TIDMSVT
RNS Number : 9147E
Severn Trent PLC
04 March 2020
Severn Trent outlines ambitious sustainability commitments for
the future
Severn Trent Plc is today hosting a Capital Markets Day,
focusing on our approach to sustainability and the benefits we can
deliver both for the environment and for the wider stakeholders we
serve.
We are making a number of ambitious long-term commitments that
will enable us to support our purpose of taking care of one of
life's essentials. These commitments are integral to the delivery
of the customer outcomes agreed in our business plan for the next
five years and also in securing a sustainable long-term future for
the business we run. As part of our plan we have chosen to invest
GBP1.2 billion in delivering our commitments.
We will:
-- Deliver our Triple Carbon Pledge of Net Zero emissions, 100%
energy from renewable sources and 100% electric fleet, all by
2030:
- committing to develop science based targets with real
reductions in carbon across scope 1, 2 and 3 emissions(1) ;
- achieving our 100% renewable energy target by 1 April 2020
with over 50% coming from self- generation and the balance
purchased through REGO-backed renewable sources(1) ;
- purchasing only electric cars from now, and only electric vans from 2023;
-- Enhance the biodiversity of 5,000 hectares of land (1% of the national target(2) ) by 2027;
-- Work with around 9,000 farmers - 63% of the farmers in our
whole region - to adapt working practices and adopt nature based
solutions to reduce pollutants in 44 catchments;
-- Reduce leakage by 15% by 2025 and by 50% by 2045;
-- Extend our commitment to paying the living wage to anyone who
works with Severn Trent in our supply chain, not just our direct
employees;
-- Annually supporting 195,000 customers who struggle to pay their bill, by 2025;
-- Donate 1% of Severn Trent Water's profits (over GBP10
million) over the next five years into the Severn Trent Community
Fund, investing in projects in our local communities, while;
-- Continuing to have one of the lowest combined bills in England and Wales for our customers.
Our Capital Markets Day will explore our commitments in more
detail and these are outlined on the following pages.
Liv Garfield, Chief Executive of Severn Trent, said:
"We firmly believe that businesses with a strong social purpose
can deliver better and more sustainable outcomes for all
stakeholders over the long term. To truly make a difference we need
to look after nature and the precious resources it provides, we
need the most talented and engaged minds helping us to drive
performance and innovate, and we need customers who trust us to do
the right thing for their communities. We're incredibly proud of
the work we have done so far when it comes to sustainability and
excited that our stakeholders support the approach we are taking
for the future. By committing to invest GBP1.2 billion in the next
five years we believe we can make a real difference to the
environment and people we serve while delivering strong business
outcomes at the same time."
Tony Juniper, Chair of Natural England, said of Severn Trent's
commitment to biodiversity:
"This very significant contribution from Severn Trent toward the
creation of a national Nature Recovery Network could not be more
welcome. If we are to achieve our goal to be the first generation
to leave nature in a better state than we found it then this is
exactly the kind of leadership, vision and partnership working that
we will need. We hope that other major companies will soon come
forward with comparable ambition, leading over time to an historic
turnaround in the fortunes of our wildlife and natural
environment."
Further information
Materials from the day and the introduction hosted by Christine
Hodgson (Chair Designate) and Liv Garfield (Chief Executive) will
be available on our website (severntrent.com) later this morning.
Videos from all other sessions will be available from Monday 9
March.
(1) See glossary for definition
(2) As set out in the Government's 25 year environment plan
An established track record
Over the past five years we have already made significant
strides to becoming a more sustainable business that delivers great
outcomes for a broad range of stakeholders. We have:
-- Invested over GBP190 million in our green energy business to
achieve our target of self-generating over 50% of our energy
needs;
-- Reduced our net carbon emissions by 40% since 2015, and by 57% since 2007;
-- Invested GBP350 million in improving 1,600km of river quality
- a third of the rivers in our region;
-- Reduced leakage by 6% and waste water pollutions by around 20%;
-- Supported over 50,000 customers each year who struggle to pay their bill;
-- Educated over 700,000 customers about responsible water use;
-- Established a Sustainable Finance Framework to match our commitments; and
-- Been credited with the Fair Tax Mark for transparently paying the right amount of tax.
Making a step change in our approach
The business planning process for AMP7 created an important
opportunity for us to align our view on what good business looks
like with the views of our customers. The work we created together
around societal purpose formed a key component of our PR19
submission and our ongoing approach, so much so that we have asked
Ofwat to embed this within our licence to operate.
Attendees of our Capital Markets Day today will hear the
following:
Triple Carbon Pledge
We have been innovating and leading on carbon reduction for over
40 years, starting with anaerobic digestion of our sewage sludge.
Our years of experience in this area have helped position us at the
frontier of the sector when it comes to energy generation which,
together with a focus on demand, have significantly reduced our
carbon emissions as well as our operating costs. We recognised the
need to go further and in May 2019 we announced our Triple Carbon
Pledge, which we will achieve through:
-- Net zero carbon by 2030
- Committing to real reductions in carbon across Scope 1, 2 and
3 emissions in accordance with the Paris Agreement(1) and setting
science based targets to be transparent on our progress.
- Insourcing our capital design team so that we build carbon
impact into the way we design and build all future assets.
- Fully utilising our GBP5 million innovation test centre to
explore new resource recovery technology and low energy treatment
on a large scale.
-- 100% electric vehicles by 2030(2)
- All cars purchased going forward will be electric, and 100% of
our car fleet will be electric by 2026.
- Increasing our number of electric vans, with only electric purchases from 2023.
- Working with vehicle suppliers to explore options for HGVs and tankers.
- Installing 300 charge points over 65 sites in the next 18 months.
-- 100% renewable energy by 2030
- Will be achieved from 1 April 2020 with over 50% through
self-generation, and the remainder purchased through REGO-backed
renewable sources(1) , but with an ambition to do more.
- Continuing to increase self-generation, primarily through Bioresources and food waste AD.
- Entering into dedicated power purchase agreements to meet a proportion of our energy needs.
(1) See glossary for definition.
(2) Assumes suitable specialist vehicles such as tankers become
available within that time window.
Restoring the natural habitat
By working to improve the natural habitat at each stage of the
water cycle, we can improve the environment and the local areas our
communities work and live in as well as substantially reduce the
cost to our business. We will commit to the restoration of natural
habitats by:
-- Enhancing the biodiversity of 5,000 hectares of land (1% of
the national target) by 2027, with our Great Big Nature Boost
- Using wildflower margins and beetle banks to reduce pesticide
use, run-off and soil erosion.
- Planting 1.3 million trees over the next 10 years to help
reduce flooding and improve water quality.
-- Halving the number of pollutions in our region over the next five years
- Encouraging changes in behaviour through customer education,
working with businesses to install fat traps, and prosecuting where
necessary.
- Investing in an in-house reactive tankering team in our waste
business to prevent small incidents turning into serious
pollutions.
-- Improving the quality of a further third of the region's rivers, equating to 2,100km
- Investing GBP350 million by 2025 to improve final effluent
discharge through asset enhancement under the Water Framework
Directive.
- Exploring nature-based solutions to remove harmful nutrients,
such as phosphates, in rivers.
- Deploying wetlands to treat waste at our smaller sites,
reducing costs and creating wildlife habitats.
-- Improve river water quality in 44 of our most important
catchment areas by engaging with c.9,000 farmers (63% of those in
our region) to reduce pollutants from agriculture entering the
watercourse.
Managing water scarcity
Water is a vital component of our supply chain and through our
25 year Water Resource Management Plan we know that meaningful
reductions in leakage and consumption are needed to mitigate the
impact of climate change and population growth. On a national
scale, we must play our part in helping to balance the geographical
supply and demand challenges we face and think creatively about how
we build infrastructure that allows us to share resources. As part
of our long-term strategy on water management, we will:
-- Deliver a 15% reduction in leakage by 2025 and commit to a 50% reduction by 2045
- Improving how we manage our own network and reducing customer-side leaks.
- Finding and fixing leaks faster with new technology such as fibre optics and robotics.
- Benefitting from the 40,000 sensors installed across our network over the last two years.
- Leveraging the World Water Innovation Fund, bringing together
companies from around the world to collectively tackle some of the
biggest challenges facing our industry, starting with leakage.
-- Reduce Per Capita Consumption (PCC(1) ) by 3.5%, or 36 million litres a day, by 2025
- Installing at least 500,000 meters by 2025 to reduce leakage
and PCC, and provide valuable data.
- Educating 500,000 schoolchildren over the next five years to use water wisely.
- Helping our customers reduce consumption by providing home
surveys and water-saving devices.
-- Establishing the right infrastructure-based solution to
balance water demand across the North and South of England, through
detailed feasibility and partnership work, by 2025.
(1) See glossary for definition.
Helping people thrive
As a business which provides an essential service to our region,
we can (and do) make a real difference to the people we interact
with every day, whether that's customers, colleagues, or
communities. Around 87% of our employees are also our customers and
they live in our communities, making the connection to our business
uniquely strong. This connection creates a highly motivated and
engaged workforce who are inspired to do their best work and they
expect us to do our best for those we serve. This shines through in
our commitments to:
-- Work with the sector to eradicate water poverty
- No combined water and waste bills to be greater than 5% of disposable income by 2030.
- Supporting 195,000 of our customers who struggle to pay each year, by 2025.
-- Creating an inclusive work environment and caring for our colleagues
- Committing to the recommendations of the Parker review(1) on BAME(1) inclusivity.
- Extending our commitment to paying the living wage to anyone
who works with Severn Trent in our supply chain, not just our
direct employees.
- Continuing our approach to improving social mobility, having
last year recruited 44% of new starters from social mobility cold
spots.
- Investing GBP10 million in a new technical training academy,
enhancing skills in the Midlands.
-- Donating 1% of Severn Trent Water's profits (over GBP10
million) into a Community Fund over the next five years
- Awarding grants of up to GBP250,000 to support local projects through a customer-led panel.
Being a company you can trust
We understand that in order to earn trust you need to deliver on
commitments, report your progress transparently and create a
governance structure that enables good decision making. Our track
record of doing the right thing, combined with our open culture,
has supported the progress we have made to date and we will
continue to improve, starting with:
-- Transparent reporting in all of our publications, and this
year publishing our first separate Sustainability report,
reflecting TCFD(1) and GRI(1) guidelines, alongside our Annual
Report.
-- A third of every employee's bonus is linked to our
performance across our sustainability commitments - from the
Executive Committee to the front line.
-- Embedding social purpose and sustainability in our decision
making process across our organisation and reporting on it.
-- Requesting our social purpose commitments be enshrined in our licence to operate with Ofwat.
Commitments in numbers
In our plan for the next five years we have committed to
improving on a range of areas in consultation with our customers.
These are the things they care about the most and are aligned with
our sustainability ambitions. The following table gives an
indication of where the GBP1.2 billion we are spending in the next
five years will be delivering benefits.
GBP billion
Our Triple Carbon Pledge 0.20
Restoring the natural habitat 0.70
Managing water scarcity 0.25
Our role in Society 0.05
Total 1.20
------------------------------- ------------
Figures shown in average AMP7 prices.
(1) See glossary for definition.
Glossary
AMP7: Asset Management Plan for the five year regulatory period
starting 1 April 2020.
PCC: Per Capita Consumption (PCC) is the average amount of water
used by each person that lives in a household property (litres per
head per day).
Living Wage: The real living wage is an independent calculation
of the cost of living, based on a basket of household goods and
services.
Scope 1 emissions: All direct emissions from the activities of
the business.
Scope 2 emissions: Indirect emissions from electricity purchased
and used by the business.
Scope 3 emissions: All other indirect emissions from activities
of the business, but occur from sources that we do not own or
control.
Paris Agreement: The Paris Agreement is an agreement within the
United Nations Framework Convention on Climate Change (UNFCCC),
with a long-term goal to keep the increase in global average
temperature to well below 2 degC above pre-industrial levels; and
to pursue efforts to limit the increase to 1.5 degC, recognising
that this would substantially reduce the risks and impacts of
climate change.
REGO-backed renewable energy: Energy which is backed by
Renewable Energy Guarantees of Origin (REGO). The REGO scheme is a
government scheme, regulated by Ofgem which provides transparency
to consumers about the proportion of electricity that suppliers
source from renewable generation.
Parker Review: Independent review by Sir John Parker into the
ethnic diversity of UK boards.
BAME: Black, Asian and Minority Ethnic.
TCFD: The Taskforce on Climate-related Financial Disclosures
(TCFD) recommendations are designed to achieve consistent,
decision-useful, forward-looking information on the material
financial impacts of climate-related risks and opportunities,
including those related to the global transition to a lower-carbon
economy.
GRI: The GRI Sustainability Reporting Standards (GRI Standards)
are the most widely adopted global standards for sustainability
reporting.
Enquiries
Investors & Analysts
Rich Eadie Severn Trent Plc +44 (0) 7889 806578
Head of Investor Relations
Rachel Martin Severn Trent Plc +44 (0) 7824 624011
Investor Relations Manager
Media
Jonathan Sibun Tulchan Communications +44 (0) 207 353 4200
Press Office Severn Trent Plc +44 (0) 247 771 5640
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to
be, 'forward-looking statements' with respect to Severn Trent's
financial condition, results of operations and business and certain
of Severn Trent's plans and objectives with respect to these
items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'projects',
'potential', 'reasonably possible', 'targets', 'goal', 'estimates'
or words with a similar meaning, and, in each case, their negative
or other variations or comparable terminology. Any forward-looking
statements in this document are based on Severn Trent's current
expectations and, by their very nature, forward-looking statements
are inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance and no assurances can be given that the forward-looking
statements in this document will be realised. There are a number of
factors, many of which are beyond Severn Trent's control that could
cause actual results, performance and developments to differ
materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to: the
Principal Risks disclosed in our latest Annual Report and Accounts
(which have not been updated since the date of its publication);
changes in the economies and markets in which the group operates;
changes in the regulatory and competition frameworks in which the
group operates; the impact of legal or other proceedings against or
which affect the group; and changes in interest and exchange
rates.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to Severn
Trent or any other member of the group or persons acting on their
behalf are expressly qualified in their entirety by the factors
referred to above. No assurances can be given that the
forward-looking statements in this document will be realised. This
document speaks as at the date of publication. Save as required by
applicable laws and regulations, Severn Trent does not intend to
update any forward-looking statements and does not undertake any
obligation to do so. Past performance of securities of Severn Trent
Plc cannot be relied upon as a guide to the future performance of
securities of Severn Trent Plc.
Nothing in this document should be regarded as a profits
forecast.
This document is not an offer to sell, exchange or transfer any
securities of Severn Trent Plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
This information is provided by RNS, the news service of the
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END
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