Britain's rivers are in a sorry state due in large part to the water sector's actions and this has been the subject of public outcry in the past couple of years.
As such it might present a conundrum for investors focused on environmental and social concerns or with an ESG remit as part of their wider investment policy.
At the time that Pennon Group PLC (LSE:PNN, OTC:PEGRY)'s South West Water division was again cited by the UK Environmental Agency for again being one of the worst water performers in the sector for allowing raw sewage to spill into rivers and the sea, its largest three shareholders are Lazard, BlackRock (NYSE:BLK) and Impax Asset Management (AIM:IPX, FRA:LW4) Group (LON:IPX).
Challenged on this, a spokesman for Impax, which specialises in sustainability-focused investments, said its funds invest in water utilities because they provide clean and safe drinking water and treat wastewater before it is returned to the environment.
“We have engaged with Pennon on this issue and note their commitment to significant improvement. This includes a commitment to achieve a four star rating on the Environmental Performance Assessment (EPA) carried out by the Environment Agency in 2023-24 and 2024-25.”
Impax said pollution events are “one of the factors considered in the assessment of their environmental performance”, while arguing that “their performance in other areas is very good”.
“For example, they are among the few companies in the industry to have a strong policy framework for restoration and enhancement of biodiversity in and around their operational sites. They are proactively looking to protect and enhance healthy places, habitats and biodiversity in their operational areas by working in partnership with wildlife trusts and other stakeholders.”
At Lazard a spokeswoman said: “we believe that thinking and operating through a sustainability lens should be everyone’s job, and sustainability insights are incorporated into multiple aspects of our investment decision-making and client solutions.
“Our team of over 250 investment professionals, including a global network of more than 100 analysts and global sector specialists, are directly responsible for conducting research on sustainable investment relevant to their sectors, stocks, and portfolios. This research is not conducted by a separate team. We believe that our sector specialists are in the best position to fully understand the material ESG risks and opportunities within their sectors, and integrate them into investment decisions.”