Water companies are not to be blamed for pollution incidents, according to investment management group EdenTree.
EdenTree said it carried out “qualitative research”, interviewing water companies, which had argued that their contribution to water pollution was low.
The 15-page report, entitled ‘The Condition of Our Rivers’, shared the water companies’ side of the argument that they had invested in measures to reduce discharge from combined sewer overflows (CSOs), which act as emergency valves to discharge untreated human sewage and waste-water when the sewerage system is overloaded.
Earlier this year, the Environment Agency released data showing that 10 water companies in England released raw sewage into waterways 1,000 times a day on average last year, led by FTSE 100-listed United Utilities Group PLC (LSE:UU.), with fellow blue-chips Severn Trent PLC (LSE:SVT) in third and South West Water, owned by Pennon Group PLC (LSE:PNN, OTC:PEGRY), in fourth.
The agency is also carrying out a criminal investigation at more than 2,200 sewage treatment works owned by these and other water and sewerage companies, over potential breaches of permit conditions for monitoring and wastewater treatment.
READ: Tougher regulation for water companies needed as chemical cocktail polluting English rivers, MPs say
But EdenTree’s research argued that CSOs are “only one part of the problem" and that utilities companies are “disproportionately blamed for water pollution”.
In fact, the report suggested agriculture accounts for approximately 40% of pollution affecting rivers and other bodies of water in the UK, followed by urban run-off accounting for another 18% due to “inadequate sustainable urban drainage solutions”.
“What we have found is that public sentiment and, to a great extent, the media have often demonised utilities companies as the culprits, but deeper research has found this not to be the case,” said Neville White, head of responsible investing policy & research at EdenTree, which was formerly known as Ecclesiastical Investment Management and is part of the Benefact Group, which is owned by the Benefact Trust charity, which itself was formerly called the Allchurches Trust.
EdenTree said Pennon’s South West Water was a “laggard”, having been responsible for at least 146 serious pollution incidents annually for the past decade, including 245 incidents in 2013 and further 225 incidents in 2020, extending its terrible long-term record on pollution.
White said this was one of “a very few” utility sector businesses that “require further engagement to improve their performance”.
He said: “Utilities companies by-and-large, and some housebuilders, have shown incredible dedication and innovation in trying to help solve urban and rural causes of water pollution.”
EdenTree, which does not have a water company in any of the top 10 holdings of its funds, said it invests in eight water and waste water utilities across all portfolios and mandates, and it engaged with all eight: Anglian Water, Dwr Cymru (Welsh Water), Severn Trent, Southern Water, South West Water (Pennon), Thames Water, United Utilities, and Yorkshire Water. It also held a stake in Bristol Water, which was acquired by Pennon.
Of the integrated major water companies only Wessex Water and Northumbrian Water are not held in EdenTree portfolios.