Loving Every Drop
Anglian Water is a regulated provider of water and wastewater services to more than 6m domestic and business customers. It supplies over 1bn litres of drinking water daily through over 38,000 kilometres of water mains. It collects and treats over 900m litres of wastewater a day and returns it to the environment via rivers and coastal outlets. Organic waste is treated and used in agriculture.
The aim was to combine two objectives: to satisfy the regulatory requirements placed upon a water company and to keep the business sustainable in the long-term. By the very nature of the business, Anglian Water has always had environmental management at its core. The organisation’s strategy, Love Every Drop, has gone beyond that to fully recognise the importance of the relationship between society, the environment and finance. This means that big challenges like climate change are being tackled alongside the business’s growth and prosperity. It is about ensuring that the company manages the key elements of the day-to-day business and long-term planning in ways that are sustainable.
‘We wanted to set up a new way of working,’ says Scott Longhurst, Managing Director Finance and Non-Regulated Business. ‘Our regulatory agreement lasts five years so we work in five-year cycles’. Currently the company is in the midst of its 2010–2015 period. ‘It is all about changing the way we work by looking at our environmental and social impacts to develop a sustainable business that produces financial results now and looking ahead 25 years in the future.’
A key aim of Love Every Drop is to help change views on water including its value and how it should be used. It was important to collaborate and engage with customers, colleagues, business partners and communities. ‘We have some aspirational long-term goals so there is a need to set the rungs on the ladder’, says Longhurst. ‘We set 10 business goals backed up by over 100 commitments and measures with very specific objectives. This was about integrating the goals into the core of the business, making sure they were measurable and had the right financial disciplines applied to them’. The emphasis was on making it real. ‘It was not just a bunch of good ideas’, says Longhurst. ‘It was going to be integrated into the business with clear targets’.
"Since 2010, we have reduced embodied carbon by 39% and reduced costs in delivering these projects by 17%"
There was also a geographical, climatic and demographic dilemma; they are based in East Anglia. ‘We operate in the driest and flattest part of the UK, but it’s also one of the fastest growing regions’, says Longhurst. Balancing that means sustainability has to be the name of the game. There are two strands here. ‘We are concerned about being a high construction industry with all the climate change implications of embodied carbon’, he says, ‘and we are concerned about the sustainability of water consumption’. This involves a programme of educating customers and getting the company’s own house in order by cutting down on leakage. Reducing pollution by avoiding sewer blockages and managing waste by reusing and recycling are also key strands to the sustainability strategy.
Anglian Water also recognised the difficulties of bringing about cultural change. ‘There is a challenge when you start’, says Longhurst. ‘It is all very well to say “Love Every Drop”, but you need to ensure that the messages are driven from the top’.
Finance Function Leadership
‘What was different’, says Longhurst ‘was the continuous reinforcement of the idea throughout the company. And it was critical at board level to have finance at the heart of it. Measurement of our progress against targets really engaged the Board’, he said.
The idea was firmly grounded in creating a smarter business allied with responsible stewardship of financial resources. The handling of the challenge of infrastructure is a good example of how this was put into practice. ‘We spend around £500m every year on maintaining and improving our infrastructure’, says Longhurst. ‘And that means a huge amount of embodied carbon, in concrete for example’. The company set out to halve that by 2015. ‘We had no idea how to do it’, says Longhurst. ‘The finance side of the business was critical to achieving it. And we had also set a target of saving 15% on costs. People said it couldn’t be done. It was the financial discipline and monitoring that gave it credibility’.
"Big scary targets drive change. If people are faced with delivering 50% reductions then they start thinking differently."
They sought the help of their suppliers and contractors for ideas, recognising the need to work together. Longhurst cites the example of a new water treatment tank Anglian Water built in 2010. ‘Traditionally you dig a big hole, create a concrete box and store your water in it’, he says. ‘But one contractor suggested using structured wall plastic instead because, although plastic has more embodied carbon than concrete weight for weight, the amount of plastic needed would be much less. This meant a 39% reduction in carbon, but Anglian Water wanted to achieve a 50% reduction so took the thought process further.
The plastic tank would normally require bedding material for support and, as there was quite a lot of embodied carbon in this bedding material, it was logical to look at this next. A supply chain partner came up with the idea that the bedding material could be eliminated if the tank was placed in a hole that matched its curved shape; the ground would then support the tank directly. In order to accomplish this, the digger buckets being used were redesigned with a semi-circular shape rather than the traditional rectangular shape’, Collaboration and lateral thinking gave them their solution.
‘By this process’, says Longhurst, ‘we delivered a 50% reduction in embodied carbon and around a 38% reduction in cost. It was a great example of using process to come up with a complete solution that we can then use elsewhere. By combining financial discipline with a sustainability initiative we produced a fantastic result. And the Board is very happy’. All of the disparate objectives are achieved.
‘Overall, since 2010, we have reduced embodied carbon by 39% and reduced costs in delivering these projects by 17%’, says Longhurst. ‘Now we are well on our way to the target of 50% by 2015’, he says. ‘We would be very disappointed if we didn’t beat it’.
Positive Long-Term Impact
Long-term sustainable change is at the heart of the company’s efforts. ‘East Anglia is the driest region in the country, but also the one with the highest growth’, says Longhurst.
‘We do need to manage our resources very carefully’. The overall strategy includes a number of smaller, more targeted initiatives that aim to change long-term behaviours. ‘We run a “Drop 20” campaign to try to get all customers to use 20 litres a day less. Currently they use 145 litres on average every day. And then customers, understandably, say “What about your own leakages?” So the company has invested in proactive leakage control and reactive repair work so less time is taken to detect leaks and repair them when they are found. ‘This year’, says Longhurst, ‘we have our lowest leakage ever and that runs at half the national average. You need to have that legitimacy in the eyes of the customers’. And, with legitimacy, you can change behaviours and effect long-term change. ‘We are investing a huge amount in education through schools, for example’, says Longhurst. ‘That way you can change behaviours for life’.
Lessons From the Case Study
Anglian Water can identify many lessons from their experience. ‘It is really important’, says Longhurst, ‘to integrate this at the heart of the business. It will not work as an add-on’.
Rigorous measurement is essential. ‘You must have specific, measurable objectives, both non-financial and financial’, says Longhurst. ‘By doing that and continually reinforcing it, it demonstrates to the business and employees that we are really serious about it’.
It has to be run from the top of the business. ‘Getting the Board’s commitment is crucial’, says Longhurst. ‘Once you demonstrate measurability and monitor results you can get their buy-in’. Work incrementally. ‘Pick one initiative to start with’, says Longhurst. ‘Show that it works, and then the Board will give you more backing’.
This also gives you the strength to move onto longer term goals. ‘Earn the credibility’, says Longhurst, ‘then you can develop much longer term initiatives’.
And don’t lack ambition. ‘Big scary targets drive change’, says Andy Brown, Head of Sustainability. ‘If people are faced with delivering 50% reductions then they start thinking differently. It drives transformation rather than just incremental change’.
And finally, says Longhurst: ‘You need the diligence and discipline of the finance department’.