Our Contribution to Yorkshire A review of our impact and public value February 2021 We’re proud to play Headline findings water’s role in making

Yorkshire a brilliant We make a strong and growing 1. net-positive contribution to society place to be - This is the headline finding of our latest six capitals assessment of our impact and value, with the results and methodology shared in this and supporting reports. The assessment shows we are better protecting now and always public health and the environment but further change is critical to secure the long term affordability and resilience of communities This is our purpose and essential water and wastewater services. This is now even more important because of the impact of the pandemic on Yorkshire communities, and we are well placed to support the economic recovery. We are working and collaborating to grow the benefits we deliver for Yorkshire and further reduce areas of negative impact.

The six capitals are helping to deliver 2. real benefits We are applying the concept of the six capitals to provide a broad view of our performance, the risks to our services and the value we create for customers, investors and other stakeholders. We are using this fresh insight to shape our current approach and future strategy to ensure our services are resilient and efficient. We are committed to much more, but our work has already helped us to improve our governance, reporting, and focus on environmental and social issues. For example, we have reduced our carbon footprint, improved how we manage land, and we are supporting vulnerable customers more than ever before. This runs to the heart of our purpose and demonstrates the practical difference we can make for Yorkshire.

We’ve improved our approach in our 3. latest work What are the six capitals? We are using the latest and best available data and economic The capitals represent the essential resources on which we techniques to quantify our impact and value, sharing openly our all rely and impact, both positively and negatively. methodology and the maturity of different aspects. We’ve extended our previous work to show trends over the five years to March 2020. We’ve also added new and more accurate indicators in many areas, for example, using the new national “biodiversity metric 2.0”. Our approach Financial Manufactured Natural Human Intellectual Social highlights opportunities to enhance our impact and value, and the capital capital capital capital capital capital inherent trade-offs that need to be considered when making decisions. This work is helping to shape our strategic direction and operational Read more on page 6 and 16. and investment choices by providing fresh insight for us, our customers and stakeholders. About this report Contents

Introduction:

Yorkshire Water delivers water, sewerage and environmental services to over 5 million 1 Guide to this report 6 people and 130,000 businesses. We are passionate about delivering great value, both in the quality of our services and through the choices we make to maximise our wider social 2 Foreword 8 impact. For example, we pay the Living Wage and use only green energy because of the benefits this brings. 3 What others think about our approach 9 This is the main report in a suite of publications sharing the findings and methodology of our latest work applying the six capitals. We call this Our Contribution to Yorkshire. This is 4 About Yorkshire Water 10 the second Our Contribution report and we will be publishing them annually in the future to help you monitor and challenge us. As well as exploring the numeric findings of our latest six capitals analysis, our most comprehensive yet, we also include lots of case studies to Summary: help bring this groundbreaking work to life. In the future our reports will help you track our performance over time in a comparable format year on year. 5 Our assets and our impacts 2019/20 12 6 The economic value of our impact 2019/20 14 Trusting this information We always want to provide information you can trust. This report is unlike our traditional 7 The six capitals concept 16 publications because we are sharing latest findings and methodologies from a new approach that uses innovative analytical techniques and which continues to develop. We 8 Developing our approach to the six capitals 18 have taken steps to ensure openness and clarity around the different levels of robustness of the various aspects of this work. Findings: A team of experts in impact and value assessment at AECOM helped us ensure a comprehensive and best practice approach, with the detailed methodology shared 9 Financial capital 22 separately. We also asked an independent third party, DNV GL, to assure our work and they have provided a report on their findings. Links to these reports can be found in the Contents, opposite. 10 Manufactured capital 26 11 Natural capital 30 For our investors 12 Human capital 42 We borrow from investors and other lenders to help fund our activities and continuous investments into the business. In early 2019 we introduced a Sustainable Finance Framework in which we committed to follow best practice guidelines that require all debt raised under the framework to be 13 Intellectual capital 50 allocated only to activities that benefit people and protect the environment. We will use this framework for virtually all of our debt in the future and have already raised £850m using the framework. 14 Social capital 58 This Our Contribution to Yorkshire publication is designed to meet the commitment we made in the framework to report annually on our environmental and social impact. A range of Key Performance Conclusions and next steps: Indicators (KPIs) can be found throughout this report, supported with commentary and case studies. To accompany this main report which is designed for all interests in Yorkshire Water, we also provide 15 Conclusions 68 another report with further information specifically for the investor community, including details of debt allocations. A link can be found in the Contents, opposite. Find out more about the framework on page 24. More detail is available in supporting reports: Contact us Methodology report, including a glossary of terms We’d welcome your feedback, questions and ideas in response to this report. Sustainable finance framework impact reports Please email us at [email protected]. Assurance report 1. Guide to this report

Important terminology Six capitals The resources we rely on and that we impact positively and negatively through our activities. Symbols used in this report Where appropriate, trend arrows are used to show whether our impact has improved or

deteriorated on average over the five year period of this assessment. Financial capital Manufactured capital Natural capital - Our financial health and Our pipes, treatment works, The materials and + ~ efficiency offices and IT services we rely on Upward trend Upward trend Upward trend Broadly stable trend from the enviroment positive outcome negative outcome unclear outcome stable outcome + - ? Downward trend Downward trend Downward trend Insufficient data to positive outcome negative outcome unclear outcome determine a trend

Human capital Intellectual capital Social capital Our workforce’s capabilities Our knowledge and Our relationships and Where appropriate we show the robustness of data and and valuation methods using the and wellbeing processes customers’ trust in us following symbols.

L M H Assets Low confidence Medium confidence High confidence in data or method in data or method in data or method A stock of resources, for example the land we own. The extent of these resources measures the quantity we own, while the condition measures their ability to provide services over time. Impact Timeframe The flow of positive and negative effects resulting from how we have maintained and used In this report and assessment we examine each financial year over the five year period from our assets, for example the carbon emissions captured in, or released from, our land. 1 April 2015 to 31 March 2020. We make clear where we were unable to collect data on the full five year period. Value The amount that something is considered to be important or beneficial. We estimate the economic worth of our impact to Yorkshire Water and to wider society, for example the value of health benefits from recreational visits to our land. Find out more Visit our capitals webpage to find the previous Our Contribution to Yorkshire report and a range of case studies on our approach. h. Reporting scope www.yorkshirewater.com/capitals We focus on the activities directly undertaken by Yorkshire Water. Except where clearly You can also find more information in our traditional performance reports: the Annual stated, we have excluded activities carried out in Yorkshire Water’s supply chain or by others Performance Report (APR) and Annual Report and Financial Statements (ARFS). in the Kelda Group of companies in which Yorkshire Water is the largest part. In the future we will extend the scope to our supply chain and value chain. www.yorkshirewater.com/reports

6 7 2. Foreword 3. What others think about our approach

It is essential that we secure and continually improve the resilience and sustainability of public water and wastewater services because they are so important to human health and wellbeing, the natural environment and economic This is our second “Our Contribution prosperity. This is central to Yorkshire to Yorkshire” report and I hope you Water’s purpose and strategy, find it informative. Our aim in this and we’ve achieved substantial publication is to go further than our traditional reporting with a The Yorkshire Forum for Dame Julia Unwin, Mark Gough, CEO, The and tangible improvements in Water Customers Independent Non- Capitals Coalition recent years. But we need to go fresh and broader view of Yorkshire Water’s impact both positive and Executive Director much further and faster if we and Chair of Yorkshire negative, and the value, risks, and “Yorkshire Water’s improving “Yorkshire Water were early are to fully play our part in the ability to measure and report a Water’s Social Value leaders in adopting the multi- National Infrastructure Strategy dependencies we are managing. We Committee have made substantial advances in broad picture of its impact and capitals approach and it is and responding to COVID-19, social value is a welcome development. “This latest progress is further fantastic to see their continued deprivation, climate change and the our latest six capitals assessment, looking in more detail and over a The introduction of an annual helping the Board to monitor commitment and advances continuing loss of biodiversity. To Contribution report will help and steer the Company’s strategic as part of a growing global help us in this, I asked my team to longer timeframe, and developing our focus on asset stocks and their us in our role to scrutinise and direction to protect and grow community. This latest work is a update and advance our use of the influence the Company’s approach the value that truly matters to great example to others of how six capitals. condition, as well as the annual flow of benefits from those assets. We in the best interests of customers water consumers and stakeholders an organisation can tailor the have also updated our approach to and stakeholders.” across Yorkshire. The Committee capitals to practically inform and More than five years on from first shape their operations.” exploring the concept of the capitals align with the latest developments by continues to support and stretch and the approach is now used in the Natural Capital Committee; the Yorkshire Water’s maturing many parts of Yorkshire Water. Department for Environment, Food, application of the six capitals and Having helped transform our land and Rural Affairs (Defra); the Capitals I’m looking forward to us doing strategy and shape our new £4 Coalition; and others. more.” billion investment programme, we are now embedding the approach This report highlights areas of to shape all our engineering and progress, priorities for further land management choices. Having attention and opportunities for collaboration and innovation. I Catherine Weller, Petrina Rowcroft, Shaun Walden, Project introduced an innovative Sustainable Programme Manager Technical Director Director, ESG and Finance Framework and raised also want to help customers and stakeholders understand and for Business & - Environmental Sustainability, DNV GL the UK’s first Sterling sustainability Nature, University of Economics, Environment bond, we are committed to raising shape our direction, and hold us to Cambridge Institute for & Sustainability, AECOM “It is great to see this more sustainable finance in the account. For our investors, this report Sustainability Leadership comprehensive impact and future. We have also used the also delivers on our commitment “We are delighted to have valuation assessment following to provide regular reporting on the “Recognising the challenges continued our relationship with capitals to strengthen our corporate associated with measuring the launch of Yorkshire Water’s governance, shaping the focus and impact of our sustainable finance Yorkshire Water by supporting this holistic and innovative sustainable investments. I welcome your biodiversity impacts, it is good latest application of the capitals Terms of Reference of our Board to see the additional detail in finance framework in 2019. The Committees, the Board’s new set feedback and ideas to help shape approach. This project has detailed and transparent nature and improve our approach. Yorkshire Water’s latest capitals been a lengthy and, at times, of Key Performance Indicators report. I look forward to further of this suite of reports will be (KPIs) and our latest executive challenging piece of work, but welcomed by the growing ESG collaboration with Yorkshire Water together we have again pushed remuneration arrangements. The and others to explore how we community and I look forward more we look, the more we find that boundaries and set a new bar to seeing the Company’s further might learn from this and go for others to replicate and build the capitals help us to cut across even further.” advances in this space.” silos and push beyond traditional upon.” approaches to protect and grow the Liz Barber value Yorkshire Water delivers for its customers. Chief Executive, Yorkshire Water

8 9 Our purpose 4. About why we exist We’re proud to play water’s role in making Yorkshire a brilliant place to be Yorkshire Water - now and always. We provide some of life’s most essential services to the people and businesses of Yorkshire, playing a key role in the region’s health, wellbeing and prosperity. We do this by supplying water and wastewater services, and being custodians of essential infrastructure and the natural environment. Our resources Our behaviours what we rely on how we act we own it Our operation what we do we’re always Financial Manufactured Natural learning capital capital capital we’re better together

Human Intellectual Social capital capital capital we have heart

Our objectives our big goals being keeping putting being great love our a great services people first with water enviroment partner affordable

Our outcomes the result of our work We support the Sustainable Development Goals (SDGs) that the global community has formally adopted to define and drive towards sustainable development.

10 11 Below we provide a visual summary of the findings of our assessment with examples of the extent and condition of the assets on which we rely and the impact we have made through our actions. The figures are for the year 2019/20 and the arrow symbol shows the average 5. Our assets and trend over the last five years (full definition on page7 ). More detail, including a five year view, can be found in the findings section of this report with a chapter on each of the six capitals,

our impacts 2019/20 and also in the accompanying Methodology Report www.yorkshirewater.com/capitals. -

+ ~ + Assets Human capital Regulatory Pension funds Total debt Total Share of Share of Assets capital value Not yet assessed £5,605m employees workforce female workforce BAME £6,951m See page 22 3,480 23% 5%

- + + + Impacts ~ + + ~ capital Financial Apprentices Injuries Gender pay gap BAME pay gap Taxes Salaries Pensions Profits Impacts 27 0.5% 8.8%

74 Favourable to female Favourable to BAME

£123m £152m £11m £212m colleagues colleagues

- -

+ + + Assets

~ ~ Intellectual capital Innovative Open access Smart network Assets Length of Length of Waste Energy used partnership projects data releases sensors mains sewers produced 642GWh 32,000km 52,000km 7m tonnes 11 100 43,000

+ - Impacts + + + + capital

Change in Waste to Renewable Employee Spend on Research Remote sensor Manufactured Impacts asset value landfill energy generated training & Development investment £1,389m 27,000tonnes 166GWh 276,000hrs £4m £13m

~ ~ ? ~ + Assets capital

Land Bathing Lifetime carbon Recreational Households Customers Suppliers Social Assets ownership Reservoirs waters emissions visits served on PSR used

28,000ha 129 19 Not yet assessed 2.6m 2.2m 66,000 1,800

+ -

+ Impacts ~ ~ ? + + capital Natural

Biodiversity Water Pollution Net carbon Recreational Internal flooding Customers Early payments

Impacts units abstracted incidents emissions health benefits incidents financially supported to suppliers QALYs 644 446,000Ml 166 245,000t/CO2 315 1,600 36,000 76,000

BAME = Black, Asian and Minority Ethnic 12 PSR = Priority Services Register 13 QALYs = Quality Adjusted Life Years While not everything can be reliably valued in monetary terms, we are finding this a useful aid to our decision making by allowing us to compare very different issues. To strengthen our existing processes, we are maturing and embedding our impact quantification and 6. The economic value economic valuation to help inform our strategic and investment choices. We show levels of robustness to recognise that economic valuation is only an estimate based on the best available information and in many cases we will not yet have captured the full impact, positive or negative. Our figures show the overall net estimate for the indicators which we of our impact 2019/20 have been able to value. The net position can mask important details in the positive and negative impacts within each indicator. There are gaps and weaknesses that we and others are improving as part of a growing global community working to mature the application of This diagram shows our estimate of the economic value of our impact in 2019/20. Overall, we cutting-edge environmental and social economics. We provide more detail on each of the deliver a strong and growing net-positive contribution to society. This shows our estimate capitals later in this report and the full methodology is provided in an accompanying report of our total public value and how we are living our purpose to play water’s role in making www.yorkshirewater.com/capitals. Yorkshire a brilliant place to be - now and always.

FINANCIAL HUMAN CAPITAL CAPITAL £123m Performance - Taxes ~ H and development £2.3m M £152m Health, safety Salaries + H and wellbeing -£7m + M

£11m Diversity Pensions + H and inclusion £0.0m + L Profits £212m ~ H MANUFACTURED INTELLECTUAL CAPITAL CAPITAL Research and - Asset value £1,389m + H development £14m L Waste use -£7m - Knowledge £21m and reuse M and learning + L Processes Renewable £13m energy ~ M and efficiency Not yet assessed NATURAL SOCIAL CAPITAL CAPITAL Water use £141m £4m and efficiency + M Trust + L

£28m Public health £15m Water quality + H and wellbeing + M

Land, soil £29m Quality of service Not yet assessed and biodiversity + L

-£71m Vulnerability £4m

Carbon + M + L - + ~ Upward trend Upward trend Upward trend Broadly stable trend positive outcome negative outcome unclear outcome stable outcome L M H

+ - Low confidence Medium confidence High confidence ? in data or method in data or method in data or method Downward trend Downward trend Downward trend Insufficient data to positive outcome negative outcome unclear outcome determine a trend

14 15 7. The six capitals concept How

To understand Our Contribution to Yorkshire we completed a six capitals assessment of our impact and dependencies. We developed annual accounts for each of the capitals covering the five year period from What 2015/16 to 2019/20. These included a range of indicators showing the extent and condition of our assets, as well as A capitals approach is designed to help the negative and positive impact of organisations become more sustainable and our activities. resilient by considering value in the broadest So what? sense. This approach shows the range of This assessment follows, extends, and resources that we all rely and impact on, but updates our initial assessment for The capitals approach is helping us to protect and are often overlooked or undervalued in finan- 2014/15, and continues to evolve to grow the public value we create for customers, cial accounting and analysis. align with business priorities and the investors and other stakeholders. You can find practi- latest global and national best prac- cal examples of how we are doing this throughout We are using a capitals approach to better tice. You can find a breakdown of our this report, including through our new land strategy, understand, and therefore better manage, the data and process in the in the our decision making framework, and our sustainable economic, environmental, and social impacts Methodology Report found at finance framework. of our actions. This approach is shaping our www.yorkshirewater.com/capitals.. thinking, decisions, and investments to help us This assessment confirms that we have grown our focus on what really matters. contribution to society over the past five years, by protecting public health and the environment. How- ever, it also identifies areas that need attention, including diversity and inclusion, leakage, water pollution, and carbon emissions. Going forwards we will focus on the areas where we need to do better to ensure the long term resilience of communities and water services.

Striving to turn the dial

Regional contribution

Tactical improvement Why and change

Growing understanding of our Corporate governance, strategy Knowledge positive and negative impacts, and the things we depend on. and decision making

Sharing this knowledge to help Reporting and engagement Engagement customers and stakeholders shape our approach and hold us to account. Collaboration to mature the capitals approach Applying this knowledge to become Service more efficient, resilient, and sustainable.

Using this knowledge to grow Public value our contribution to society, the economy and the enviroment. Find out more . We openly publish our work on the capitals. Find detailed methodologies and case studies at 16 www.yorkshirewater.com/capitals. 8. Developing our approach to the six capitals Pilot test of the Natural Capital Protocol 2015

First total impact and value assessment, focused on 2014/15 2016

Corporate Sustainable Business governance finance planning Land People

Little Don New and Burnby business Lane 2017 model assessments Human and Decision intellectual Sustainable Making capital account finance Framework Esholt framework shaped integrated and UK’s £4bn+ We have been working with the capitals approach since 2015 and before that we were at resources 2018 the forefront of piloting ecosystem services assessments (the term ecosystem services is first Sterling operations master plan Social value sustainability and defined on page30 ). The diagram opposite summarises how we have used the capitals to committee create a series of assessments, processes and tools that are shaping our strategy, delivery, bond investment and new plan governance, and reporting. long term strategy New land In 2015 we were amongst the first globally to apply the Natural Capital Protocol https://( strategy 2019 capitalscoalition.org/capitals-approach/natural-capital-protocol/); successfully and tools Social quantifying and valuing the environmental impacts at a large engineering scheme to for Yorkshire enhance the resilience of Rivelin water treatment works in South Yorkshire. From that pilot capital Water account study we saw how we could expand the natural capital approach to include more of the and sister Climate resources and other factors that are important to our effective decision-making. This led to Revised Board Initial company the award-winning six capitals assessment that we published in the first Our Contribution change risk KeyLand committees allocation valuation to Yorkshire report and which we have further developed in this latest assessment and and reporting report 2020 publication. pilot

A notable development is our integration of the capitals into our Decision Making Framework (DMF); our cutting-edge asset management planning system and process. We used the Second total impact and value assessment, DMF for the first time to help optimise our new business plan for the asset management focused on the five years to March 2020. 2021 period that runs from 2020 to 2025. Now, we are embedding its use throughout our day-to- day planning processes to help us shape each of our engineering and investment choices. This is helping in our efforts to fully consider innovative approaches such as behavioural programmes to reduce water demand and sewer blockages, and for nature-based solutions Continuing to embed and mature the capitals approach throughout our like catchment management to slow the flow in areas of high flood risk. decision-making and reporting

18 Continual improvement Developing the capitals approach is a process of continual learning and improvement. For us and the growing number of organisations who are working to use the capitals, ongoing development is working towards the rigour of traditional financial approaches and seamless integration throughout decision making and reporting processes. We have made good progress in our latest work, with significant improvement to the depth, breadth and robustness of our assessment compared to our first Our Contribution to Yorkshire assessment and report.

We have revised our approach to reflect the latest Corporate Natural Capital Accounting (CNCA) (https://www.gov.uk/government/publications/natural-capital-committee- research-corporate-natural-capital-accounting) guidance developed for the Natural Ensuring accuracy and transparency Capital Committee. This provides a framework of assets, flows and values that has helped We have taken steps to ensure openness and clarity about the different levels of robustness us progress from our previous focus on the flow of impacts in a year, to now also considering in this work because we are sharing latest findings and methodologies from a new approach the stocks and health (or ‘extent’ and ‘condition’ in more technical terms) of the underlying that uses innovative analysis techniques and which continues to develop. assets which enable those impacts. This gives a more holistic picture of the sustainability of flows into the future and the sustainability of the business and our services given that this depends on many of these assets. It can be challenging to assign economic values to things which are not usually expressed in monetary terms, and to quantify impacts that are not tangible or in our direct control. As a result, our processes have used assumptions and estimations. In our work to date we have prioritised the impacts which we understand to be the most significant. Our figures do We have extended the CNCA approach to cover all six capitals. To our knowledge, this is the not yet represent the entire ‘value’ of nature, people or society. For example, while we might first time this has ever been done. To do this, we gathered a more comprehensive set of data express a value to the company of our colleagues’ wellbeing in terms of reduced sickness than in our first Contribution assessment, including many new indicators. We addressed rates, this does not reflect the entirety of its importance to individuals and neither does it some weaker aspects of the previous assessment through the development of new models reflect the total scope of our business interests or responsibilities. and metrics. Some of the indicators we included in the first version have been removed where we found them to be immaterial. We have also identified several new indicators that we have not yet been able to quantify, which will be a focus in future developments. The To ensure openness and clarity in this report, we have: specifics can be seen in the Methodology Report available atwww.yorkshirewater.com/ capitals.

Worked Asked for We have established an approach that we can now repeat annually and that aligns with Published alongside an other six capitals applications we have developed and continue to develop, such as our DMF our data and independent independent expert assurance and our land management decision making tool. While we still expect some change each Rounded our methodology Used robustness expert, AECOM, year, this should now be reduced into the finer details. in a report on our work final figures so ratings to show to review from DNV GL. as not to imply accompanying our original this one the reliability and Their report on misleading levels maturity of each approach and our work can be of accuracy. available to support and We focus on our direct impact in this latest assessment because this is where we are most at www. measure. found at www. able to deliver change and where we have best available data. In our previous assessment challenge us in yorkshirewater. yorkshirewater. developing this we also explored our indirect impact in the supply chain and the wider impact we enable com/capitals. com/capitals. others to deliver. We will return to consider indirect and enabled impacts once we have further. further embedded our comprehensive and mature approach to our direct impact.

20 21 rest ofthisdocument. support theregion.Weexploreexamplesofhow wearegrowingoursocialvaluethroughthe We haveembracedourroleasananchorinstitution inYorkshiretofurthergrowhowwe the interestsofallmembers. insight wecanshareanddiscusswiththeindependent trusteeswhogovernthepensionsin Company’s influenceislimited,butwehopean analysiswouldyieldusefulmanagement as partofourimpactandvalueassessment.The pensionsareheldinseparatetrustssothe In thefuturewewillexploreethicsandsustainability ofYorkshireWater’spensionfunds We alsointroducedaSustainableFinanceFramework whichisdescribedon disclosures, andclosednumerouscompanies in ourgrouptosimplifyfinancialstructure. delivering essentialpublicservices.Inresponse, weincreasedourpublicreportingand Transparency andlegitimacyremainpriorities because weareaprivatelyownedbusiness challenges. long standingfocusonefficiencyandinnovationinresponsetotheseshortterm has beenaddingpressureonbillincomeandoperatingcosts.Wehaveescalatedour legal requirementsandworseningclimatechange.Overrecentmonths,thepandemic bills whilealsoinvestingtomaintainageingassets,andrespondpopulationgrowth,new Looking ahead,weobservegrowingpressurefromtheneedtoretainaffordablecustomer contribution increasedthelasttwoyearswhileourprofitsdecreased. Value. Ourcontributionthroughsalariesgrewoverthefiveyearperiodandourtotaltax in servicesandinfrastructure,whichturnhelpedincreaseouroverallRegulatoryCapital and sensiblemanagementofourfinancialposition 77% despitetotalborrowingsincreasing,whichwasduetosubstantialshareholdersupport period 2015/16to2019/20.O The headlineindicatorsofourfinancialcapitalaccountremainedbroadlystaticoverthe What doesourassessmenttellus? and theprofitswegenerate. make asignificantanddirectfinancialcontributionthroughthesalariestaxeswepay, underpins theeconomyandwehavefurtherimpactthroughourlargesupplychain.Wealso of essentialservices,knownasananchororganisation.Waterandwastewaterinfrastructure For societyandtheeconomy,weplayanessentialroleasalargepermanentprovider and futurecustomerstheenvironment. the region’spublicwaterandwastewaterinfrastructureouressentialservicestocurrent For YorkshireWater,strongfinancialfoundationsarecriticaltoourabilityreliablymaintain Why isfinancialcapitalimportant? or resilienceofourpensionfundsinfuturedevelopmentscapitalsapproach. classed assustainable.Wehavealsoidentifiedthepotentialtoaddameasureofethics resilience includingourcreditrating,gearingratioandtheproportionofdebtthatis (GVA). Thisincludessalaries,profitsandtaxes.Wealsoaddotherindicatorsofourfinancial the componentsofacommonmeasurefinancialcontributioncalledGrossValueAdded We considerourtotalimpactandvalueinnewfinancialcapitalaccountbyincluding to theheartofcapitalsconceptforneedtakeabroadviewvalue. making, itisthispartialrepresentationthatcanleadtounsustainableapproaches.Thisruns value inherentintheothercapitals.Withdominanceoffinancetraditionaldecision capital cannotexistwithouttheotherfivecapitals;itisawayofrepresentingparts includes thosethingswithacashvalue,forexamplemoney,stocksandshares.Financial Financial capitalisthecommonwayinwhichsocietymeasuressomething’svalue.It What isfinancialcapital? 9. Financialcapital 22 available at performance andresilience inourstatutoryAnnualReportandFinancial Statements Report availableat Find afullbreakdownof oursixcapitalsfinancialcapitalaccountinthe Methodology www.yorkshirewater.com/reports www.yorkshirewater.com/capitals ur gearingratiostartedandendedthefiveyearperiodataround . . Weborrowedmoretocontinueinvesting . Alsofindmoreabout our financial page 24 .

Values Impacts Assets

£106m £123m

Taxes £106m Taxes capital value £6,951m ~ ~ Regulatory Financial £103m Gearing assets 77% ~ £112m + £123m 2015/1

£96m £152m Salaries Salaries 6 £108m + + 2016/1 £116m Share invested Total pension Investments assessed assessed £128m sustainably 7 Expenditure Not yet Not yet

£152m funds 2017/1 8

2018/1 £8m Pensions Pensions £9m £11m + + 9 £9m 2019/20 £10m £11m Share invested sustainably £5,605m Total debt Debt 15%

£249m + - £212m Profits Profits £317m ~ ~ £273m £230m 23 £212m Case study Our Sustainable Finance Framework We fund a proportion of our expenditures through debt in order to spread the cost over time and keep water bills affordable. In January 2019 we introduced an innovative ‘whole business’ Sustainable Finance Framework (SFF). All debt raised through the SFF can only be allocated to activities which deliver benefits for people (eg social bonds), the environment (eg green bonds) or a blend of both (eg sustainability bonds). The framework aligns our financing arrangements with our social and environmental responsibilities and ambitions. The framework was enabled by our six capitals approach and was one of several measures we have taken to secure responsible and resilient corporate financial management. We have also, for example, closed legacy offshore companies, complied with the Global Reporting Initiative (GRI) Core Standard, and become an early adopter of the reporting recommended by the Taskforce for Climate-Related Financial Disclosures (TCFD). Through the framework we also commit to reporting annually on the impact of our investments, which is enabled through our six capitals approach in this document and the supporting reports. At the time of publication, we have raised £850m of finance using the SFF. This equates to just over 15% of our total debt. In April 2019 we issued our first public bond using the framework, followed by further bond issues in November 2019, including the first ever Sterling sustainability bond from a UK corporate. Going forward we aim to raise the majority of our future financing using the SFF. Independent assurance is important to demonstrate the integrity of the framework and the associated impact reporting. The framework and subsequent public bonds were reviewed by DNV GL who are experts in this field. They agreed that our framework aligned with the global best practice Green Bond Principles, Social Bond Principles, Sustainable Bond Principles and the Green Loan Principles. DNV GL have also assured our latest six capitals impact assessment and this report, with their assurance report available at www. yorkshirewater.com/capitals. Find the SFF on our parent company website at https://www.keldagroup.com/investors/ sustainable-finance/sustainable-finance-framework/.

Opening the London Stock Exchange in 2019 as we launched our Sustainable Finance Framework

24 25 10. Manufactured Water Wastewater Waste Energy assets assets assets assets capital Length of Length of Waste Energy

Assets mains sewers produced used

32,000km 52,000km 7m tonnes 642GWh - ~ ~ - Share Share Diverted from Self-generated renovated renovated landfill renewable electricity 0.4% 0.06% 99.6% 15% What is manufactured capital? + + ~ + Manufactured capital includes the human-made physical objects that are owned or controlled by an organisation. Yorkshire Water uses, maintains, and enhances a vast infrastructure of pipes, pumps and treatment works to provide water and wastewater Asset value Waste use Renewable services to customers. Manufactured capital also includes a wide range of goods such as and reuse energy tools and vehicles. Why is manufactured capital important? The stewardship of Yorkshire’s water and wastewater infrastructure is essential to the region’s health and prosperity. It is Yorkshire Water’s core duty to efficiently and effectively use, maintain, and enhance its water and wastewater infrastructure to ensure that communities and businesses can continue to rely on safe and affordable water and wastewater services, today and long into the future. Impacts Change in Waste going Renewable asset value to landfill energy generated

We are investing and innovating to reduce waste from our operations to be financially efficient, minimise environmental impacts and to support resilience. We are introducing £1,389m 27,000tonnes+ 166GWh ‘circular’ approaches that create new value by keeping resources in continual reuse and avoiding the creation of waste. For example, we are an increasingly large generator of + + renewable energy from human waste and other under used resources.

- What does our assessment tell us? + With an estimated replacement value of over £53 billion, the scale of our infrastructure ~ is enormous. The graph on the opposite page shows the annual change in the total financial value of our infrastructure, with the year-on-year growth an indicator of effective maintenance and enhancement. However, this growth is partly a result of inflation and the overall position can mask important details in different areas of our infrastructure. For example, less than 0.5% (approximately 140km) of the water network was being repaired or replaced each year of the last five years, and less than 0.1% (30km) of the sewer network. Values To determine the optimal approach to maintenance and enhancement requires detailed m consideration of many factors. There is a balance to be struck between financial and carbon £1,655m

efficiency, generally achieved by maximising the use of existing assets as far as possible, £761 while also ensuring reliability and performance by making interventions where and when £1,502m necessary. There is also an intergenerational consideration to ensure the fair and optimal £1,389m £1,248m £13m

balance of investment needed today and in the future. Careful planning, engineering £11m £10m

Waste use £10m and innovation helps to ensure the best overall outcomes for customer service, social and reuse £8m affordability and environmental impact. Our total energy use and waste production grew over the five year period covered in this Asset value Renewable assessment. The latter was partly a result of improved monitoring and reporting. We made energy improvements to divert the majority of waste from landfill and dramatically grow the amount of waste recovered to generate renewable energy. We explore this further over the page. -£7m -£7m -£7m -£8m Find a full break down of our manufactured capital account in the Methodology Report -£9m at www.yorkshirewater.com/capitals. Also find more about the nature of our assets, investments and service performance in our Annual Performance Report at www. yorkshirewater.com/reports. 2015/16 2016/17 2017/18 2018/19 2019/20

26 27 Creating value from Case study under used resources Showcasing the circular economy at The six capitals approach is helping us to embrace circular approaches that grow value from under used resources. What was previously something to be disposed of, is now seen as an important resource. We now consistently send less than 1% of our waste to landfill and we have committed to creating at least £65m of new value from under used resources by Esholt wastewater 2025. This will be measured using our six capitals approach. We give some examples below. Turning human waste into renewable energy treatment works We will achieve a transformational milestone in 2021 when, for the first time, we will recover We have used our six capitals approach to design bold plans for the large Esholt site that virtually all our sewage sludge for renewable energy generation and nutrient recycling. offers many opportunities for reuse of resources including redundant brownfield land, Sewage sludge is what’s leftover at the end of our wastewater treatment processes. It is our waste heat and treated wastewater. Offering a great example of sustainable economic largest area of what used to be thought of as waste, previously disposed of through four regeneration, the first phase of work is already delivering financial, social and environmental incinerators which we have been able to shut by instead installing anaerobic digestion (AD) benefits, and further phases are progressing well. facilities. The digestion process turns human waste into a renewable, low carbon source of energy that we use to power our treatment works. In 2021 we will complete our latest 1. Recovering brownfield land and old filter media – With our partner, Thompsons of AD investment, at Dewsbury treatment works, to further grow our generation capacity by Prudhoe, we have so far (at the time of publication) processed and sold 395,000 of the approximately 6% to around 94 gigawatt hours (GWh) a year. 450,000 tonnes of filter media from 13 hectares of filter beds which were made redundant several years ago. The filter media provides a construction aggregate that has been used instead of virgin materials in a range of nearby projects. The five year programme to recover Ongoing investment the filter media and beds is expected to complete in 2021 and has successfully turned a £20m disposal liability into a financially and environmentally positive approach. We see benefits from further growing the amount of renewable energy we generate. This delivers financial and carbon savings while also improving operational resilience. As well as 2. Developing sustainable housing and industry – We have been engaging with the local trialling cutting edge ways to increase the amount of energy we can generate from sewage authorities, communities and other stakeholders about our proposal to build 150 exemplar sludge, we are also developing a large programme of new solar power that can be installed homes and 1m square feet of innovative employment space that will have ultra-low water on our land, buildings and reservoirs. and energy use. These will be built on the brownfield land mentioned above, and also on an area of redundant storage tanks. Our sister company, Keyland Developments, is leading the work and hopes to secure planning permission in early 2021. Energy consumption 3. Further opportunities – Our plans for the site extend even further, with future phases of The movement and treatment of water is energy intensive, with upward pressures from work being developed with various potential partners. For example, an old stately home population growth, climate change and ageing assets. Over the next few years, new legal could be brought back into use and areas for nature and recreation could be enhanced environmental water quality standards will significantly increase our energy use because through links with local charities to offer new training and development opportunities along they force the addition of new energy and carbon intensive treatment processes. We seek with support for physical and mental health. support for innovative nature-based solutions that can deliver better value with benefits for the air, land and water environments as well as for customers. Our total energy use reduced from a peak of 679 GWh in 2018/19 to 642 GWh in 2019/20, although this was still higher than in 2016/17 when we used 624 GWh. Our response to the weather causes annual variability, with periods of drought and heavy rainfall requiring extra pumping and treatment of water and wastewater. Most of our energy is used in the form of electricity with a small proportion from other fuels. We are increasing our focus on energy efficiency to support our financial efficiency and our commitment to net zero carbon emissions. In 2019/20

We We We We This consumed sourced generated supplied produced 600GWh 100% 85GWh 15% £13m of electricity from certified of our own of our own of value for

green energy renewable electricity needs Yorkshire Water electricity-

+ + ~ Our vision for sustainable housing at Esholt

28 29 time wehaveestimated ourbiodiversity‘units’andtheareaofland providingbenefits We haveadvancedournaturalcapitalaccount withnewmeasures.Forexample,forthefirst environment withoutsufficientconsiderationfor otherenvironmentalandsocialpriorities. consequences ofacurrentlegislativeimbalance thatdrivesimprovementsinthewater go furtherbyusingholisticapproaches,likethe sixcapitals,tohelpavoidtheunintended many otherneeds.Wearealsochampioningnational policychangetohelpusandothers restore andprotectthenaturalenvironmenton whichwerelyforourwaterservicesand We continuetogrowthescaleandpaceofour programmesandpartnershipstohelp Despite thisimprovement,werecognisethatmuch moreactionisneededbyusandothers. reduced ouroperationalcarbonfootprint. grew theareaandeffectivenessoflandwe areconservingandenhancing.Wesharply able toreducetheamountofwaterweneeded toabstractfromtheenvironment.Wealso environment. Forexamplebyreducingthewaterlostthroughleaksin2019/20wewere capital accountshowwearemoreeffectivelyprotectingdifferentaspectsofthewater March 2020,withannualvariability.Overthelasttwoyears,manyindicatorsinournatural Our environmentalimpactwasgenerallystableandimprovingoverthefiveyearperiodto What doesourassessmenttellus? and resilienceofourbusiness. how wecanpreserveandenhancethemforfuturegenerations,isvitalthesustainability Understanding hownaturalandhumanlandscapes,habitatsprocessesinteract, influencers aswedon’townmostofthelandfromwhichsourcewaterforpublicsupplies. farming, wildlifeandcarbonstorage.Wealsoworkcloselywithmanyotherlandowners protect sourcesofwaterwhiledeliveringotherbenefitsforfloodmanagement,recreation, hectares. Weownandmanagethislandwithourfarmtenantsotherpartnersto Yorkshire Waterisalargelandownerwithanestatecoveringapproximately28,000 equipment areallmadefrommaterialstakentheenvironment. forms ofnaturalcapital,andresultsinalargecarbonfootprint.Ourpipes,pumps,other and wastewaterreliesonlargeamountsofenergychemicalsproducedfromdifferent treating itforsaferecyclingbacktotheenvironment.Thetransportandtreatmentofwater water fromtheenvironmenttosupplycustomers,movingwastewateroutofharm’swayand have substantialimpactsuponit,bothpositiveandnegative.Ourcoredutiesinvolvetaking Public waterservicesfundamentallyrelyonandotherresourcesfromnature,also Why isnaturalcapitalimportant? provides. Theseservicescanbeconsideredinfourcategories: depend on.Weallbenefitandrelyonawidevarietyof‘ecosystemservices’thatnature Natural capitalisthestockofenvironmentalresourcesthatpeoplemanage,use,and What isnaturalcapital? 11. Naturalcapital 30 account canbefoundin theMethodologyReportat We explorepriorityaspects ofournaturalcapitaloverthefollowingpages andthefull address remaininggaps andareasoflowerconfidence. for waterqualityregulation, floodregulationandpollination.Weareworking tofurther services suchas water, food,and Provisioning timber. services such absorption to regulate the Regulating as carbon climate. services suchas soil formation and nutrient Supporting cycling. www.yorkshirewater.com/reports spiritual value. as recreation, services such tourism, and Cultural .

Values Impacts Assets * SSSIs* infavour- SSSIs =Sites ofSpecialScientificInterest able condition 28,000ha

£15m biodiversity Land, soil& biodiversity Biodiversity ownership Land, soil& Land Land 644 units

£22m 4% ~ ~ + + £22m £23m £29m 2015/1 Water withdrawn from enviroment Average water use perperson Water useand Water useand 446,000Ml abstracted 99,000Ml Reservoirs

£121m 135 efficiency efficiency Leakage 6 Water 129 ~ £127m ~ l/h/d ~ 2016/1 + £122m

7 £137m

2017/1 £141m incidents Pollution 8 166 Environmental water quality Exceeding min Environmental water quality - Water leftin 2018/1 -£29m enviroment standard Bathing waters 84% 19

-£31m ~ 9 + improved -£37m 459Km 2019/20 River

-£34m + £28m per megalitres(Ml) 173 Carbon emissions Lifetime carbon water provided -£118m assessed Net carbon emissions emissions emissions 245,000 Not yet emissions t/CO kg/CO -£119m Carbon Carbon Air + 2 + + -£121m e/yr 2 e/Ml -£75m 31 -£71m Our estimateoftheoverall economicimpact which isinfluencedbytheweather. each yearinresponsetoconsumerdemand Levels ofwaterabstractionalsochange water lostthroughleaks,asshownopposite. This dropwasinpartachievedbyreducing that wasfollowedbythedropin2019/20. as thisincludedanupwardtrendto2018/19 reported asstableoverthefive-yearperiod The overalltrendforwaterabstractionis approximately 18billionlitresofwater. a reductioninwaterabstractionof From 2018/19to2019/20therewas Sourcing watersupplies environment. taking morefromthe changing climatewithout growing populationinthe can reliablysupplythe By allusinglesswaterwe and wildlife. resilience ofwaterservices society iscriticaltothe in ouroperationsandacross improving waterefficiency sources anddramatically Carefully managingwater environmental protections. and standardstoimprove regularly reviewinglimits protect habitatsandwildlife, Environment Agency(EA)to governed bythe We complywithpermits from amixofboreholes,riversandreservoirstoprovidethepublicwatersupply. emissions. YorkshireWatercurrentlytakesapproximately450billionlitresofwatereachyear enough waterfortheneedsofsocietywithoutdamagingnatureandwithminimumcarbon change, populationgrowthandpollution.Carefulmanagementisneededtoreliablysource Water isessentialtolifeandthispreciousresourceunderincreasingpressurefromclimate efficiency Water useand 32 Yorkshire Waterandthe environmentalcost. reflects thefinancialincome generatedfor growing from£121mto£141m. Thisvalue positive positionoverthe fiveyearperiod, of abstractionshowsan increasingnet around 80litresof To helpputthese huge figuresin A bathholds context water. holds 2.5mlitres. The RoyalAlbert

Hall couldstore Billion litres of water swimming pool abstracted per year over 86mlitres. An Olympic 2015/16 453 2016/17 451 2017/18 456 2018/19 464 2019/20 446 available. future oncemoreaccurate approachesare our watersavingsupport interventionsinthe We willsharemoredata ontheimpactof guidelines wereoverestimating thesavings. our approachafteritbecame clearthese different devices.However,wearereviewing measure theamountofwatersavedfrom the pastweusednationalguidelinesto services andwatersavingdevices.In water byprovidingawiderangeofadvice, Yorkshire Waterhelpscustomerstosave 2019/20 comparedtothepreviousyear. of growth,albeitwithaslightincreasein reduction inrecentyearsafterdecades country andcontinuesageneraltrendof in Yorkshireisamongstthelowest the averagewateruseperperson.PCC water efficiency.Itisthetechnicaltermfor PCC isanindicatorofsociety’soverall Consumption (PCC) Per Capita leakage. said theywouldbewillingtopayreduce determined bytheamountourcustomers approximately £50mperyear.Thisvalueis the impactofthislevelleakagecosts Our economicassessmentestimates through leakage. from theenvironmentisultimatelywasted because over20%ofwaterabstracted the comingyears.Thisisastrategicpriority and wehaveplanstogomuchfurtherover near lowesteverrecordedlevelsin2019/20 approach hashelpedusreduceleakageto identify, avoidandfixleaksmorequickly.Our sensors onthewaternetworktohelpus We haveinstalledthousandsofextra satellite detectiontechnology,forexample. many innovativetechniquesincluding teams ofleakageinspectorsandtrialling leakage overrecentyearsbygrowingour We haveescalatedourfocusonreducing in helpingcustomerstousewaterwisely. for Yorkshireandsupportsourcredibility role insecuringresilientwatersupplies customer-owned pipesplaysacritical Reducing leaksfromournetworkand Leakage

Litres of water used per Billion litres of water lost person per day through leakeage per year

2015/16 142 2015/16 104 2016/17 137 2016/17 108 2017/18 136 2017/18 111 2018/19 134 2018/19 106

33 2019/20 135 2019/20 99 Permitted compliancestandards are and furtherimprovethisperformance. We arecontinuallyinvestingtomaintain period. reduction from99.1%atthestartof 97% acrossthefiveyearperiod,withaslight compliance protectionstandardsatover treatment worksweconsistentlymaintained others candischarge.Atourwastewater set minimumstandardsonwhatweand To protectthewaterenvironment,EA requirements discharge permit Compliance with much furtherbecausemanypressurescontinuetofaceYorkshire’swaterenvironment. continue toinvestandareworkingwithcustomersawiderangeoforganisationsgo Yorkshire’s riversandcoasts,therebybetterprotectingriverlifeamenityvalue.We the region’swastewatertreatmentworksandseweroverflowstoimprovequalityof in reducingtherisksfromfloodingandpollution.Extensiveinvestmenthasupgraded enhancing over600treatmentworksandavastpublicsewernetworktoplayourpart We collectandtreataroundabillionlitresofwastewatereveryday,maintaining the environment Returning waterto 34 treatment works. of phosphorusfrommany ofYorkshire’s over thenextfewyears will reducelevels For example,significant investments reviewed regularlytostrengthen protections.

Percentage compliance with discharge permits

2015 99.1% 2016 97.2% 2017 97.8% 2018 97.5% 2019 97.5% further inourfutureassessments. to beclassifiedintheUK. Wewillexplorethis bathing water,thefirst inland bathingwater in Yorkshirehasrecently beenclassifiedasa Looking ahead,theRiver WharfenearIlkley bathing water. used sufficientlytobeconsideredaformal Defra duringtheperiodbecauseitisnot One bathingwaterwasdeclassifiedbythe coastal waterquality. with stakeholderstomaintainandimprove continue toinvestandworkinpartnership fluctuation andsomedeterioration.We period. However,thedatashowsannual minimum legalstandardoverthefiveyear waters wasconsistentlybetterthanthe at nearlyalloftheregion’s19bathing improvement programme,thewaterquality Following thecompletionin2015ofa£110m environmental value. to Yorkshire’srivers,aswellthebroader represents therecreationalvalueofvisitors impact worth£53min2020.Thisfigure suggests thisactivityhasapositive sewer network.Oureconomicassessment and improvednumerousoverflowsonthe capabilities atmanywastewaterworks example, weenhancedthetreatment better protectalmost500kmofriver.For a widerangeofactivitiestoimproveand Between 2015and2020weinvestedthrough rivers andcoasts Improving Yorkshire’s of theincidentsin2020was£31.5m. Our assessment suggests the economic cost achieve zeroseriousincidents. next fiveyearsandwewanttoconsistently plans tofurtherreduceincidentsoverthe to finalregulatoryconfirmations.Wehave and anoveralltotalof130incidents,subject progress in2020with and latestincidentnumbersshowfurther This helpeddeliverimprovementin2019 a newreductionplanandextraresources. responded tothisdipinperformancewith the lasttwoyearsoffiveyearperiod.We of themostseriousincidentswashigherin activities since2016.However,thenumber number ofpollutionincidentsfromour delivered adecliningtrendinthetotal and infrastructureinvestmenthave Programmes ofoperationalimprovement Pollution incidents

3 seriousincidents

Number of bathing waters reaching standard Number of pollution incidents 0 20 2015 5 180 2015 2016 4 207 2016 2017 3 202 2017 2018 11 188 2018 2019 7 159 35 20190 serious incidents excellent good sufficient other incidents poor unassessed land management.This isanewandevolvingapproachthatwewillsupport andapplyto organisations toaccountforgainsandlossesresulting fromdevelopmentorchangesto Biodiversity Metric2.0hasbeendevelopedbyDefra withinputfromavarietyof estimate theeconomicvalueofthatgrowthwas worthapproximately£7meachyear. the fiveyearperiod,from352,034biodiversity units in2015/16to354,6102019/20.We best availablelanddata,weestimatethebiodiversity valueofourestategreweachyear to estimatetheoverallbiodiversityvalueofour estate.UsingtheBiodiversityMetric2.0and known gapinourprevioussixcapitalsassessment wehaveusedanewnationalmeasure The variedandcomplexmakeupofbiodiversity makesithardtomeasure.Toaddressa Measuring biodiversity and manyotherbenefits. to deliversubstantialfurtherimprovementasthissupportswaterquality,carbonstorage will exploreinournextimpactandvalueassessment.Itisapriorityofnewlandstrategy been reviewing and strengthening how they assess and classify the health of SSSIs, which we the startofperiodwasreducedtojust0.03%in2019/20.NaturalEnglandhaverecently grew from2.67%in2015/16to4.01%2019/20.The0.35%‘unfavourabledeclining’statusat recovering’ categorythroughoutthefiveyearperiod.Theproportionin‘favourable’status scale from‘favourable’to‘destroyed’.Almost96%ofourSSSIsremainedinthe‘unfavourable Yorkshire landscape.NaturalEnglandmonitorsthehealthofSSSIs,assessingthemona approximately 11,300hectaresofSSSI,muchthisispeatuplandthaticonicinthe SSSIs areformallydesignatedfortheirecologicalimportance.YorkshireWaterowns Sites ofSpecialScientificInterest(SSSI) order toensurecontinuedimprovement. have beenexpandingourprogrammesin recently developedanewlandstrategywe hectares duringthefiveyearperiod.Having conservation programmesgrewbyover300 shows thatthetotalareaoflandinour owners andinfluencers.Thegraphopposite Yorkshire LandNetworkwithmanyotherland even furtherwerecentlyestablishedthe to waterservicesandwidersociety.Togo with otherstoincreasethemanybenefits a longhistoryofworkinginpartnership We leadourownprogrammesandhave estate andotherlandacrossYorkshire. to protectandrestoreour28,000hectare We deliverawiderangeofprogrammes and enhanced Area oflandconserved recreation onpage carbon emissionsassociatedwithourestateonthenextpageandvalueofaccessfor here wefocusontheimpactofourapproachtolandmanagement.Wealsoconsider aspects ofourimpactonbiodiversityinthewaterenvironmentoverpreviouspages, Yorkshire throughthewaywemanagelandandwatersystems.Havingexploredseveral water andmore.YorkshireWaterhasanimportantroletoplayinprotectingbiodiversity resilience ofcommunitiesandeconomiesfortheservicesresourcestoair,climate,food, Biodiversity meansthevarietyoflife.Itiscriticaltopeople’shealthandwellbeing biodiversity Land, soiland 36 develop thesemetricsand datatohelpbettermonitorandmanagethese impacts. including theregulation offloodriskandsupportforpollinators.Going forwardwewillfurther We haveintroducedmeasures ofthebenefitsseveralland-based ecosystem services, of land-relateddatato help informourreportingandmanagementchoices. help monitorthebiodiversity impactofourlandstrategy.Wearealso improving thequality 61 .

Hectares of land conserved or enhanced

2015/16 11,470 2016/17 11,490 2017/18 11,480 2018/19 11,520 2019/20 11,800 levels canimprovesoilhealthtotheresilienceoffarmandenvironment. organic matterhasfallenby50%overthepast60years,usingcovercropstorestorethese tonnes perhectare,whichcanstoreoverfourofatmosphericcarbonyear.Assoil carbon storage.Trialshaveshowntheplantscanincreasesoilorganicmatterbyupto40 to growcovercropsintheperiodbetweenharvestingandsowingimprovesoilhealth universities ontheSustainableLandscapesHumberProject.Thisinitiativeishelpingfarmers owners. WearecollaboratingwithBirdsEye,FutureFoodSolutions,andHullTeesside While theaboveprogrammeiscurrentlyfocusedonourestate,wealsoworkwithotherland Sustainable Landscapes Institute forCharteredSurveyor’s(RICS)2020SocialImpactAwards. The programmehasbeensosuccessfulitwontheLandandRuralcategoryofRoyal created newwetlandandwoodland,collaborativespaceforlocalcommunities. Starting atHumberstoneBankFarm,theprogrammehasbetterprotectedpeatlandSSSIs, expand theapproachwithmoreofourtenantfarmers. Beyond Naturefarmscoveringnearly5,000hectaresofourestate,andwecontinueto Yorkshire Waterandforsociety.Wehavematuredgrowntheprogrammetonine to farmingthatprotectsandgrowsthemanybenefitsdeliveredforafarmbusiness, In 2015westartedaninnovativeprogrammetodevelopanewandcollaborativeapproach Beyond nature also protectingwaterandwildlife,storingcarbonenablingrecreation. to helpmovemoresustainablewaysofmanaginglandthatproduceshealthyfoodwhile We workonourestateandacrossYorkshirewithfarmersenvironmentalorganisations Sustainable farming Case study The catchmentaround Baitingsreservoir Carbon emissions

The UK water sector is playing a leading role in reducing carbon emissions because affordable and resilient water supplies and We use the term ‘carbon’ as flood management services fundamentally shorthand for all greenhouse gasses, measured as carbon dioxide rely on a stable climate. Delivering our 500 services is traditionally carbon intensive equivalent (CO2e). 1,000 tonnes of carbon is known as a kilotonne (kt) because of the energy required to move 450 and treat water, and the concrete and other and is about the same as driving resources needed to maintain and improve about 3.6 million miles in an average 400 our pipes, pumps and treatment works. car. That’s the same distance as 234 going to the moon and back However, we and other water companies 350 ktCO2e seven times! have dramatically reduced emissions and 300 have bold commitments to go much further. 250 Our operational footprint 200 We have reduced the carbon footprint of our day-to-day operations by around 80%. We 150 describe on page 28 how we have transformed the way we source energy to reduce the 84 largest source of our emissions. We have invested in new technologies that help us generate 100 e ktCO2e around 15% of our own energy needs by digesting sewage sludge. We buy the rest from 2 only certified green energy providers. We estimate the carbon avoided through our energy 50 improvements was worth approximately £40m to society in 2019/20. ktCO 0 The graph shows how we monitor our operational emissions using two good practice approaches. The market-based approach recognises our overall position including the 2011/12 2010/11 2012/13 2016/17 2017/18 2013/14 2014/15 2015/16 reduced emissions we enable by buying only green energy. We have started measuring and 2018/19 2009/10 2019/20 reporting the market-based approach to carbon accounting for the last two years, having 2004/05 2005/06 2006/07 2007/08 2008/09 introduced a green energy purchasing approach. The location-based approach uses the average emissions of national electricity supplies, recognising the value of reducing energy Market based emissions (ktCO2e) use regardless of how it is generated. Location based emissions (ktCO2e) In 2019 we committed to achieving net zero operational emissions by 2030. To achieve this, we have escalated our focus on all our sources of operational emissions, including: • Exploring how we can reduce our energy use and further grow our renewables, Storing carbon in our land including the installation of solar panels across many of our sites. Expert consultants recently helped us to create a cutting-edge accounting and modelling tool to help us monitor the carbon emissions across our estate. We estimate a baseline • Switching our fleet to low carbon options, including electric cars and vans. We are stock of more than 13,000 kilotonnes of carbon in our estate today. We also used the tool to also the first water company to install hydrogen power in a water tanker to test feasibility estimate that latest changes to our estate enabled a net increase in carbon storage of 9.7 for heavier vehicles where more power is needed. kilotonnes in 2019/20, with a social value of about £2.8m in the year. • Trialling alternative approaches where we use gas oil and other fossil fuels. We will use this new insight to shape our land management choices so we can grow the amount of carbon we store. With the help of volunteers and environmental partners we have • Researching how to better measure and reduce the emissions from our biological now planted nearly 250,000 of the million trees we pledged to introduce by 2028. We also treatment processes which are currently less well understood. continue our long standing programmes to support protection and restoration of Yorkshire’s peatland. Activities like these are not only good for carbon but also achieve wider benefits • Embedding carbon throughout our decision making processes and reporting. for water quality, wildlife and flood risk.

38 39 Case study Capital carbon

Investing to maintain and enhance Yorkshire’s water infrastructure results in a carbon footprint from the materials used, especially concrete and metals. We call this capital carbon. To help monitor and reduce the impact of our investment choices we have integrated carbon into our main asset management planning system and governance process. We continue to mature and fully embed a culture of carbon decision-making and have recently completed independent assurance that our approach follows the best practice Publicly Available Specification (PAS) 2080. Our approach to capital carbon is helping us go further than the traditional focus on only operational emissions, but capital carbon is more complicated to record and reduce because it is less in our direct control. Much of the activity is carried out in our supply chain An example approach to secure water by a wide range of organisations and strict legal requirements have a strong influence on the scale and pace of our infrastructure improvements. Capital solutions can also reduce quality in the town of Hessel or increase long term operational emissions by locking in energy or chemical intensive approaches. Build Less We observe a bias in legislative requirements that has delivered significant improvements Build Smarter in the water environment at the expense of the atmospheric. We seek to lead by example We were able to go even further by and work collaboratively and innovatively with the government, regulators and suppliers Nearly 17km of water mains in the town taking a total expenditure (totex) to achieve the optimal balance between social affordability of water services, protection of Hessle needed attention following approach that blended capital and for the water environment and carbon reduction. For example, we have been required in concerns about discoloured water operational interventions. By only lining our new investment programme to reduce levels of phosphorus found in treated sewage supplies. A traditional approach would the biggest mains and introducing a effluent. The strict standards and compliance deadlines will make it hard to avoid traditional be to replace the mains, however we pipe flushing routine in the area we approaches which are concrete, energy and chemical intensive, and financially expensive. were instead able to extend the life were able to protect water quality With collaboration and innovation we think there are alternative approaches that would of the existing pipes by using a spray for customers and further reduce the deliver much greater value on all fronts. lining technique which avoided the need to dig trenches along the route capital carbon from 206 tonnes to 36 of the mains. This reduced the capital tonnes. This combination of options We estimate that taking a ‘business as usual’ approach to our new five year programme will achieved a total saving of 638 tCO2e create approximately 745 kt of capital carbon. However, we have set ourselves a target to carbon from 674 tonnes to 206 tonnes. from the traditional solution. reduce this by at least 23% by being innovative. The PAS2080 carbon reduction hierarchy is helping guide our approach. Carbon reduction hierarchy

100% Build nothing

80% Build less

50% Build smarter

20% Build efficiently Potential for Whole Life Carbon reduction

An indication of the scale of our infrastructure - Definition (outline design) Operation Development (design and construction) Concept installing huge new pumps at Bransholme Pumping Station in Hull

40 41 12. Human capital

Employees Share of workforce Share of workforce

Assets female BAME What is human capital? 3,480 23% 5% Human capital relates to people’s wellbeing and the value they bring to society. For an ~ + organisation, human capital encompasses their workforce’s health, productivity, and experience. Human capital is not ‘owned’ by an organisation, but essentially ‘leased’ in exchange for salaries and other employment benefits. Human Capital is closely related to Colleague Lost Time Share of senior Share of senior

Intellectual Capital, which we examine in the next section. engagement Injury Rate managers female managers BAME While it can be useful to monetise the value of human capital to help inform decision making 80% 0.36+ 35% 9% and the business case for investment, this is not about seeing people as a commodity. Quite the opposite, by understanding the value of human capital and the things that affect this ~ + + value, more effective action can be taken to protect and grow people.

Performance and Health, safety Diversity and Why is human capital important? development and wellbeing inclusion Our people are the heart of Yorkshire Water: without them we would not be able to function. Ensuring that we have a safe, healthy, and skilled workforce is essential for us to continue providing our services. Additionally, as a large employer in Yorkshire, our approach to human capital has a role to play in social cohesion and we are committed to increasing our diversity to more closely reflect the society we serve. Assessing our human capital helps us to understand and manage risks and opportunities presented by factors such as an ageing workforce, sickness rates, and diversity and inclusion programmes. We have of course been considering and managing these matters for many Impacts Apprentices Injuries Gender pay BAME pay years. However, through our work in this area we have now been able to value issues and gap gap interventions to aid our decision making. This has helped shape our new corporate ambition

‘to put people at the heart of everything we do’. 27 74 0.5% 8.8%

Favourable to female Favourable to BAME

+ + + colleagues colleagues - What does our assessment tell us? The value of our human capital increased over the five year period to April 2020. The overall size of Yorkshire Water’s workforce grew from 2,451 to 3,480 colleagues through a mix of external recruitment, insourcing of contracted services and restructuring within the Kelda - Group of companies of which Yorkshire Water is the largest part. This growth created high + + quality roles for job seekers, and training and promotion opportunities for colleagues, as well as fresh energy and perspectives for business performance. For example, there was expansion of our leakage team and an annual intake of apprentices. There were also significant levels of staff turnover which has benefits to a point but can cause a net cost Performance to the business from lost skills, experience, and recruitment needs. This is one the biggest and £2.3m Health, safety Diversity factors in the economic value of the Performance and Development theme in the graph development and wellbeing and inclusion opposite, along with costs of wage inflation/deflation. Our performance management remained strong, for example with high levels of colleague Values £0.0m engagement and all colleagues receiving at least the Living Wage. A company-wide and -£5m -£6m m -£1.1m -£0.4m -£1.3m long-term escalation of focus on health, safety and wellbeing was introduced at the start -£8m m -£3m of the five year period following a tragic fatality. Relative to the size of the workforce, rates of -£2.8m both injuries and sickness absence showed overall improvement until a dip in 2019/20. New -£10 -£11m plans and targets have been agreed to drive further progress in supporting physical and -£10 mental health, and reducing the risk of accidents. The workforce became more diverse over the five year period with a higher proportion of colleagues now coming from a Black, Asian and Minority Ethnic (BAME) background, and including growth in senior roles. However, we know there is more to do as our workforce, -£18m including our Board, remains under-represented for both women and ethnic minorities. We explore priority aspects of our human capital over the following pages and the full account can be found in the Methodology Report at www.yorkshirewater.com/capitals. Also find more detail in our Diversity Report athttps://www.yorkshirewater.com/careers/working- for-yorkshire-water/diversity-inclusion/ and discussed on page 48. 2015/16 2016/17 2017/18 2018/19 2019/20

42 BAME = Black, Asian and Minority Ethnic 43 of injuriestoourstaff,the lossofwellbeing costs incurredbyYorkshireWaterasaresult of eachinjury.Thisincludestheproductivity an estimateofthehumanandfinancialcost in 2019/20.Thisfigureiscalculatedbasedon We estimatethecostofinjurieswas£0.7m and refreshedourplantargets. performance andwehaverecentlyreviewed 2019/20. Itisaprioritytofurtherimprovethis in 2018/19followedbyasmallincrease external comparison.Theratereduced hours in2017/18toenableannualand a LostTimeInjuryRateper10,000working approach in2015.Westartedmeasuring fundamental reviewandescalationofour having shownstrongreductionsfollowinga time offworkincreasedsharplyin2019/20 The overallnumberofinjuriesresultingin Injuries of colleagueengagementtokeepsafetyfrontmindforeveryone. Our approach is underpinned by ten Life Saving Rules and a continually evolving programme reducing riskthroughacomprehensiveoccupationalhealthandsafetyimprovementplan. and mentalhealthproblemsifpoorlymanaged.Wetakeahighlyproactiveapproachto that presentarisktolife,andotheractivitiescancontributechronicillnesses our operationspresentsarangeofchallenges,includingbothhigh-hazardactivities Our firstpriorityisalwayspeople’ssafetyandwellbeing.Thespreadcomplexityof safety andwellbeing Occupational health, 44 uk/economics/eauappraisal.htm further informationsee: by theNHSindealingwith anyinjuries.For wider societalcostssuch asthoseincurred to theindividualswhoare injured,andthe https://www.hse.gov. .

72 2016/17

61 2017/18 0.50 50 2018/19 0.34 74 2019/20 0.36 Number of injuries Lost time injury rate than 2to1. shows astrongreturnon investmentofmore programmes increased overtheperiodand through ourhealthand wellbeing for allourmanagers.The valuegenerated We havethereforemandated thiscourse attendees. with positiveandpowerfulfeedbackfrom in mentalhealthfirstaidforseveralyears example, wehavebeentrainingcolleagues largest causesofsicknessabsence.For issues inourworkforce,andsomeof health whichourdatashowsarecommon muscular-skeletal conditionsandmental introduced arangeofmeasuresforboth colleague healthandwellbeing.Wehave have alsobeengrowingourinvestmentin Beyond ourongoingfocusonsafety,we programmes Health andwellbeing illnesses. incurred bytheNHSindealingwithany and thewidersocietalcostssuchasthose of wellbeingtotheindividualswhoaresick, Water asaresultofstaffabsences,theloss the productivitycostsincurredbyYorkshire financial costofeachincident.Thisincludes based onanestimateofthehumanand £11.2m in2019/20.Thisfigureiscalculated over theperiod,andwasestimatedtobe The annualcostofsicknessabsencegrew the impactofCovid-19onsicknessabsence. this introduced newsystemstohelpusimprove an accuratepictureandwehaverecently suspect ourcurrentreportingfailstocapture rate ofsicknessabsenceisrelativelylow.We shows annualfluctuationandtheoverall The totalnumberofrecordedsickdays Sickness absence . Inthenextassessmentwecanexplore

31,600 2015/16 £8.7m £413,000m 2016/17 35,000 £0.3m 2016/17 £9.7m £369,000m 2017/18 38,200 £0.5m 2017/18 £11.8m £355,000m 2018/19 22,500 £0.6m 2018/19 £8.4m £563,000m 2019/20 35,800 £1.2m 2019/20 £11.2m

45 Spend on health/wellbeing Additional value provided Number of sick days by health/wellbeing Cost of sickness absence over recentyearsand has approximatelyhalved of womenonourBoard increased, theproportion women inseniorroleshas While thenumberof more seniorpositions. of womeninhigherpaid, with agrowingnumber profile ofourworkforce to asteadychangeinthe can largelybeattributed 2017. Thisimprovement steadily reducedsince gender paygaphas The meanandmedian operational teams. balance ofourcore improve thegender centre. Wearekeento functions andcontact women inourback-office a higherproportionof different teams,with masks variabilityacross operations. Theaverage engineering andtechnical of long-servingrolesin a historicaldominance workforce ismalewith Overall, mostofour Gender some keyheadlinesandtherelatedfindingsofourlatestimpactvaluationassessment. Over thepagewedescribeourDiversityReport,andprovidealinktoit.Below,explore of ourapproachasalargeemployerinYorkshire. diversity strategyisessentialtostrongbusinessperformanceandwerecognisetheimpact our diversecustomerbase.Webelievethataninnovativeandeffectiveequality We’re committedtoprovidingadiverseandinclusiveworkingenvironmentwhichreflects inclusion Diversity and 46 closed in2019/20. gender paygapwas We estimatethemean targets toincrease. this issomethingwehave

% of workforce that is female

In 2019/20ourmeangender paygapturned 24% 2015/16 27% favourable towomen,improving to -0.5% from1.5%theprevious year. 22% 25% 2016/17 30%

40% 24% 2017/18 28% 33% 23% 2018/19 31% 20% 23% 2019/20 35% 18% All Senior managers Statutory directors policies. organisationtohelp us engagecolleagues,celebratediversityand shape relevant • WorkedwithaDiversity &InclusionSteeringGroupofcolleaguesfrom acrossthe • CommittedtotheSocial MobilityPledge,alongwithalltheEnglishwater companies. improvehowweengagelocalcommunities. • Identifiedwaystomakeourrecruitmentprocesses moreinclusive,includingtheneedto sidewaysmove. programme,60%ofparticipantshaveprogressed theircareerthroughapromotionor feedback.Havingrecentlylaunchedthefifth cohortofthewomen’sleadership • Runleadershipprogrammesforfemaleand BAME colleagues,receivingpositive autism. thosewithvaryingneeds,suchasTheLighthouse Trustwhohelpyoungpeoplewith • Offeredinternshipsandworkexperienceinpartnership withorganisationswhosupport In additiontoafocusonimprovingourdataand reporting,wehavealso: Improvement action inclusive workforce. shows weneedtomakesignificantimprovementsifareachieveatrulydiverseand need tomakeiteasierforcolleaguesdeclarediversity.Especiallyasthedatawedohave We haverecentlyimplementedanewsystemtohelpimprovethedataovertime,butwestill workforce. occupational healthdatasuggestswehaveamuchhigherinstanceofdisabilityinour example, ourdisabilitydeclarationnumbersarelowerthannationalestimateswhile and inclusion,suchasreligionbelief,sexualorientationgenderreassignment.For stronger thanmanyorganisations.Wehavepoordataonotheraspectsofdiversity gender dataismature,butourethnicityhassomegapsindeclarations,although Showing anaccuratepicturedependsonhavinghighqualitycomprehensivedata.Our Data quality mean now–8.8%andthemediangapis2.1%. This hasreducedsincewefirstestimateditin2018,withthe We voluntarilyreporttheethnicitypaygapinourworkforce. being BAME,16.3%inSheffield,15.0%Leeds,and5.9%Hull. at amorelocallevel,with32.5%oftheBradfordpopulation Yorkshire regioninBAME.However,thereisawidevariability our mainoffices.Accordingtothe2011census,11.2%of than theregionalaverageandinthosecitieswherewehave Overall, weseelowerBAMErepresentationinourworkforce ethnicity asBAME. on ourBoarddisclosetheir with annualvariability.None year periodto2020,albeit leadership overthefive our workforceandsenior colleagues hasgrownin and MinorityEthnic(BAME) proportion ofBlack,Asian disclosed theirethnicity,the colleagues whohave Based ondatafromthose Ethnicity

% of workforce BAME

4% 2015/16 5%

4% 2016/17 9%

5% 2017/18 8% to -8.8%from-3.3%the ethnicity paygapgrew minorities, increasing In 2019/20ourmean more favourableto 5% previous year. 2018/19 10%

5% 2019/20 9%

47 All Senior managers Statutory directors Case study Diversity report

In December 2020 we published a second Diversity Report on the nature of our workforce and how it compares to the communities we serve. This goes beyond legal requirements for gender reporting to also share our ethnicity pay gap and data on the gender, age, disability and ethnic profile of our colleagues, where they have declared it to us. In publishing this report we want to let the data speak for itself while also engaging openly with our colleagues, the communities from whom our workforce is derived, and with other stakeholders. We have been talking with other large employers in Yorkshire, such as the NHS, education bodies and local authorities, to align our efforts to improve the diversity of our workforce and ensure we are working collaboratively. For example, we are part of a group of employers in Leeds that have committed to publishing diversity data in a common format. In the future, it should be possible to show a city-wide position of the employment profile of the city’s largest employers, supporting collective improvements. We currently have a set of diversity objectives which are set out in the report. Part of the purpose of openly sharing our diversity report is to help us ensure that these objectives are the right ones and that they meet the expectations of colleagues and stakeholders. Once we’ve completed that dialogue we’ll commit to a new set of objectives and then publish our progress against them on an annual basis. In the short term, our priority continues to be improving our data so that next year’s report shows an even more comprehensive picture. Find our gender and diversity reports at: www.yorkshirewater.com/careers/working-for-yorkshire-water/diversity-inclusion/.

48 49 efficiency andmaturity ofourprocesses,andthevalueimpact ourinvestmentin account, forexamplewewanttodevelopmeasures tohelpusbetterunderstandthe for example.Wewanttogoevenfurtherbecause werecognisetherearestillgapsinthis range ofnewmeasures,suchasafocusonour deploymentoflatest‘smart’technologies, In ourlatestassessmentwereviewedandexpanded ourintellectualcapitalaccountwitha colleagues. We havealsogrowntheamountoftrainingand developmentwehavedeliveredforour both thewaterandwastewaternetworkstohelp usbettermanageleaksandblockages. in technologyandinnovation,forexamplebyinstalling largenumbersofremotesensorsin public educationonthevalueofwaterand environment.Wehaveinvestedsignificantly we aresharingpublicly.Wehavealsogrownour involvementinpartnershipsandourrole are currentlyabletomeasure.Wehavesubstantially increasedthevolumeofinformation Our assessmentshowspositiveperformanceon theaspectsofourintellectualcapitalwe What doesourassessmenttellus? improving theserviceweoffer. or betterapproachestosavemoneyandkeepbillslowforcustomerswhiledelivering Furthermore, wearecontinuallyimprovingourwaysofworkingandfindingquicker,cheaper, processes inordertodeliverefficientandreliablewaterwastewaterservices. We maintain,advance,anddeployourknowledgethroughpeople,systems, Why isintellectualcapitalimportant? programmes. partnership working,investmentsinresearchanddevelopment(R&D),education intellectual capitalweshareoutsideoftheorganisationthroughinformationdisclosures, ‘owned’ by,individualpeople.However,itgoesbeyondouremployees,andincludesthe to humancapital,sinceknowledge,skills,andexperienceareoftencharacteristicsof,or and innovationsthatweusesharewithsociety.Intellectualcapitaliscloselyrelated data andinformationwemanagegenerateasanorganisation,thetechnologies Intellectual capitalisknowledgeandinformation:ourpeople’sskillsknow-how,the What isintellectualcapital? 13. Intellectualcapital 50 account canbefoundin theMethodologyReportat We exploreseveralaspects ofourintellectualcapitaloverthefollowing pagesandthefull and measurementofintellectual capitalcontinuestodevelopinternationally. innovative technologies. Wearemonitoringexternaldevelopmentsas theunderstanding www.yorkshirewater.com/capitals .

Values Impacts Assets Condition notyet Knowledge and and learning Partnerships £6m 276,000hr Knowledge partnership Innovative Employee assessed projects learning £8m training 11 + £9m + + 2015/1 £10m

6 £21m 2016/1 Spend on Research & Development Condition notyet Research and data releases development Research and developmen Open access 7

£18m innovation Ideas and assessed £4m 2017/1 £20m 100 + - - £17m 8 £12m t 2018/1 £14m 9 2019/20 Condition notyet Remote sensor Processes and Processes and assessed technology investment efficiency 43,000 Data and Not yet efficienc assessed network sensors £13m Smart + + y 51 awareness oftheimportancewaterenvironmentandhowwecanallprotectit. development forourcolleaguesandalsoengagementactivitieswithcustomerstoraise of ouroperationsandessentialservices.Thisincludestechnicalleadershiptraining, skills andbehaviouralchangethatsupportthesafety,efficiency,qualityresilience A rangeofongoingandevolvingprogrammeshelpmaintainpromotetheknowledge, these activities,withapproximately a3to1 for theinvestmentwemaketodeliver 2019/20. Thispresentsastrongpayback our educationactivitiesgrewto£0.5min Our assessmentsuggeststhevalueof engagement received. we havestartedtomeasurethehoursof To betterdemonstratequalityanddepth assessments toprovideacompletepicture. We willlooktoaddthisintoourfuture save waterandusesewersappropriately. through communicationcampaignsto Further educationvalueisachieved and pupilsisnearlyalwaysverypositive. groups. Feedbackfromparents,teachers centres, inschools,andwithcommunity activities weundertakeatoureducation This dataincludesthedirectengagement environment andhowtobetterprotectit. we areengagingwithaboutthewater We havegrownthenumbersofpeople Public education 2019/20. grown overtheperiod,reaching£20.9min Company, ourpeopleandsocietyhasalso We estimatethevalueofthistrainingto job’ traininganddevelopment. therefore missingmoreinformaland‘onthe learning managementsystem,andare as theyincludeonlytrainingloggedinour figures arelikelytobeanunder-estimate supporting andtrainingourworkforce.The as wespentmoretimeandresources spent intrainingincreasedconsiderably The totalnumberofhoursouremployees and development Colleague training and development Education, training 52 resilience ofwaterand wastewater services. of securingthelong-term affordabilityand consumer engagement isanimportantpart further intheperiodto2025 asweknow return. Wehaveplansto growouractivities

Number of education Employee hours participants spent on training

2015/16 14,000 2015/16 45,000 2016/17 11,000 2016/17 77,000

2017/18 14,000 2017/18 114,000 2018/19 17,000 2018/19 106,000 2019/20 19,000 2019/20 276,000 other users. help usreachnewand more diverseaudiencesbygivingoptions forteachersand safely. Inaddition,ournew digitallearningtoolsaddtooursuiteofeducation resourcesto and complexityofthetreatment processesforthemselves,whenand where wecanoperate We arekeentowelcome backvisitorstooureducationcentressothey canseethescale in waterthemedvirtualevents,bothregionally and nationally. the benchmarkengagementrates.Oureducation teamhavealsobeenabletoparticipate that havehadviewstotallingover23,400hours andwhichhaveconsistentlyoverperformed These newresourceshavebeensupplemented byaseriesofsocialmediaeducation‘shorts’ question andanswersessions. information aboutYorkshireWater.Theycanalso takepartinliveorrecordedstudent Our teamcanprovideadviceandfurtherinformation onthelessontopicsanddetailed our educationadviserstothoseschoolsregistering todelivertheclassestheirstudents. guidance, studentworksheetsandextensionactivities. Wealsoofferthedirectsupportof filmed atouroperationalandcatchmentsites acrossYorkshire,alongwithteacher teachers whosepupilsareathomeorinschool. Thelessonsincludepre-recordedvideos Our seriesofonlinelessons,whicharedelivered viaYouTube,havebeendesignedfor received fromthosewhotookpart. Nature Reserve,withgreatfeedback workshops outdoorsatourTophillLow delivered newfamilyfocusedenvironmental colleges. Whencircumstancesallowed,we career talksforsecondaryschoolsand topics forprimarystudents,andvirtual lessons coveringasuiteofwater-related of onlineeducationresources,including latest technologiesandlaunchedarange outcomes inadifferentway.Weembraced how wecouldachievethesamelearning so oureducationadvisorshadtorethink greatly restrictedthroughthepandemic Our normalfacetoapproacheswere at KeyStage2. visits thatsupportthenationalcurriculum primary schoolchildrenbyofferingfree to 70plus,wefocusourprogrammeson Whilst ourvisitorsrangefrom7yearsold their roleinusingwaterandsewerswisely. and recyclewater,waystheycanplay also learnabouttheprocesstosupply guided experimentsandgames.Visitors through thewatertreatmentprocess,and including sitetours,interactivejourneys value ofwaterthrougharangeactivities community groups.Visitorslearnaboutthe specialist centres,andinschools programmes havebeendeliveredatour Traditionally ourpubliceducation Covid-19 education through Delivering water Case study Tophill LowNatureReserve Teaching aboutthewaterenvironmentat 53 We seevalueinencouraging widerscrutiny network. millions oflinesdataonleaksfromour Data MillNorth.Forexample,weshared disclosures throughourpartnershipwith an increasingnumberofinformation by default’wehavevoluntarilypublished Following ourcommitmenttobe‘open information Openly sharing area. the longterm.Belowweexamineafewprioritymeasuresofourimpactandvalueinthis intellectual capital,thisisacriticalpartofsecuringhighqualityandaffordableservicesfor of innovation,andalsotoleadsupportnewareasinnovation.Likeallaspects It isanongoingtasktomakethemostofrapidlyevolvingtechnologyandotherforms technology Innovation, dataand 54 in futureassessments. but thisisanareawehope canbeimproved to estimatethisvaluein economicterms, fresh innovation.Wehave notyetbeenable to helpholdusaccount andtoenable

Number of information disclosures

2015/16 19 2016/17 20

2017/18 43 2018/19 85 2019/20 100 will focusoninthefuture. of thisinvestment,but issomethingwe estimate thesixcapitals valueandimpact and hardware.Wehave notyetbeenableto maintaining andenhancing oursoftware These figuresshowour maininvestmentin supply interruptionsandpollutionincidents. the networksinoureffortstoreduceleaks, improves ourabilitytomonitorandmanage networks in2018/19and2019/20.Thisgreatly 40,000 sensorsonthewaterandwastewater operations. For,exampleweinstalledover support theefficiencyandqualityofour investment inlatesttechnologiestohelp We havesubstantiallyincreasedour technology Applying latest better servicemoreefficiently. and costsavings–allowingustoprovidea service deliveryandthroughefficiencies customers throughimprovementsinour further £4.60invaluetoourbusinessand that every£1weinvestinR&Dproducesa on ourinternalcalculations,weestimate which showsastrongrateofreturn.Based estimate thebenefitofthisinvestment, In ourassessmentoftheimpactwe in otherpartsofthebusiness. and maynotcaptureotherR&Dactivitiesled investment, led through our innovation team, that thisfocusesonthemainareaofour again in2019/20.Itisimportanttonote the fiveyearperiodbutstartedtoincrease The levelsofinvestmentinR&Dreducedover development (R&D) Research and In 2019/20wespent£4mon R&D generatingareturnon

Technology investement investment of£14m R&D investment 2015/16 £19m 2015/16 £5m 2016/17 £29m

2016/17 £6m 2017/18 £41m 2017/18 £5m 2018/19 £62m 2018/19 £3m

55 2019/20 £53m 2019/20 £4m Case study Building a smarter network

In Sheffield we have been working on an ambitious pilot study involving 15 companies working together to develop the largest and most extensive smart water network pilot in the UK. Cutting-edge water meters, sensors, advanced analytics and telecommunications channels are being deployed to enable near real time data from across the water network, If the pilot is successful, this will help to revolutionise the way we can manage leaks and interruptions to supply and therefore reduce the amount of water we need to take from the environment. The project will utilise state-of-the-art technologies including the NB-IoT (Narrow Band Internet of Things) network, which was brought to the area after BT switched on its first upgraded masts in the UK as part of the project. BT’s NB-IoT solution has the potential to deliver significant improvements in data quality and battery life, enabling Yorkshire Water to identify and prevent leaks and network incidents more accurately than ever before. The NB-IoT could also support local economic growth with opportunities for local businesses to take advantage of the advancement in IoT technology. Yorkshire Water and partners have recently deployed almost 4,00 acoustic, flow, pressure and water quality monitors for this project. The smart water network pilot will integrate the rich data from multiple new and existing sources and present it in a single visualisation platform. This will provide a virtual model of the physical assets across the network, referred to as a digital twin. Using machine learning and artificial intelligence, clustering data sets and removing false positives, this will inform asset and operational decision making. We hope this will allow our analysts to prioritise repairs instantly, enabling leaks to be repaired quicker and reducing water lost. The 12-month pilot and the outputs will be used as part of the wider Yorkshire Water’s digital strategy to determine future dynamic control and system optimisation capabilities. A colleague installs a new logger

56 57 14. Social capital

Site Household Vulnerable Suppliers visitors customers customers Assets Recreational Households Customers Suppliers visits served on PSR used 2.6m 2.2m 66,000 1,800 ? ~ + Share of site Share of invoices visitors who are Satisfaction Awareness BAME of PSR paid late

2% 92% 42% 38% What is social capital? - Social capital is the value of an organisation’s relationships with people, society, and other organisations, and the trust placed in it by its customers and suppliers. It also relates to the ? ~ ~ impacts that an organisation can have on people and society; for example, by providing a valuable service, or through contributions to charities and the local community.

Public health Quality of Vulnerability Trust Why is social capital important? and wellbeing service As a private company providing a public service, our social capital is essential – our ‘social license’ to operate is every bit as important as our legal one. Maintaining strong levels of trust and integrity is a priority for us at a time when surveys show that public confidence in large organisations is low. We achieve this by doing the right thing for our customers and other stakeholders, by looking after those in vulnerable circumstances, and by consistently delivering our high quality, highly reliable services. We also pay close attention to our wider impacts on the region and the world, such as through our volunteering programme and our charitable work with WaterAid which works for Impacts Recreational Internal flooding Customers financially Early payments

a world where everyone has safe water and sanitation. health benefits incidents supported to suppliers 315QALYs 1,600+ 36,000 76,000

What does our assessment tell us? ? + + According to our latest assessment and the measures we have been able to include, our social capital has grown substantially over the five years from 2015 to 2020. Not yet Our ability to support public health and wellbeing has been advanced through + assessed + + improvements in water services that protect public health, through investment in high quality access to our land for recreation, and through our focus on enhanced support for those in vulnerable circumstances. The large increase in the 2019/20 value for public health and wellbeing shown in the graph opposite is primarily because we have been able to add a

value estimate for the health benefits of exercise from recreation on our land (£7.9m). £15m The quality of our service has improved over the period although we are still developing metrics to measure these impacts. A notable challenge is the need to work collaboratively and innovatively to reduce the risk of flooding with growing pressures from urban Values development and climate change. Measures show we are protecting and growing trust in the business. Having maintained and further improved many areas of customer service we have retained high and broadly stable levels of customer satisfaction and value for money perceptions. In our supply chain m m m m we have taken steps to help smaller suppliers through the economic challenges during the £7 £6 £6 pandemic and we have improved the proportion of invoices paid on time, but we need to £6 do even better on this in the future. The sharp increase in 2019/20 trust values, as seen in the m £4m m m graph opposite, is caused by our growth in early payments to suppliers. £4m £4m

£3 Trust £3 Social capital is hard to measure and we continue to monitor external developments as £3 the understanding matures internationally. In this latest assessment we have updated and Public health Quality of service Vulnerability expanded the indicators of our social capital, although we recognise that further work is and wellbeing -£1m -£1m -£2m needed in this area. For example, in the future we want to develop measures of the role we -£2m play in contributing to a good quality of place in Yorkshire. Over the following pages we review several priorities within our social capital and the full account can be found in the Methodology Report at www.yorkshirewater.com/capitals. 2015/16 2016/17 2017/18 2018/19 2019/20

58 PSR = Priority Services Register 59 BAME = Black, Asian and Minority Ethnic QALY = Quality Adjusted Life Years rather thanchoosinga private supply. water servicetothegrowingpopulation borne illnessesbyextendingourpublic explore thehealthbenefitofavoidingwater We haveintroducedthisnewmeasureto £5m eachyear. estimate thisimprovementisworthjustover health benefitweprovidetoYorkshire.We further improvedtheunderlyingpublic customers overthelastfiveyearswehave By extendingwatersuppliestomore our coreservices Protecting healththrough the chapteronHumanCapital. Also notethesectiononoccupationalhealthandsafetyin we supportcustomersinvulnerablecircumstances. spaces forrecreationalexerciseandthroughthemanyways how wedeliverourservices,forexamplebyprovidingopen we canaddadditionalhealthbenefitsthroughchoicesin infrastructure. Wethinkitismoreusefultofocusonwhere which usesoverahundredyearsofinvestmentinpublic whether ornotitisYorkshireWaterinitscurrentform,and this isultimatelyourcoredutythatsomeonehastodeliver assessment. Wedonotseektoquantifyitherebecause benefits ofourservicesdwarfeverythingelseinimpact service andunderpincivilsociety.Thehealthsanitation Water andwastewaterservicesareanessentialhealth health andwellbeing Supporting public 60 the accuracywithlocal datainthefuture. broadly comparablewe canlooktoimprove because ofdataavailability. Whilethisis Yorkshire-specific figure inthisestimation We usedanationalaverage ratherthan Quality AdjustedLifeYears showing thechangeto used economicmeasure (QALYs) isacommonly quality andquantityof Health benefit of extended public water service (QALYs) people’s health.

2015/16 201 2016/17 202

2017/18 203 2018/19 205 2019/20 206 estate. In theNaturalCapitalchapter weexplorethewiderimpactandvalueassociated withour ethnic diversityofvisitors andrecognisethisisanareaforfurtherattention. visitors withapramorusing awheelchairormountaintrike.Wealsowant toimprovethe for ourworktoimprove paths andremovestepsstilestoensurebetter accessfor of society.Workingwithorganisationssuchas Experience Communitywehavewonawards tackling barriersthatrestrictaccessandincreasing therangeofopportunityforallsections A priorityofrecentyearshasbeentomakeour landevenmoreappealingtoeveryone, generating approximately315QALYsofhealthbenefits worthanestimatedvalueof£7.9m. This suggeststherewereover2.5mvisitstoour sitestoundertakeexercisein2019/20, recreational activitieshardtomeasure,wehave estimatedourimpactforthisassessment around 98%overthefiveyearperiod.While diffusenatureofoursitesandvisitorsmakes tell ustheyvaluetheseopportunities.Surveysshow visitorsatisfactionwasconsistently We havelongbeenachampionofopenaccess toourrecreationalsitesbecausecustomers Recreational exercise value created. cost ofourfinancialsupport,ratherthanthe impact assessmentwhenwelookedatthe improvement onourapproachinfirst to over£4mayearin2019/20.Thisisan through ourabilitytohelp.Thishasgrown health benefitsofreducedstressachieved have estimatedthevalueofmental increase thisfurtherovercomingyears.We financial supportandweareworkingto number ofpeoplewehelpwithdirect We havesubstantiallyincreasedthe of thepandemic. more importantwiththeeconomicimpacts debt whenitstarts.Thishasbecomeeven debt inthefirstplace,andtomanage to proactivelyhelpcustomersstayoutof those strugglingtopaytheirwaterbill,both provide. Itisourongoingprioritytohelp financial andothersupportmeasureswe We havegrownthequalityandquantityof Supporting thevulnerable

Number of customers receiving financial support

2015/16 22,900 2016/17 26,600

2017/18 28,600 2018/19 31,600

61 2019/20 35,900 Case study Dementia Friends

Some customers need additional help from us. This could be because they are older, or because a disability or an illness means they need extra help during a water shortage, or they need help to read their bills by receiving them in different font sizes or braille. Some customers may temporarily need additional help during pregnancy, or while recovering from medical treatment. Whatever the reason, we want to reassure those customers that we are here to help and have a range of priority services for them. One area of focus for us is to better support those with dementia. Research by Alzheimer’s Society shows that 850,000 people in the UK have a form of dementia, and this is growing fast. That’s why we are working to become a Dementia Friendly business as part of our work to better tailor our services to individual needs. We have been raising awareness amongst our colleagues by rolling out training to help volunteers become Dementia Friends. This is an initiative led by Alzheimer’s Society to help people understand more about dementia and the little ways they can help. So far we have trained nearly 900 of our workforce and we want to go even further. The outcome for our customers is that we have staff that can have direct contact in a way that is better for them, as well as allowing staff to improve all aspects of our business to suit people who may have different needs.

A group of colleagues become Dementia Friends

62 63 We areworkingtomaintain andfurther year todeliverrealtermspricereductions. rising bylessthantherateofinflationeach country throughoutthefiveyearperiod, were amongstsomeofthelowestin measures. AveragewaterbillsinYorkshire performance inmostofourcoreservice to keepwaterbillslowwhileimproving These resultsweresupportedbyourability services. of valueformoneyinYorkshireWater’s of customersatisfactionandperceptions surveys consistentlyreportstronglevels provide anindependentbenchmark.These perceptions ofeachwatercompanyto regularly surveycustomersfortheir The ConsumerCouncilforWater(CCW) Customer perceptions society weserve,discussedaspartofHumanCapital. as beingopenwithourdata,foundinthechapteronIntellectualCapital,andreflecting Many oftheactivitiesexploredelsewhereinthisreportalsocontributetolevelstrust,such region’s waterinfrastructureandservices. service. Thismeansweneedtomaintainstrongsupportforcontinuedinvestmentinthe Yorkshire Waterbecauseweareaprivatelyownedcompanydeliveringanessentialpublic collaboratively inthebestinterestsofYorkshireregion.Trustisespeciallyimportantto stakeholders bydeliveringreliable,qualityservicesatafairpriceandworkingopenly We continuallystrivetosecurehighlevelsoftrustfromourcustomersandother Securing trust 64 for example. pollution andriskofflooding fromthesewers reduce interruptionsto supplies, leakage, period, recognisingweneed todomore improve servicesoverthe newfiveyear

83% 2015/16 94% 81% 2016/17 92% 78% 2017/18 92% 78% 2018/19 92% 80% 2019/20 92% Value for money Customer satisfaction procured atthenecessary qualityandprice. economy wheregoods and servicescanbe help monitorourrolein supporting thelocal spend withlocalbusinesses inYorkshireto our assessmenttoinclude theamountwe In thefuturewewouldalso liketoexpand because ofthepandemic. cashflow pressuresthatmanyexperienced smaller suppliersin2020tohelpwiththeir We offeredimmediatepaymenttermsto overall spendwithsuppliers,ataround9%. broadly stableasaproportionofour increased inabsolutetermsandremained The amountwespentwithsmallersuppliers to £5.9m. the benefitsofourearlypaymentsincreased cost of late payments reduced to £1.7m while For 2019/20,ourassessmentestimatesthe of earlypayments. we alsosawalargerincreaseinthenumber they remainproportionatelyhigh.However, end oftheperiodbutweneedtodomoreas invoices wepaidlatereducedtowardsthe to improveperformance.Thenumberof we paid,followinganincreaseininvestment an overallincreaseinthenumberofinvoices business. Overthefiveyearperiodwesaw effectiveness inbeingahighlyresponsible we supportsuppliers’trustinusandour invoice paymentsasoneindicatorofhow We haveusedthenumberoflateandearly on time Paying oursuppliers

2015/16 48% 3% 48% 2016/17 75% 15% 11%

2017/18 59% 1% 40% 2018/19 31% 1% 68% 2019/20 38% 0% 61%

65 % of invoices paid late % of invoices paid on time % of invoices paid early Case study Reputation dashboard

We have introduced a new performance dashboard to help us better monitor and manage several key aspects of our social capital. The dashboard is tracked and communicated to management on a regular basis to provide latest insight on a mix of headline indicators of the strength of our brand, trust and relationships with customers and other stakeholder groups. The dashboard is structured around three themes of customer, media and political sentiment, including the balance of positive, negative and neutral feedback. We compare our performance against that of other’s in the sector as well as our own targets. We continue to develop our measurement of aspects of social capital and recently developed a process to estimate customer emotions about our service and performance. This is all part of our ongoing commitment to great customers service and it supports our new vision to put people at the heart of everything we do. In practice we are able to use the indicators and the more detailed information behind the dashboard to shape our operational approach, customer service and long term strategic direction.

An example of our new reputation dashboard, with sensitive aspects greyed out

66 67 Further improving our measurement, 15. Conclusions reporting and decision-making

Internal reporting will Consistent, widespread be supported with the application – We have introduction of a new developed cutting-edge capitals dashboard. tools and processes, and Amongst others, this started to apply them in will help our Board and several areas of Yorkshire Social Value Committee Water. Our focus now in their role to scrutinise is to use our capitals and stretch the processes and tools to Company’s approach. assess and optimise all Having matured our our asset management approach in this latest needs and investment work we can stabilise choices. We are working We remain committed to the structure and key to fully embed the six further developing and performance indicators capitals functionality in embedding the six capitals in the assessment for Our our new Decision Making approach throughout our Contribution to Yorkshire, Framework. We are also decision-making, corporate with the need for future finalising a new tool and governance and reporting. change only in the finer process specifically for As we continue to mature detail. land management. These our approach, priorities tools are supporting us include: in comparing a richer view of the costs and benefits of traditional and innovative approaches, Protecting and growing our Public reporting of Data and measurement thereby growing our Our Contribution to – We are embedding focus on nature-based impact and value Yorkshire will be released the required data and behavioural-change annually from now on to reporting needs to This runs to the heart of our purpose-led approach to business at Yorkshire Water. Our techniques that help support our openness become ‘business as address issues at source latest assessment shows generally stable or increasing performance across each of and enable scrutiny. usual’. We are also the six capitals. In economic terms, we estimate net growth in the overall public value with many benefits As well as considering working on remaining beyond the immediate we are managing and creating for customers, shareholders and wider society. To draw a highly accessible gaps and areas of out just some examples, we have increased our financial support to customers in need water service objective at and customer-friendly lower confidence in our hand. and increased the environmental value of our estate, while reducing carbon emissions summary of this work we capitals accounts and significantly. We also maintained strong levels of colleague engagement and grew levels of will also further advance indicators. For example, training and development. our ‘integrated reporting’ we want to further develop our intellectual The assessment also highlights areas needing further attention if the business and its approach to reporting through careful alignment capital account, continue essential public services are to be sustainable and resilient for the long term. We need the improvements we to continue to address leakage and water pollution issues. We also need to continue our with our Annual Performance Report (APR) made on measuring transformational, multi-agency collaboration to protect and restore our Sites of Special biodiversity and net gain, Scientific Interest (SSSI) where 96% currently fail to achieve ‘favourable’ condition. We need and Annual Report and Alignment and Financial Statements and better understand collaboration on to further embed and evolve our new payment systems to help ensure we reliably pay the value of water to us, our suppliers on time. And our enhanced focus on diversity needs to achieve measurable (ARFS). In the longer term developing best practice we may no longer need our customers, and the in applying the capitals change in the representative makeup of our workforce and Board. Furthermore, we observe environment. Further many opportunities where we are well placed to make a substantial contribution to regional a Contribution report as concept and evolving this further matures and specifics can be found environmental and and national priorities such as the economic recovery from the impacts of the pandemic, in the Methodology the leveling-up agenda, and climate change. we can fully integrate social economics. We the work into our formal Report. We also want to are working with other This report includes many further examples of strong and improving performance, and annual reporting. explore the dependencies water companies and areas where more action is needed. Improvement and investment plans to 2025 are in between the capitals more widely as part of place to protect and enhance current performance and continue the positive trend for and our impact and a growing community improvement. We are also engaging in Yorkshire and nationally to collaborate on the wider value under each applying multi-capitals systemic changes needed across the water sector and wider society. Our recognition for the capital. This will support approaches. Several imperative of resilience and sustainability will be further strengthened in our new corporate our understanding and government departments strategy as we develop this through 2021 and beyond. In the future, we’ll be able to align management of risk and and agencies are also our six capitals assessment to help us openly demonstrate our progress and performance resilience. leading in this space. against our new strategy and defined priorities.

68 69 yorkshirewater.com

Yorkshire Water Services Limited, Western House, Halifax Road, BD6 2SZ. Registered in England and Wales No.02366682