ESG Enforcement Tracker

Key facts:

Following an investigation into its compliance with water treatment laws by Ofwat, SWW has proposed a £24 million “enforcement package” aimed at improving its sewage management. According to Ofwat, the proposal is both sufficient to secure SWW’s compliance with its legal obligations, and appropriate to accept in lieu of a financial penalty of £19 million (6.5% of SWW’s relevant turnover).

In its “minded-to decision”, Ofwat concluded that SWW was in breach of its licence, as well as the Urban Waste Water Treatment (England and Wales) Regulations 1994 and the Water Industry Act 1991. Ofwat considered that SWW had failed, in particular, to:

• Operate, maintain, and upgrade its wastewater assets;
  Provide drainage and deal with the contents of its sewers;
• Put in place adequate processes to identify and address compliance risks;
• Ensure that its data gathering and analysis were fit for purpose; and
• Ensure that its Executive Board received sufficient information on the company’s operational performance.

In response to that minded-to decision, SWW proposed undertakings under section 19 of the Water Industry Act 1991. The proposal relates to a £24 million “redress package” which will be “entirely funded by the company and its shareholders rather than customers”, and is comprised of:

• £20 million to reduce discharges at key overflows, in particular in sensitive and community areas;
• • £2 million for the creation of a fund to tackle sewer misuse and misconnections, which will support plumbing repairs, community outreach, education, surveys, enforcement, and technology to improve detection; and
• £2 million for the creation of a “Nature Recovery Fund”, which is aimed at supporting biodiversity projects, river quality work, and local initiatives such as rainwater storage, tree planting, and pond creation.

The delivery of the undertakings will be monitored by Ofwat, and are enforceable by Ofwat under section 18 of the Water Industry Act 1991. While Ofwat has proposed to accept SWW’s undertakings, a public consultation on that decision is open to representations until 3 August 2025.