Friday, 18 November 2022 14:55

Blame the boardroom non-exec's for water industry pollution & poor investment, says author

The driving force behind unacceptable sewage spills, water leaks and lack of investment decisions lies with the independent non-executive directors who form the majority on the boards of all existing UK water companies, but fail to hold others to account, claims corporate governance expert and author Gerry Brown.

Brown comments: "There is clearly an issue about the effectiveness of the water company independent directors failing to hold their boards to account. There may have been an awful lot of careful monitoring going on from these independent directors but, sadly, they have had very little impact in curbing the more egregious excesses of their various water company boards."

disaster in the boardroomWater leaks and an epidemic of sewage spills continue to thrust UK Water Companies into wider public scrutiny and negative acclaim as our rivers, seas and water tables suffer substantial but unnecessary pollution levels.

Compounding this failure, nevertheless these independent directors have been been unafraid to nod through handsome senior executive remuneration and bonuses as well as make substantial dividends payments to overseas majority shareholders. Brown notes, "This ongoing tidal wave of excessive water company senior executive reward is founded upon financial results skewed by the ongoing failure to make appropriate investment decisions in pollution control and mitigation or, indeed, investment in new pipes and reservoirs."

Brown also questions why the existing cadre of water and sewer company non-executive directors have been so ineffective in stopping the pollution of our rivers and coastal waters. "Operating within the current loose regulatory regime is genuinely no excuse for the failure of these independent directors to stop sewage pollution on the current industrial scale.

"The fig leaf of strict adherence to all existing laws and scrupulous regulatory box-ticking fails the literal and metaphorical smell test! Especially when it comes to independent and non-executive directors at our water companies robustly fulfilling their wider community responsibilities to mitigate the health, social and financial costs these water and sewer companies are currently imposing on present but also future generations."

Gerry Brown believes that good governance often requires that independent directors believe in their organization and its mission and purpose - so strongly that they are not afraid to criticize it or make recommendations for change. Indeed, many water industry company websites highlight that they encourage internal naysaying and scrutiny from their existing NED and independent director appointees. And yet, water board executives are much more likely to be found on site visits of the facilities, but nowhere near the pipes that discharge their sewage products into our rivers, coastlines and seas.

Brown notes, "The unavoidable conclusion is that the current roster of water company independent directors are little more than a Potemkin exercise of going through the motions when it comes to scrutiny, analysis and guiding board decision-making regarding water pollution. The doubtless sincere but light touch supervision of these people ensures UK society generally – and generations afterwards - can then also literally go through the actual motions too."

(Gerry Brown and Randall S. Peterson are joint authors of the book Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand)