Environmental

Climate change is the single biggest risk facing the planet according to the 2021 Intergovernmental Panel on Climate Change (IPCC).

Our Group businesses are already experiencing many climate change impacts, and these are expected to increase, with temperatures anticipated to be at least 1.5°-2°C this century. Addressing climate change is not just a global issue, local impacts will be felt, and local action needs to be taken. Our region is particularly vulnerable to climate change as we have 860 miles of coastline, and our proximity to the Atlantic Ocean means our area is exposed to impacts from rising sea levels and storm intensity.

Future trends for the South West show that by 2050 we could see a 3°C increase in average summer daily temperatures, with a 5°C increase by 2080, rainfall will become more variable with much drier summers and a fivefold increase in heavy rainfall events and by the end of the century sea levels are predicted to be 0.5-0.8m higher than they are today.

Climate adaptation

In December 2021, we published our climate change adaptation report. We have invested to ensure that we have the tools and data to understand the impact of climate change on our operations and services and have assessed over 60 climate-related risks that could affect the services and the environment we rely on, each of which has been assessed using our Corporate Risk Framework. Assessing climate change risks, and the potential impacts, and possible mitigations on our various operations, assets and networks, is an ongoing and iterative process.

We are taking the opportunity to further our resilience this year as we update our Climate Adaptation Report as part of the UK government’s adaptation reporting cycle to feed into the next UK Climate Change Risk Assessment. We have already made great progress in mitigating the impacts of climate change, but the risks from climate change are growing over time so we need more action in the future and our plans will reflect this. These are driven through:

• South West Water and Bristol Water water resource plans for the next 25 years.
• South West Water drainage plans for the next 25 years.
• South West Water and Bristol Water five-year business plan covering the period 2025-2030.

These plans can be found on their company websites.

For further details of how our business preparing for climate change please see our latest Climate Change Adaptation Report

We are core members of the Water Resources West Country Water Resources group, established in 2017 to allow improved collaboration in water resources management in the South West of England.

Task Force on Climate-related Financial Disclosures’ (TCFD)

TCFD provides a framework setting out how businesses should integrate climate change risk and opportunities into their business strategy, governance, risk management and metrics and targets. Pennon support the Financial Stability Board Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations that were introduced as mandatory reporting for 2022. Read our TCFD report for 2024.

All our sites operate under strict permit conditions set by our regulators, and we submit our air emissions data to the regulators as and where required.

Air emissions reduction initiatives

Pennon Group and South West Water are actively managing air quality and emissions through various measures. South West Water is collaborating with the Environment Agency to implement the Industrial Emissions Directive, which may involve permit changes and new requirements for relevant sites. The company is also conducting spot checks of stack emissions from standby generation plants as per the Medium Combustion Plant Directive, with potential for further checks at smaller plants in the future.

To address odour emissions from wastewater treatment works, a key performance commitment, South West Water has installed odour monitoring equipment and invested in odour control improvements across multiple sites. The Group is working with industry partners to explore solutions for better monitoring and managing air pollutant emissions from wastewater operations and has started reporting on other air pollutants such as NOx, SO2, and VOCs in its ESG Databook 2023/24.

As part of its Net Zero plans, Pennon Group is trailing the use of 'HVO' bio-fuel for standby power generation as an alternative to diesel, reducing greenhouse gas emissions and air quality emissions compared to diesel. Additionally, the Group is transitioning its transport fleet to low and zero-carbon alternatives, including the deployment of more than 50 electric vans, to reduce air quality emissions from fleet activities. Charge points have also been installed across the Group's sites.

Through regulatory compliance, odour control initiatives, industry collaboration, reporting, and sustainable initiatives like biofuels and electric vehicles, Pennon Group and South West Water are taking proactive measures to manage air quality and emissions, demonstrating their commitment to environmental stewardship and reducing their environmental impact.

Water is a valuable natural capital asset and at the heart of our business. We strive to improve our own internal water efficiency in addition to promoting sustainable water usage to our customers, stakeholders and members of the public.

South West Water, as the regional water utility across the South West peninsular and beyond, including the Bournemouth area is responsible for supplying water to c.4.24 million customers. Our business involves the extraction of water from the environment, treatment and supply of this water to our customers. It then requires the management and treatment of wastewater returned through the sewerage network before its safe return to the environment. We are regulated for the environmental and efficient management of these activities with our performance reported annually to the regulators including through South West Water’s Annual Performance Report (APR).

Water policy and targets

We have developed a Group-wide Water Management Policy, with the aim of reducing our own water footprint, enabling us to lead by example in water stewardship. The policy sets out to optimise water efficiency by encouraging employees to demonstrate best practice water-saving behaviours and to ensure that facilities are in place to monitor water consumption, reduce leakages, and enable employees to most efficiently use water. We are also investigating how we can further reduce and recycle water usage where possible throughout our operations.

More information about South West Water's water efficiency measures are described in the Water Resources Management Plan (25 year). The plan seeks to prevent increasing customer water demand through the delivery of water efficiency engagement programmes.

We have made the following water reduction commitments by 2025 (against a 2019/20 baseline):

• a 15% reduction in leakage
• 6.2% reduction in customer water consumption
• reduce water use within our wastewater treatment works by 2.8 megalitres/day

Our community

On the demand side, the success of South West Water’s unique and innovative Stop the Drop campaign, where the campaign gained traction as the collective might of the people came together to see a sustained reduction in customer demand (c.5%) over the period, has been a useful learning. We continue to engage with our customers to influence behavioural change, through our now ongoing customer campaign Save Every Drop, and in issuing over 133,000 free water saving devices from water butts to shower heads. At the same time, we are focused on reducing our own usage on our sites.

We run initiatives to educate and engage with the public on steps which can be taken to save on water usage and bills. We offer free water-saving products to all our customers and offer free home audits to high consumption households to reduce household water consumption. Our Think Sink! and Love Your Loo initiatives provide information on how to prevent blockages in pipes and sewage networks, and our Upstream Thinking project applies natural landscape-scale solutions to improve water quality.

Our employees

We run initiatives to educate our staff on water consumption and on how to reduce water wastage. Staff were challenged to save water during Water Saving Week through various activities including water usage reduction competitions and an opportunity to purchase a subsidised water butt. Our directors also took part in a challenge to reduce water use by having Hydrao showerheads installed in their homes. We actively promote Water Saving Week and our Water Smart campaign and encourage our employees across the Group to become Water Saving Ambassadors.

Initiatives to reduce our own freshwater use: Our Water Efficiency Programme

Pennon Group is committed to reducing its own direct water use. Over the past two years, the Group has successfully reduced water use by 11 million litres per day and continues to improve efficiency within its processes. As part of its business plan to 2025, Pennon committed to building two state-of-the-art treatment works in the Bournemouth area, with work progressing well at Alderney and Knapp Mill. Alderney is on track to achieve water into supply by March 2025, benefiting customers with enhanced ceramic membrane treatment. Additionally, upgrades at four works in Devon and Cornwall are underway, with investments made to reduce manganese and install Granular Activated Carbon Treatment.

Pennon Group is actively promoting water efficiency among its customers through various initiatives. South West Water launched the 'Water is Precious' campaign, issuing around 500 water-saving devices daily, and its North Devon smart metering program is 50% complete. The company also introduced a tariff incentive for customers in Cornwall, offering a bill credit if they collectively reduced water consumption, which they achieved. Progressive charging trials for 2024/25 have been launched, including standard seasonal tariffs, rising block tariffs, and peak period seasonal tariffs.

In Bristol, initiatives target customers to use less through water-saving devices and donations to charities promoting water consumption education. SES Water progressed its universal metering program, continued in-home water efficiency assistance, deployed a targeted campaign to gain insights for its 2024 concept, and is designing a water efficiency pilot to provide the best value support to customers.

Pennon Group has established a Water Efficiency program to deliver improvements in all aspects of its direct water use, including a commitment to reducing potable water usage by implementing water reuse and recycling at some major wastewater treatment sites. Through infrastructure investments, customer initiatives, and water reuse and recycling efforts, the Group demonstrates its commitment to water efficiency and conservation, promoting sustainable water use.

Water use monitoring and measurement

The vast majority of water extracted from the environment is for our customers which we define as indirect use. However, to operate the water network and assets, we use water for cleaning and flushing and additionally consume water within our own offices and facilities.

Our water use data can be found within South West Water’s Annual Performance Report or within the Water section of our ESG Databook.

Water stress

Water stress refers to the ability or lack of, to meet the human and ecological demand for water (GRI 2018¹). The ratio of total annual water withdrawal to total available annual renewable water supply (i.e., baseline water stress) is high (40-80%) or extremely high (>80%) (WRI²). According to this definition, none of our abstraction/withdrawal operations operate in water catchments of water stress.

¹GRI 303: WATER AND EFFLUENTS 2018 https://www.globalreporting.org/standards/
²World Resources Institute, Aqueduct Water Risk Atlas, www.wri.org/our-work/project/aqueduct/

Part of the function of a water and sewerage undertaker is to collect and treat wastewater and return it to the environment. Without treatment the wastewater from domestic and residential premises, industrial wastewater discharges to sewers and rainwater contaminated with metals, oils and other pollutants from run-off in urban areas draining to sewers, would have significant adverse impacts on the water environment. Effective treatment also means treated wastewater can be returned to the environment to maintain river flows for conservation, fisheries and recreational interests.

Like all water and wastewater companies, our investment programme and operational practices are required to adhere to strict regulatory controls, as set out by the Environment Agency. To safeguard river, shellfish and bathing water quality we aim to ensure the wastewater we return to the environment is treated to the required standards. All our discharges are permitted by the Environment Agency and it is these permits that set out the required standards and levels of treatment required to protect the environment.

South West Water is the regulator for industrial wastewater discharges to the public sewer. The company conducts careful checks before permitting any release into the sewer, and monitors compliance with those consents. This is designed to protect both our processes and the environment from harm by ensuring levels discharged to the sewer are safe, treatable and do not harm the integrity of the sewer.

Objectives and Targets

Our objectives and targets for effluent management are driven by environmental compliance to ensure the treated wastewater returned to the environment (discharge) meets the environmental standards agreed with our regulator. Our target is 100% compliance.

Our effluent management compliance performance can be found within South West Water's Annual Performance Report.

Initiatives to reduce, reuse or recycle effluents

As part of our newly established Water Efficiency Programme, we are exploring opportunities to recycle effluent within our wastewater treatment processes to reduce the demand for potable water usage.

Investment in effluent management

Since 1989, we have improved over 305 stormwater overflows to bathing waters and 409 to shellfish waters, by adding more than 953,966 cubic metres of additional stormwater storage built at a cost of over £100million. We continue to present our storm information through WaterFit Live launched in March 2023 to cover all our bathing beaches, we are in the final stages of rolling this out across our rivers which will give live updates on all our storm overflows. By 2030, we will have tackled all storm overflows at our bathing beaches, shellfish waters and high-spilling sites given the importance of tourism to our region. We have also invested significantly to install event and duration monitors on our intermittent discharges. In addition, we have recently put forward Green Recovery acceleration plans to the Government and regulators, to increase monitoring of our network and improve management, performance and understanding of storm overflows through investigation and work to reduce storm overflows.

South West Water’s business plan (2020-2025) includes investment to improve its sewerage network and wastewater discharges to the environment, including coastal bathing waters. In addition, South West Water’s Green Recovery Initiative includes proposals to improve inland bathing water quality (i.e. rivers).

Waste is generated by our business as a result of our operational activities, in particular sludge (biosolids) arising from the wastewater treatment process. We also encounter hazardous wastes including laboratory waste, waste from maintenance activities, waste electrical and electronic equipment, and surplus treatment chemicals. More reading on hazardous waste can be found under Hazardous Waste Tab.

We work with our key engineering contractors and partners to responsibly manage onsite environmental impacts and minimise resource use whilst maximising recycling and recovery of waste arisings. Environmental Management plans form part of our Construction Phase Plan supported Site Waste management Plans.

Examples of effective industrial ecology with our contractors includes re-use of construction and demolition waste in new construction projects as illustrated as below;

1. Reducing waste to landfill through innovative foundation design and the designing of prefabricated pipework to minimise cutting and waste on site.
2. Surplus excavated material being used to re-landscape sites, including the utilisation of surplus material in the development of a wildflower meadow.
3. Improving and repairing field access and tracks for landowners after projects have concluded utilising site generated and surplus materials.
4. Surplus concrete was used to construct a bench base for a local parish council
5. Segregation of waste for re-purposing and / or recycling. For example, brick and concrete material can be re-used to construct haul roads and sand from filters is tested and re-used during construction into the permanent works (bedding for ducting etc.)
6. The promotion of “off-site builds” which maximise efficiency whilst reducing waste and reducing health & safety risks.
7. Sustainable procurement, such as the use of Concrete with high GGBS or PFA content (waste product from coal power stations) and the use of recycled aggregates within concrete.
8. Reinforcement and piles containing up to 100% recycled steel content while out ductile iron pipework contains >80% recycled material content

We have been working hard with our waste contractors over recent years to better understand our waste arisings from our engineering and construction activities. Our most recent year’s data can be found in our ESG Databook.

Managing hazardous materials needs to be carried out safely and responsibly. We ensure full compliance with relevant environmental and waste management legislation including Duty of Care at all our operational sites, and we have the same expectation of our suppliers.

Reducing hazardous waste initiatives

South West Water encounters hazardous wastes including surplus or out of specification treatment chemicals, trade effluent, laboratory waste, construction waste, and wastes generated from asset maintenance activities, all of which are safely handled and stored at our operational sites.

South West Water is the regulator for industrial wastewater discharges to the public sewer. We conduct careful checks before permitting any release into the sewer, and monitors compliance with those consents. This is designed to protect both our processes and the environment from harm by ensuring levels discharged to sewer are safe, treatable and do not harm the integrity of the sewer.

We also run behavioural and awareness campaigns with our customers about not putting the wrong things into the sewerage system.  The award-winning Love your Loo and Think Sink campaigns target non-biodegradable materials to help prevent pollution incidents.  We have also supported Water UK in its work with the Government and wet wipe manufacturers to avoid non-degradable and plastic-containing wipes from being marketed and sold as ‘flushable’, and to help get plastic microbeads prohibited from use in cosmetic products.

We are not permitted to accept any hazardous waste via third party tankered waste imports for treatment at wastewater treatment works. Company processes are in place to ensure compliance including pre-acceptance sampling and customer declaration, and data returns demonstrating compliance are made to the Environment Agency in accordance with the Environmental Permitting Regulations.

Hazardous waste reporting

Hazardous waste is collected from our operational sites.  A breakdown of our most recent data is provided below. The waste types include those produced from equipment maintenance activities such as waste mineral oils and oily rags, clinical waste, and used electrical equipment and batteries (WEEE waste). The waste is categorised in accordance with the List of Wastes (England) Regulations 2005 and collected by our approved hazardous waste contractor. It is then sent on for further treatment and/or disposal in accordance with the Hazardous Waste (England and Wales) Regulations 2005.

Group Hazardous Waste generated can be found ^*in our ESG Databook

There are significant areas rich in wildlife and biodiversity across and adjacent to Pennon’s operational sites and projects, including a number protected by law. We are committed to the protection, enhancement and sensitive management and stewardship of our landholdings and to contribute to the same across the landscapes and catchments in our operational areas, for the benefit of biodiversity and wildlife.

Pennon Group has created a Group-wide biodiversity strategy to provide a cohesive approach across the organization and build on existing excellent work within its businesses. The Group is committed to protecting, enhancing, and sensitively managing its landholdings, contributing to the same across landscapes and catchments in operational areas for the benefit of biodiversity and wildlife. Pennon's landholdings and operational areas hold significant biodiversity opportunities for enhancement through responsible stewardship. South West Water actively manages several conservation-designated landholdings through its partnership with South West Lakes Trust and is recognized for its innovative approach to managing invasive species.

South West Water plays a critical role in protecting and enhancing the region's natural environment through its 'source to sea' approach, favouring innovation, sustainable solutions, and partnership working to deliver positive outcomes for ecosystems and habitats. The company works to minimize its carbon footprint, improve raw water quality through its Upstream Thinking  catchment management initiative, and continue improving biodiversity through environmental projects. Since 2010, South West Water has been working with local partners, farmers, and landowners to deliver its award-winning Upstream Thinking program, establishing relationships with key regional delivery partners.

To date, the Upstream Thinking approach has improved land management across 127,000 hectares, outperforming the 123,000-hectare target by March 2025, achieved through initiatives across Exmoor, Dartmoor, and Bodmin Moor. Additionally, South West Water has restored 1,550 hectares of peatland since 2020 and planted over 250,000 trees since 2020, meeting its 2025 target a year early.

Pennon Group demonstrates its commitment to biodiversity and environmental stewardship through its biodiversity strategy, responsible landholding management, 'source to sea' approach, and the multi-award-winning Upstream Thinking program, aiming to improve water quality, biodiversity, climate resilience, and restore natural habitats.