Natural resources

How our natural resources help us to create value

We hold abstraction licences that permit us to utilise the natural environment in the North West to create value for our business. Raw water is collected from our catchment land and stored in our reservoirs, or is taken directly from rivers and boreholes. This key resource is essential in order for us to continue providing water to our customers' taps once we have treated it.

We own over 56,000 hectares of land, much of which is catchment land around our reservoirs. As well as providing a source for raw water collection, the way we manage this land helps to protect and improve the natural environment in the North West, enhancing recreational value for the community and providing economic benefits such as underpinning the region's tourist industry.

Another value-generator can be found in the waste that we collect. Bioresources from wastewater can be processed to generate renewable energy. Our advanced digestion facility at our Davyhulme wastewater treatment works is one of the largest of its type, and we inject biogas from Davyhulme's wastewater treatment into the national gas network. We recycle waste by supplying treated biosolids to agriculture, providing a valuable resource for farmers as high-quality fertiliser.

We have a responsibility to return water to the environment safely after extensive cleaning processes. Spills from our network can lead to pollution which, depending on the severity, can damage the natural environment and potentially lead to loss of reputation and/or financial penalties.

The best service to customers

Providing the best service to customers goes beyond the provision of water and wastewater services and looks at ways we can add further value. We help customers to save money on their bills through our water-saving initiatives, efforts to reduce leakage, and 'what not to flush' campaigns to prevent blockages.

At the lowest sustainable cost

The generation of renewable energy from bioresources helps to save power costs, and we seek to use the lowest cost sources where practicable and innovate to find the most cost-effective methods to treat water and wastewater.

Preparing our network to cope with the extreme weather and potential effects of a changing climate that we are both experiencing and predicting for the future can save repair and recovery costs as well as ensuring a more resilient service for our customers.

In a responsible manner

We continue to invest in the protection and, where appropriate, enhancement of the natural environment of the North West.

See Our stakeholder engagement section for how we are contributing to the UN's Sustainable Development Goal to 'Ensure access to water and sanitation for all'.

Much of our catchment land is open to the public for use and enjoyment by our communities and the tourists that visit our region.

We consider the natural environment in the management, operation and maintenance of our sites, helping to support rare species and habitats. Wildlife is not only protected, but frequently improved, as a result of our interventions.

Our Sustainable Catchment Management Programme (SCaMP) has shown that we can manage our catchment land to protect and enhance water quality and to provide other benefits for the North West, such as an improving biodiversity.

Our approach to integrated catchments looks at working with others to improve the lakes, rivers and coastal waters where we return treated wastewater in the North West.

Rainfall in our region is greater than in other parts of the country, and therefore short, medium and long-term water supply is not as constrained. Nonetheless, it is in everyone's interest to make the most of this precious resource. Reducing demand for water is important, and our efforts to encourage and support water efficiency are increasing. We encourage customers to save water, and are working with external partners to integrate our messaging further afield, as well as working to reduce leakage.

The use of bioresources provides an ongoing opportunity to reduce carbon emissions, helping in the global fight against climate change as well as saving money that can be used to add further value by investing in improving the resilience of our assets and/or by reducing bills for customers.

We can make an important contribution to protecting and enhancing the natural environment by using fewer natural resources and reducing our greenhouse gas emissions.

While providing water and wastewater services to the North West, we produce waste materials such as sludges, excavated materials and general office waste, which we are committed to managing in a sustainable way, with less than five per cent of our waste going to landfill.

We are looking at ways to lessen our use of raw materials to reduce our impact on the environment and make us more efficient, and we use recycled products where practicable.

We are working on plans to substantially increase our renewable energy production across this 2015–20 regulatory period, with the main contributor being solar opportunities. This will provide environmental benefits as well as adding value through energy cost savings.

How we manage our natural resources

Our ISO accredited environment management system covers the whole business and our environmental policy is available on our website at: unitedutilities.com/corporate/responsibility/environment

This policy details our commitments to:

  • Manage water resources sustainably and promote water efficiency;
  • Improve the North West's bathing waters through our work and that of others;
  • Act to prevent pollution from our operations and inform our customers on the responsible disposal of waste to our sewers;
  • Protect and enhance the natural environment and the services it provides;
  • Manage our use of natural resources, reduce waste and put it to valuable uses;
  • Consider the impacts of climate change on the services we deliver and adapt our business accordingly;
  • Reduce our greenhouse gas emissions and generate more renewable energy;
  • Aim to observe legal and regulatory requirements and appropriate industry codes of practice; and
  • Integrate environmentally responsible behaviour into our operations.

Our regulatory framework shapes the way that we manage natural resources as we are governed by environmental regulators.

Protecting and enhancing the environment is one of the promises and key outcomes that we committed to deliver as part of our business plan for the current regulatory period, and features as one of our Business Principles, which can be accessed online at: unitedutilities.com/corporate/about-us/governance/business-principles

We continuously encourage our customers to use water more efficiently and have increased the number of households fitted with meters.

In terms of managing water supply and demand, we already have an integrated supply zone covering the majority of the North West. Generally, this system is proficient in managing demand, but there are extremities that require further improvements to deal with future challenges. Where there is any potential shortfall, we bring more supplies online to meet demand.

We have a regulatory annual leakage target, based on the sustainable economic level of leakage, which is one of our operational KPIs, and we have consistently met or outperformed this target.

As a major owner of woodland we manage our trees in a sustainable way to protect water quality, conservation, access, recreation and timber, and we have been Forest Stewardship Council® (FSC®) certified since 2003.

The sustainable management of surface water is vital in adapting to the predicted increase in more intense rainfall across the region, which is the key risk to our wastewater service.

We are one of many organisations with a role to play in boosting the quality of bathing water on the North West coast. With strict bathing water standards, we continue to work with partners to improve the quality of rivers and coastal waters, and we give the public real-time information on bathing water quality.

The Environment Agency assesses water companies' performance across a basket of measures, such as regulatory compliance, pollution incidents and improvement plans, and its overall assessment is included as one of our operational KPIs.

Our environmental performance is reported within our corporate responsibility pages on our website at: unitedutilities.com/corporate/responsibility/environment/environment-performance and a table of measures important to stakeholders, including those relating to our environmental performance can be found in the Stakeholder report.

Impact of the external environment

We plan far into the future to ensure we are prepared for the changing natural environment, most notably the risks and opportunities presented by climate change.

Climate change is the long-term change in average weather conditions, including temperature, rainfall and wind. It is predicted that our climate will change dramatically and for the North West, this will result in higher daily temperatures in both winter and summer, and a shift in our rainfall from summer to winter.

This will mean there is likely to be:

  • More frequent and/or higher magnitude drought events in summer;
  • More rainfall in the winter; and
  • More occurrences of heavy rainfall.

Climate change has been the subject of strategic concern to us for over two decades. As a water and wastewater utility provider, we have first-hand experience of the impacts of extreme weather events on our operations and our customers, and we recognise our part to play in mitigating climate change.

With severe dry periods becoming increasingly common, we must ensure we continue to have resilient water resources and an infrastructure capable of moving water efficiently around the region.

At other times, we must tackle flooding incidents caused by the intensive bursts of rainfall which are becoming more frequent due to changing weather patterns.

Our response to climate change can be split into two areas:

  • Adaptation – making sure our services are resilient to a changing climate.

The potential effect of climate change on our future water resources is included in our 25-year Water Resources Management Plan, and we have published two adaptation reports, in 2011 and 2015, outlining our holistic, integrated and partnership approach to a range of short, medium and long-term challenges including climate change.

  • Mitigation – reducing the carbon emissions associated with our services, especially through our energy strategy.

The key factor in climate change is an increase in greenhouse gases. There is global scientific agreement that as a result of human activity the amount of greenhouse gases in the atmosphere is increasing and affecting the global climate. Therefore, minimising the greenhouse gases emitted as a result of our operations will mitigate climate change.

We have been driving down our carbon footprint over the last decade (a reduction of one-third since 2005/06) and have plans to reduce it further.

More information on our approach to all of these impacts and our environmental performance can be found on our website at: unitedutilities.com/corporate/responsibility/environment/environment-performance

For information on principal risks and uncertainties in this area, see 'Health safety and environmental risk', 'Water service risk' and 'Wastewater service risk'.

Pictured: Crummock Water in the Lake District

People

How our people help us to create value

Our employees play a critical role in increasing long-term value generation. Fundamental to the decisions we take, and the operational performance we deliver, is a skilled, engaged and motivated team.

Our suppliers and contractors provide us with essential services that we rely on to deliver our strategy. Our suppliers are contributing significantly towards the around £9 billion forecast contribution we are making to the regional economy over the 2015–20 period.

The best service to customers

Our people, both our employees and our supply chain, act as the face of our business for our customers, and therefore are a crucial part of delivering the best service to customers across our entire business.

At the lowest sustainable cost

Independent studies have shown that competitive wages, benefits and long-term incentives enhance the quality of work, increase employee retention and reduce absenteeism, as well as providing societal benefits, which helps to ensure efficient costs in relation to salaries and training. Comprehensive training and development opportunities for our employees help to improve our internal skills-base and therefore quality of work at an efficient cost, as well as creating a more engaged workforce.

In a responsible manner

We are supporting thousands of jobs in the North West. We have been named as one of the top 100 apprenticeship employers and have a growing graduate programme, helping to secure a legacy for the future in our region.

We work with our supply chain partners to give young people not in education, employment or training (NEETs) the chance to gain hands-on experience and basic skills training in a real workplace environment, bringing social and economic benefit to the region.

We are committed to promoting a safe, happy and diverse workforce and we maintain a comprehensive suite of policies, from 'Agency worker' to 'Working time' which are available to all employees on our intranet.

See Our stakeholder engagement for how we are contributing to the UN's Sustainable Development Goal to 'Promote just, peaceful and inclusive societies and institutions'.

How we manage our people

Our employees are paid a competitive base salary along with a benefits offering and the opportunity to join both the employee healthcare scheme and our share incentive plan. We measure employee engagement each year through our Employee Voice survey and achieved 79 per cent in the latest survey, which is higher than the UK norm. Management has a range of incentives which focus on performance over a number of years, rather than just the current year, to encourage the delivery of benefits over the longer-term.

We place a strong emphasis on providing comprehensive training and development opportunities for our employees. We strive to enhance our understanding of best business practices in other companies and sectors around the world and, by bringing this learning back to our business, we have increased our organisational knowledge and capability. This has been integral to developing our Systems Thinking approach to operating our business.

The health and safety of our employees is fundamental, both for their welfare and to the reputation and performance of our company. This continues to be a significant area of focus as we strive for continuous improvement. We have implemented a number of initiatives over recent years to improve health and safety conditions for our employees, and have been awarded the Workplace Wellbeing Charter.

We value diversity, providing equal opportunity and recruiting and promoting employees on the basis of merit, which we believe drives a more comprehensive and balanced skill set. Despite being a highly engineering-based organisation, women are represented at all levels of our company. Over a third of our combined board and executive team is female. See chart below.

Gender diversity across our business


Male

No.

%

Group board

7

70

Executive team*

2

50

Senior managers

37

84

Wider employees

3,416

64

Female

3

2

7

1,914

30

50

16

36

* Excludes CEO, CFO and COO, who are included in UUG board figures


As at 31 March 2018, there were 14 male (82 per cent) and 3 female (18 per cent) employees who were appointed as statutory directors of subsidiary group companies but who do not fulfil the Companies Act 2006 definition of 'senior managers'.

Over the last few years, we have been striving to improve diversity at all levels and across all types of roles within our business, including establishing our Gender Equality Network in 2015 to provide role models, mentoring and opportunities, and targeting diverse shortlists and attraction campaigns for our apprentice and graduate schemes.

Our policies on maternity, paternity, adoption, personal and special leave go beyond the minimum required by law. For disabled applicants, and existing employees, we are committed to fulfilling our obligations in accordance with the relevant legislation. Applicants with disabilities are given equal consideration in the application process, and disabled colleagues have equipment and working practices modified for them, as far as possible, where it is safe and practical to do so.

Our Human Rights policy demonstrates our commitment to protecting the human rights of our employees and supply chain. We convened a cross-company working group to draft the policy statement, and identify and assess human rights risks and potential impacts on our employees, customers, suppliers and communities. This group identified our salient human rights issues as access to clean water, data protection and privacy, health and safety, and modern slavery.

We work with suppliers and contractors whose business principles, conduct and standards align with our own. Our key suppliers have committed to our Sustainable Supply Chain Charter. We support the appointment of a small business commissioner to investigate companies who do not treat suppliers fairly, are a signatory to the Prompt Payment Code, and will fully comply with rules on reporting payments to suppliers.

Impact of the external environment

The availability of skilled engineers is dependent on economic and social conditions and preferences. Our award-winning apprentice scheme, coupled with our graduate recruitment programme, is helping to ensure we can continue to attract and train a high calibre of engineers, in a profession which has seen declining numbers in the UK in recent years.

For information on principal risks and uncertainties in this area, see 'Health safety and environmental risk' and 'Resource risk'. To date, we have not identified any human rights abuses within our own operations nor our supply chain and so no remediation actions have been required. We have mapped our human rights risks against our corporate risk register and manage them within this framework. Our supply chain modern slavery risk management plan is detailed in our Slavery and Human Trafficking Statement.

Assets

How our assets help us to create value

Many of our assets are long-term in nature, for example our impounding reservoirs have a useful economic life of around 200 years. We earn a return, received through revenues, based on a regulatory measure of the value of our capital asset base, Regulatory Capital Value (RCV). This mechanism allows us to share the cost of building these long-term assets between the generations that will benefit from the use of those assets.

Our RCV is currently just over £11 billion, however the gross replacement cost of our fixed assets (including all our reservoirs, treatment works and pipes), i.e. the estimated amount it would cost for another company to build similar assets and networks, is around £90 billion. We expect to invest around £3.8 billion across 2015–20 and to continue with a substantial investment programme for the foreseeable future in order to meet more stringent environmental standards and to maintain and improve the current standards of our assets and services.

We manage our assets in a holistic way that seeks to minimise whole-life costs, which helps us to deliver efficient totex against our regulatory allowance.

The best service to customers

Since privatisation in 1989, total capital investment of over £15 billion has provided substantial benefits to our customers, including reduced supply interruptions and improved water quality.

At the lowest sustainable cost

By carefully reviewing our potential capital projects, and considering the most efficient long-term solutions in terms of the lowest whole-life cost, we can save future operating costs, help to reduce future customer bills, and work towards being able to operate in a more sustainable manner. Disciplined investment, along with RPI inflation, also grows our RCV, increasing future revenues.

In a responsible manner

Effective capital investment helps us to meet increasingly stringent environmental standards, which helps to improve the region's environment and protect indigenous wildlife, as well as contributing to the North West's economy through job creation, both within our company and through our supply chain.

How we manage our assets

When deciding on our investment strategy we need to be mindful of the impact on our customers' bills and this is why, for example, we are spreading some of the environmental spend required by European legislation over the next 15 years.

It is important that we have the right systems and procedures in place in order to monitor and control the assets efficiently and effectively within our network. Embracing innovation in our asset configuration and work processes can help to make our future service better, faster and cheaper.

See Our stakeholder engagement section for how we are contributing to the UN's Sustainable Development Goal to 'Build resilient infrastructure, promote sustainable industrialisation and foster innovation'.

We are committed to managing and operating our water, wastewater and energy assets to ensure we continue to provide a water and wastewater service that helps life flow smoothly for our customers, regulators and other stakeholders.

We have an asset management policy that is available to all employees on our intranet that details how we will operate, maintain and invest in our assets with the aim of delivering our customer promises and their associated outcomes, as agreed at the price review for the current regulatory period.

Impact of the external environment

We anticipate an increase in the North West's population of around 900,000 by 2045 (more than the population of a large city such as Liverpool).

We are planning to ensure that our services and supporting infrastructure are able to meet the needs of this growing population, which is also expected to include a higher proportion of older people. We must ensure we are able to meet increased demand on both our water and wastewater networks as the regional population is expected to increase.

We must build increased resilience into all of our assets in order to cope with the anticipated impacts of a changing climate. Our assets must be prepared to meet the changing and increasingly challenging environmental constraints that we have to comply with in regard to areas such as water abstraction (for example our West Cumbria pipeline project), increasingly stringent wastewater treatment levels, and improvements to flood defences as a result of increasing extreme weather conditions.

There is need for a careful balance between preparing for future challenges and maintaining affordable bills by phasing the work and cost. We must strike a balance between the various interests of customers and our many regulators, as well as political and societal interest.

A phased, long-term approach to address all of these concerns ensures that the necessary work can be delivered without placing too much pressure on customer bills.

Technology and innovation presents an opportunity; for example the new wastewater treatment process, Nereda, has transformed this area, our use of robots in managing the water network has driven greater efficiency and improved customer service, and we are using drones to inspect assets with restricted access to improve health and safety as well as reduce time and costs.

We have been utilising technology within our energy self-generation, for example our Davyhulme sludge recycling centre employs a groundbreaking configuration of thermal hydrolysis to maximise energy generation from sludge; and we built Europe's largest floating solar array system on our reservoir in Godley, Greater Manchester.

Advances in technology can be used to help deliver improvements in the quality and/or cost of our service. Embracing innovation, using modern technology or techniques, is at the heart of how we do business. Our Systems Thinking approach to operating our network is a key example of this.

Technological advances can give rise to greater risks as well as presenting opportunities. Cybercrime has been on the increase in recent years and, as the holder of customer information, is a threat we take very seriously.

Financing

How our financing helps us to create value

We aim to maintain a robust and sustainable capital structure, balancing both equity and debt, to achieve a strong investment grade credit rating, thus enabling efficient access to the debt capital markets across the economic cycle.

We adopt a prudent approach to managing financial risks, which helps to ensure financial resilience in the long-term. We have a long track record of aligning our financial risk management with the regulatory model through inflation and interest rate management policies, which helps us manage uncertainty in volatile market conditions and when faced with changes in Ofwat's approach to setting the cost of debt at each price review.

The best service to customers

Customers benefit from reductions to bills and lower finance costs contribute to our ability to deliver this.

Customers also appreciate receiving the benefit of service improvements earlier rather than later, and the ability to efficiently finance our business helps enable us to deliver this.

At the lowest sustainable cost

Locking in long-term debt and swaps at good relative value can help keep our finance costs low and provides the potential to outperform the industry-allowed cost of debt.

The long-term average life of our debt portfolio, our strong and stable investment grade credit rating, robust hedging policies, and maintaining access to a broad range of sources of finance, all help to ensure that our ability to efficiently finance our business is sustainable, and to reduce our exposure to the risk of fluctuating market conditions and changes in the regulatory environment.

In a responsible manner

As a FTSE 100 listed company, we have open and transparent reporting around all of our equity and debt financing arrangements.

We do not utilise offshore financing vehicles, and we maintain an appropriate level of gearing, measured as net debt to Regulatory Capital Value (RCV), broadly in line with regulatory assumptions, which supports a robust and sustainable capital structure.

How we manage our financing

We have proactive programmes of engagement with equity and credit investors, which allows us to hear their views, which we then consider in our strategic planning, and also to update them on developments in our business.

As part of our planning process, we review key credit ratios to ensure these meet required thresholds in order to satisfy the board's ratings targets. Performance against business plan credit ratios is regularly monitored, and we maintain close contact with the credit rating agencies to understand the methodology and any changes. Gearing is maintained within our target range of 55 per cent to 65 per cent, which broadly mirrors regulatory assumptions.

Issuing new debt is important as our capital investment is largely financed through a mix of debt and cash generated from our operations. We maintain access to a broad and diverse range of sources of finance, in a number of markets, across which we seek best relative value when issuing new debt. We manage relationships with a diverse range of banks, and we refresh our European Medium Term Note (EMTN) Programme annually to allow for efficient issuing of debt under pre-agreed contractual terms.

We aim to avoid a concentration of refinancing in any one year, and tend to fund long-term where possible, with the average life of our term debt being just under 20 years. We regularly review liquidity forecasts against our policy of having available resources to cover the next 15–24 months of projected cash flows. This helps ensure forward funding requirements are met.

We have clearly articulated financial risk management policies, covering credit, liquidity, interest rate, and currency risk, and we responded proactively to Ofwat's intention to transition from RPI to CPIH inflation and to index the portion of new debt in calculating the cost of debt in the next regulatory period.

We have conducted an extensive review of our inflation and interest rate hedging policies and amended these to align with the new regulatory model and continue to maintain the most appropriate financial risk management. We will no longer substantively fix all of our nominal debt at the start of each regulatory period, but maintain a rolling 10-year fixing profile on nominal debt to mirror Ofwat's assumed 70 per cent embedded and 30 per cent new debt split (with debt indexation on the new debt portion). We aim to retain around half of our net debt in index-linked form (where it is economic to do so), by issuing index-linked debt and/or swapping a portion of nominal debt. This is expected to remain mostly in RPI-linked form until CPI/CPIH debt and swaps become available in sufficient size at an economic cost.

We are the sector leader in CPI inflation-linked financing, having issued the first ever CPI-linked notes by a UK utility, and we have continued to build the CPI-linkage in our debt portfolio where good relative value opportunities can be found.

Impact of the external environment

Changes in economic conditions and financial markets, such as inflation and interest rates, can influence our ability to create value through financing. While these are outside of our direct control, we can mitigate some of the potential adverse impacts associated with market movements, such as on inflation and interest rates, through our financial hedging strategies. In this way we can create value by reducing the risks to which we are exposed.

Interest rates have remained below the long-term trend and we have benefited from this as we drew down, or raised, over £600 million of new debt in 2017/18. Comparatively low interest rates have been beneficial to our future cost of debt as we continue with our nominal interest rate hedging strategy.

RPI inflation has continued to rise during 2017/18, briefly reaching levels as high as 4.1 per cent, but returning to 3.3 per cent at March 2018, compared with 3.1 per cent at March 2017. However, it has been lower over recent years than levels it has reached in the last 10 years. The prices we charge our customers (which drive our revenue) and our Regulatory Capital Valu (RCV) are linked to RPI inflation for the current regulatory period, therefore lower RPI over recent years has meant slightly lower growth on these measures. However, as a result of our large quantity of index-linked debt, our finance costs decrease as inflation falls, providing a partial economic offset to revenue.

Our pension liabilities are linked to RPI inflation, and have been hedged by a combination of a market hedge and the inflation funding mechanism (IFM), whereby company contributions are flexed for movements in RPI. We expect the schemes to increase the market hedge for inflation in line with a progressive de-risking strategy, with a corresponding reduction in the IFM.

Market sentiment can also have an impact on our financing. While much of this can be outside of our direct control, there are ways in which we are able to help inform and influence public opinion.

Governance

Good governance lies at the heart of all successful organisations. We firmly believe that it leads to better management decisions as well as helping to avoid exposure to potential risks and improving corporate resilience.

We strive to operate in a manner that reflects the highest standards of corporate governance, accountability and transparency. Our company structure and governance standards are designed to ensure that our board continues to observe sound and prudent governance in compliance with the principles of the UK Corporate Governance Code. Our audit committee has oversight of the policies and procedures in relation to anti-bribery and fraud.

We have an anti-bribery policy that all our employees must follow, and processes in place to monitor compliance with the policy. This policy is available to view online at unitedutilities.com/corporate/about-us/governance

We also operate an independently provided, confidential reporting telephone helpline and web portal for employees to raise matters of concern in relation to fraud, dishonesty, corruption, theft, security and bribery, and all claims are fully investigated.

Our employees and representatives of our suppliers must also comply with our sustainable supply chain charter, which explains that we will not tolerate corruption, bribery and anti-competitive actions and we expect our suppliers to comply with applicable laws and regulations and in particular never to offer or accept any undue payment or other consideration, directly or indirectly, for the purposes of inducing any person or entity to act contrary to their prescribed duties.

Prudent risk management

As you would expect of the provider of an essential service, we adopt a prudent approach to managing risks to our business. That being said, accepting some level of risk is a normal consequence for a commercial organisation being run in a cost-effective way.

Given the complex legal and regulatory environment within which we operate, we are exposed to a range of risks.

An important risk to our business is ensuring that we get the constituent elements of our five-yearly business plans correct to ensure our financeability, as well as the outcomes we will deliver for customers, and that we provide sufficient information to Ofwat to ensure we receive a final determination that covers these, as we are bound by these plans for the following five-year period with limited opportunity to change them. Failure to meet the terms of our current 2015–20 regulatory contract is a risk.

We face risks in relation to potential future changes in legislation or regulation. This includes the anticipated changes for the 2020–25 regulatory period, as outlined in Our marketplace, and increased political scrutiny with discussion of the potential Renationalisation of the water industry, as well as potential changes further into the future.

We also face risks such as possible non-compliance with existing laws or regulations, and from environmental impacts such as climate change.

Values and culture

We are committed to delivering our services in a responsible way and our approach to responsible business practice is outlined in our Business Principles document, which is available on our website at: unitedutilities.com/corporate/about-us/governance/business-principles. More information on the board's approach to values and culture can be found in the Corporate governance report. Also see Our stakeholder engagement for how we are contributing to the UN's Sustainable Development Goal to 'Promote just, peaceful and inclusive societies and institutions'.

Our culture is embodied in our three core values of customer focus, integrity and innovation, and we operate with these at all levels of our business. These core values are interrelated – innovating to improve our services and acting with integrity in the way we conduct our activities helps us to continually improve customer service.

Customer focus

We have instilled a customer-centric approach right across our organisation, and this evolving culture has been a key driver of the major improvements in customer service we have been able to deliver.

Putting customers at the heart of what we do has also helped deliver benefits for shareholders and wider stakeholders.

Integrity

Acting with integrity, both at board level and as a company, underpins our approach to responsible business and building trust.

We actively encourage our employees to express their opinions and ideas through various engagement and social channels, such as our annual 'Employee Voice' survey, through news articles on our intranet, and on our social media collaboration tool 'Yammer'.

Innovation

Innovation is a critical enabler in creating value, helping us to be ahead of our competitors, and we welcome ideas on how we can innovate across all levels of our business and from wider industries across the world.

Our employees are given the opportunity to develop and present their ideas to senior management, facilitating and encouraging an innovative environment. Utilising innovation from our suppliers is part of our supply chain approach, which provides another avenue to benefit from new ideas and technologies.

The business insight Innovation across our entire business demonstrates a few of the ways that we innovate across the business.