Published as a LinkedIn article 15 Feb 2023

Thanks in no small part to Feargal Sharkey’s brilliant and relentless campaigning, we are all now fully aware that Britain’s waterways are in a dire state due to the fact that untold megalitres of raw sewage are being dumped into our rivers and seas hundreds of thousands of times every year. The Environment Agency reports that storm overflows discharged untreated sewage 372,533 times over a period of 2.7 million hours in 2021 alone.

Which is all quite legal thanks to the fact that the current British government simply doesn’t seem to care. (And for the odd time that it isn’t legal, it may as well be as the fines are frankly derisory.) Its recent ‘Storm Overflows Discharges Reduction Plan’ is so soft that it effectively gives the industry a greenlight to continue this revolting practice until 2035 at least – and when doorstopped recently on the issue, Rishi Sunak commented that he had little appetite to increase the fines to a level that would be genuinely punitive. Meanwhile, the Environment Agency has declared that by 2027 only 6% of our waterways may be considered healthy to swim in.

It is frankly disgusting.

Several newspapers from The New Statesman to The Express and The Times have now reacted with appropriate horror and are using their full voice to campaign for change. They have the water company executives firmly in their sights. For good reason: these company officers are indeed responsible and should be held to account – personally.

But there is a group that may be far more culpable: the shareholders. After all, the well-paid executives don’t own their companies. They are managers, hired by the company owners to do their bidding. Surely it is the shareholders that we should be forcing to clean up their mess and to stop destroying Britain’s waterways. After all, shareholders in the big nine water UK companies receive over a billion pounds in dividends every year. Between 2007 and 2018, almost all of the water companies’ profits were paid out in dividends – when some of it could have gone to investing in solutions to this revolting problem.

So, who are these shareholders? Well a quick look at some of the main share registers reveals that a significant proportion of them are overseas pension funds and sovereign wealth funds:

Canadian public sector pension funds (Ontario Municipal Employees Retirement System (OMERS) and British Columbia Investment Management Corporation (BCI) combined own c40% of Thames Water and Canada’s largest public pension fund, CPPIB (CPP Investments), owns a third of Anglian Water. Thames Water pumped raw sewage into our waters 14,713 times during 2021, according to an article in The Times by Adam Vaughan. Anglian Water dumped shite into our waters 21,351 times that year.

Australian pension and investment funds own more than a third of Anglian.

Sovereign Wealth Funds also make up a sizeable chunk of investors. The Abu Dhabi Investment Authority (ADIA) owns almost 10% of Thames Water and 16.7% of Anglian. China’s CIC owns 8.7% of Thames Water, The Queensland Government’s QIC owns 5.4%, The Qatar Investment Authority owns almost 5% of Severn Trent and Norway’s massive sovereign fund Norges Bank Investment Management close to 3% of United Utilities.

CK Hutchison Holdings Ltd, a company registered in the Cayman Islands and listed on the Hong Kong Stock Exchange, owns both Northumbrian Water and Essex & Suffolk Water. (They also own Greene King pubs.) And they dumped raw sewage into our water 36,483 times in 2021.

Which begs the question:

Why are the Canadians, Australians, Emiratis, Chinese, Qataris and Norwegians dumping raw sewage into our waterways?!

But they aren’t the only ones who are sitting back, taking the cash and allowing this to happen. We are too …

Through investment managers including BlackRock, Vanguard, Lazard, Legal & General Investment Management (LGIM), Hargreaves Lansdown and a host of our own pension funds such as the Greater Manchester Pension Fund , the London Pensions Fund Authority (LPFA), Lancashire County Pension Fund, Merseyside Pension Fund, West Yorkshire Pension Fund, the BT Pension Scheme Management who invest ditectly into water companies, and countless others who invest in them indirectly – we too may be complicit in the parlous state of our water.

For if you invest in the FTSE, you invest in Severn Trent, which dumped raw sewage into our waters 59,684 times in 2021 alone. And pretty much every single UK investor, employee and pension-holder invests in the FTSE.

But is it fair to blame individual investors? I mean, if we invest in the FTSE, we also invest in tobacco companies whose products kill more than 6 million people a year. We invest in arms manufacturers. We invest in gambling companies. Many/most workplace pension investors would be blissfully unaware of any of this. But they do care about the quality of their waterways.

So, what can we do?

The power, and therefore the lion’s share of the responsibility, lies with the big institutional investors – for surely this power comes with obligations as well as rights. Obligations to the society in which they operate, not just to their/our back pockets. This utopian concept is called responsible capitalism and we need to start living it. The executives of the big pension funds, fund managers and Sovereign Wealth Funds traverse the world attending conferences on Responsible Investing and ESG (and they are great events – I have spoken at several of them) … while overseeing the dumping of raw sewage into Britain’s waters.

If you work for an overseas investment company or pension fund – change! Imagine the furore that would ensue if you were dumping raw sewage into Lake Ontario, Sydney Harbour, the Brisbane River, Hong Kong Harbour or off the Corniche in Abu Dhabi or Doha … so stop doing it in Britain! Yes, it will require investment and a reduction in dividends, but don’t wait for the British Government to finally force your hand. Get ahead of the game. For no other reason that it is the right thing to do.

If you work for a UK pension fund – it’s the same deal. If you are investing in water companies, don’t you have a responsibility to force the executives you have effectively hired to stop this abhorrent practice? After all, it is your own water you are poisoning!

If you are a fund manager based in the UK like BlackRock or Vanguard – speak up! Your trillions under management gives you power. Use it.

Perhaps it is time that every single major investor in UK water companies is held responsible for what their companies are doing to Britain’s waterways.

If you are an individual investor in any of these companies – yes, you don’t have anywhere near as much power as the big boys but you could write to the water companies, lobby your employer’s pension manager demanding action – or tell them you want your money invested elsewhere.

And if you are a member of the UK government – for goodness’ sake, step up! You have a crucial role to play in this. Get serious about it. Care. Force the water companies to be responsible corporate citizens by forcing them to invest in solutions that will stop this abhorrent practice. Increase fines to meaningful levels – tens or even hundreds of millions. Fines of a size that will make it worth their while to invest in solutions to this problem.

And maybe even pass a law that holds major shareholders to account – for, arguably, they are even more responsible for poisoning our waterways than the executives who report to them.

Campbell Macpherson