer companies

WATER leaks and an epidemic of sewage spills continue to thrust UK Water Companies into wider public scrutiny and negative acclaim as our rivers, seas and water tables enjoy substantial but unnecessary pollution levels. The driving force behind these unacceptable pollution and lack of investment decisions lies with the independent non-executive directors who form the majority on the boards of all existing UK water companies. 

This is clearly an issue about the effectiveness of the water company independent directors failing to hold their boards to account. There may have been an awful lot of careful monitoring going on from these independent directors but, sadly, they have had very little impact in curbing the more egregious excesses of their various water company boards.

Compounding this failure to hold water boards to account or be sufficiently concerned about leaks, pollution, sewage and exogenous costs, nevertheless these independent directors have been unafraid to nod through handsome senior executive remuneration and bonuses as well as make substantial dividends payments to overseas majority shareholders. This ongoing tidal wave of excessive water company senior executive reward is founded upon financial results skewed by the ongoing failure to make appropriate investment decisions in pollution control and mitigation or, indeed, investment in new pipes and reservoirs.

But why have the existing cadre of water and sewer company non-executive directors been so ineffective in stopping the pollution of our rivers and coastal waters? Operating within the current loose regulatory regime is genuinely no excuse for the failure of these independent directors to stop sewage pollution on the current industrial scale. The fig leaf of strict adherence to all existing laws and scrupulous regulatory box-ticking fails the literal and metaphorical smell test! Especially when it comes to independent and non-executive directors at our water companies robustly fulfilling their wider community responsibilities to mitigate the health, social and financial costs these water and sewer companies are currently imposing on present but also future generations.

Good governance, of course, often requires that independent directors believe in their organisation and its mission and purpose - so strongly that they are not afraid to criticise it or make recommendations for change. Indeed, many water industry company websites highlight that they encourage internal naysaying and scrutiny from their existing NED and independent director appointees. And yet, water board executives are much more likely to be found on site visits of the facilities but nowhere near the pipes that discharge their sewage products into our rivers, coastlines and seas. 

The unavoidable conclusion is that the current roster of water company independent directors are little more than a Potemkin exercise of going through the motions when it comes to scrutiny, analysis and guiding board decision-making regarding water pollution. The doubtless sincere but light touch supervision of these people ensures UK society generally – and generations afterwards - can then also literally go through the actual motions too.

Photo credit: Science Photo Library/BBC