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Water sector partnership sets natural capital approach principles on which to base future investment decisions

14 December 2020 6:01

The Water Industry Forum, working with Water UK’s Environment Policy Advisory Group members, through Welsh Water and supported by Atkins, has produced a set of principles to guide the water sector on the use and application of Natural Capital type approaches in investment decision making.

The principles include:

  • Natural Capital approaches should aim to:
  • ­   facilitate balanced decisions that will meet the needs of the present without compromising the ability of future generations to meet their own needs
  • ­   create benefits across a broad range of outcomes beyond individual targets, for environment and society
  • ­   offer best value options for environment, and stakeholders.

The full list of principles can be found in the Water Industry Forum report ‘Natural Capital Principles for the Water Industry’ available to download on the Forum’s website as well as the websites of many of the organisations that took part.

The report is seen as a best practice guide for water companies and regulators to help design and apply Natural Capital type tools - ultimately with the aim of making more sustainable investment decisions and delivering better outcomes for customers and the environment.

Peter Drake, Water Industry Forum’s Chief Executive said “The list of principles are the result of a true collaborative effort by water companies, regulators and governments from across the UK working in partnership.  As a neutral and independent forum, we are really pleased to have been able to facilitate an outcome that moves the industry forward.”

Tony Harrington, Welsh Water’s Director of Environment said: “We are delighted to have led with the Water Industry Forum and Ofwat the development of these Natural Capital principles for our sector. Through effective collaborative working, the industry is now in a position to take these principles forward and subject to the availability of funding, expand our ambitions to work more with nature and so focus on addressing the longer term challenges we all face such as climate change and biodiversity loss.  Such an approach will help ensure that our services support the environmental, social and economic wellbeing of future generations”.

Richard Whale, Market Director for Water at Atkins, said: “The importance of natural capital cannot be underestimated as our industry strives to do its part to tackle climate change and biodiversity loss, and help the UK transition to a Net Zero future. At Atkins, we thrive on these kind of projects, and it’s a real privilege for us to have been working with Water Industry Forum, water companies and regulators to create a framework which puts natural capital at the heart of our engineering and asset management decision making. The UK Water Industry has taken a leading position, which is likely to benefit other sectors that follow.”

In creating these principles, it was recognized that

-      a Natural Capital Assessment approach should be well evidenced, highlighting the social, economic, and environmental wellbeing of communities as well as aligned with national policy 

-      any such systems based decision-making approach will result in some difficult trade-offs being required

-      not all are necessarily practicable, or even appropriate in terms of applying such an approach to all investment decisions.

The following comments were made by some of the other participating organisations:

Ofwat’s Director of Environment, Public Value and Governance, Bart Schoonbaert said “We welcome the collaborative approach taken to arrive at these principles, as well as the guidance that sits alongside them. We look forward to seeing these applied in practical ways. Natural capital approaches can enable better decisions on and assessments of investment proposals, and lead to better outcomes for customers and the environment. This work, alongside a focus on natural capital approaches in processes such as WRMPs, helps to move the entire sector forwards in this space.” 

Yorkshire Water’s Head of Sustainability, Gordon Rogers said “Natural Capital is core business to the water industry, which fundamentally relies and impacts on the environment. I’m passionate about fully reflecting the value of these dependencies and impacts throughout our decision-making process to continue the work to make us more sustainable. This supports the case for catchment and behavioural approaches that are essential to the affordability and resilience of customer services, while also delivering multiple other benefits.”

Louise Hunter, Corporate Affairs Director at Northumbrian Water Group, said “We are committed to supporting this industry-wide natural capital approach that will help deliver wider benefits to society and the economy, through more aligned principles.  We are passionate about investing in our local communities and enhancing our local environment, working with partners and our customers to make sure we deliver support where it is really needed.  This new approach will help to build resilience, which is essential to support a healthy natural environment and protect our water cycle, ensuring we can deliver a continuous supply of clean, clear and great tasting water to our customers.”

South East Water’s Regulation and Strategy Director, Oliver Martin said “South East Water has made a responsible business commitment to adopt a natural capital approach to ensure we value our impacts and dependencies on nature in the decisions we make. Adopting this approach will help ensure that the investment solutions we implement both protect and enhance the natural assets under our ownership and influence.  We consider that the principles adopted provide a good set of rules to test that the future implementation of natural capital accounting in South East Water is both effective and appropriate.”

Keith Scott, Northern Ireland Water’s Business Reporting Manager said “Northern Ireland Water welcomes the publication of the ‘Natural capital principles for the water Industry’ as an important milestone in the application and use of natural capital approaches.”


The Water Industry Forum launched in 2012 to meet the need for an independent, not-for-profit stakeholder forum for the whole of the UK water sector.  Our membership comprises around 600 organisations including government, regulators, regional water companies, contractors, consultants, manufacturers, research organisations, third sector organisations and investors.  Our primary aim is to tackle the many challenges facing the UK water sector through facilitated collaborative working.  We do this by providing a forum that is both neutral and independent.  This allows us to bring together and engage a wide range of stakeholders to focus on the specific challenges identified by our partners.

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