Blog

The current lobbying scandal is shining a light on the interaction between business, politicians and the civil service. When the behaviour of public office holders fails to meet the high standards required, and individual interests are put before the public good, public trust in institutions and systems suffers. All sides can be tarnished and the social contract between citizens and rule makers can be eroded. A ‘one rule for us and another for them’ approach seldom ends well and does not create a healthy environment for individuals, and good businesses, to thrive. 

There is a growing recognition that a focus on corporate purpose can align government, company, investor and other stakeholder interests around long-term goals such as net zero and help ensure that these are delivered in a fair way.  On 30th March Sustainability First hosted its ‘Fairness in utilities’ conference to explore this issue and what the purpose agenda means for both companies and government in sectors such as energy, water and communications.

Hosting COP26 is creating a strong focus on climate issues at home.  What does making the most of this opportunity look like?  Technological change is vital for UK delivery of net zero.  But if our national action on climate doesn’t also deliver a socially ‘just’ transition, its success risks being undermined at home, and abroad.  The Energy White Paper has recognised this, highlighting the importance of fairness and affordability in energy policy.  But why is this important and what can be done to turn rhetoric into reality?

The extent to which short term shareholder returns should be the main focus of corporate strategy has been questioned increasingly over the past few years. Even mainstream players such as Larry Fink – chair of Blackrock, the major investment fund – now accept that a wider focus on purpose, and specifically on Environment, Social and Governance factors, is a long-term driver of shareholder value. Nowhere is this truer than in public utilities. These sectors deliver ‘essentials of life’: water, energy and digital access. They are core to answering the long-term challenges of net zero, climate resilience and protecting nature.

2020 ended in a blizzard of policy. There’s a lot to be stimulated by and optimistic about. Amongst the detailed research on cost of capital, on routes to net zero, on infrastructure and through innovation there’s room for people too. The Energy White Paper, the Committee on Climate Change, Ofgem’s RIIO-2 settlement and the Ten Point Plan all envisage a radically different energy sector. And quickly.

What is an essential good or service? Recent months have seen some heated debates on this point. In Wales, one supermarket got into trouble by classifying period products as non-essential. In Ireland, a dog boutique selling canine accessories was able to stay open as it also sold pet food.

Sustainability First has a long history of working with the essential utility services that are necessary for existence such as energy and water. There is little argument that in meeting our basic needs, these are essentials.

Of all the utilities, water is probably the least prone to radical change. The first water infrastructure – wells and even some disposal of sewage - was developed over 6000 years ago. Water infrastructure in the Roman empire was more sophisticated than other utilities would achieve until well into the industrial revolution (and believe it or not some is still used today).

The underlying principles that policy makers and regulators use to guide their every-day decisions need to be transformed if we are to survive and thrive through Covid-19 and the biodiversity and climate crises.

Price-control design is both complex and 'mission-critical'. At stake is how the £billions of funding allowed by the regulator for DNO investment and operations will be shaped for the coming five years and beyond. Rightly, there is a strong focus on cost-efficiency. But concern about past returns shouldn't wholly dictate the future.

Search