Thames Water – No corporate cornucopia for the community

Fearful of the effects of recession, some charity fundraisers were hoping the last round of privatisations would sustain total corporate giving, bringing in new donors with multi-million pound programmes like BT or British Gas. If Thames Water’s cautious approach is typical, community groups will be disappointed. In the year to March 1992, the Group devoted less than 0.1% of its £236 million profit to community contributions. However this is not corporate meanness, but part of a deliberate long term strategy, Thames Water argues, and the comparison with BT unfair.

The business

Joining the private sector in November, 1989, Thames Water Plc now has 306,000 shareholders with 20% of shares held by private individuals. It is the monopoly supplier of water and sewerage services to thirteen million people in southern England. The Group has embarked on a diversification programme into water and environmental related activities, with 17% of turnover coming from non-utility business, although this currently generates less than 3% of profit.

Privatisation

In the public’s perception, the previously publicly-owned utilities still enjoy an effective monopoly, with all the attendant fears of over-charging that are associated with monopoly. However BT has Mercury snapping at its heals and gas and electricity are at least alternatives, if not competitors. The water companies have no such solace. Their privatisation was the most controversial – witness the current concern in Scotland – because of the feeling that water is, in some way, everyone’s birthright, not a commodity for private profit. The tight, and tightening, regulatory arrangements, particularly on charges, have yet to ameliorate these public concerns.

Fear of public reaction causes Thames Water, rightly or wrongly, to be cautious about having a munificent donations programme: corporate cornucopia might lead customers to question whose money is being given away. The company has also not been immune to public controversy over the private utilities’ general approach to executive pay rises and political donations – although at least on the former Thames Water itself has behaved impeccably. In any event, Thames Water has not felt it appropriate to embark on a donations programme equivalent to companies privatised earlier.

Strategy

Instead the strategy is to build up gradually long term links with organisations having a common interest in its region, based on employee involvement and partnership. As an early exemplar of this approach, Thames Water is linking up with BTCV to identify suitable sites for environmental improvement, with BTCV providing the organisation to run the project and with the Group offering technical expertise and volunteer labour. The choice of site is sensitive, since Thames Water must avoid any suggestion that it is off-loading its environmental obligations onto community groups and volunteers.

Identifying the possible partnership projects, building up those relationships, encouraging staff to volunteer and finding ways to offer donations in-kind through company services and facilities, rather than just in cash, inevitably takes time. For a company with no track record or experience of running a community affairs programme, there is a steep learning curve. So in preparation for an employee volunteering programme, Thames Water has spent time at Allied Dunbar in Swindon, learning from an acknowledged leader in this area. Nor should it be underestimated how long it takes to change entrenched attitudes and work practices. As other companies have found, middle management as well as senior executives must accept that community involvement is a mainstream activity before staff are really free to participate.

Policy

Meanwhile there are three elements to Thames Water’s activities:

support for WaterAid, the water industries’ charity to bring safe water supplies and sanitation to the world’s poorest communities;

pound for pound matching of employee fundraising;

a programme of small donations to charities and community groups operating in London and the Thames Valley.

To be eligible for support, community groups must have a link with the Group’s business activities, in the field of environment, recreation, education, the arts, primary health or in the local vicinity of a site. Over time, as the balance in the programme shifts towards the partnership arrangements, this donations element will increasingly be driven by the local site managers to build up good neighbour relations.

Management

A charities committee consisting of the Group Deputy Chairman, Sir Christopher Leaver, and three senior executives decides on charitable giving. There is no staff representation. Implementation and the delivery of a programme of local sponsorships is the part-time responsibility of two managers in the company secretary’s department, not the corporate external relations section. The “snow storm” of paper generated by unsolicited applications always receives a reply, even if it is a polite ‘no’.

The education programme is delivered through the personnel section, with a full time schools liaison officer. Support offered includes teacher placements, schools materials and donations.

Communication

External communication is mainly limited to a paragraph in the Annual Report, in accordance with the desire not to build a high profile among the general public. By contrast, all staff receive regular updates in the monthly staff newspaper and get an annual newsletter, giving details of the previous year’s activities.

WaterAid

The one exception to the low profile approach is WaterAid, where in common with other water companies, Thames Water includes an appeal with every domestic bill posted out in March each year. Last year this raised £220,000 in the Thames region, bringing the total raised including staff fundraising and a corporate donation to £313,000. A voluntary committee of staff coordinates the fundraising. Despite the hesitation about being seen to be involved in charitable activities, this appeal has not generated any complaints from customers. Indeed the sum of money raised through a simple leaflet, rivalling the more professional approach of many charities, indicates that this cause does command widespread support.

Conclusion

Thames Water has started to set in place a coherent community affairs strategy. The company is less than three years old. In that time, it could not reasonably have leapt into the top rank of corporate citizens, although the plans to involve employees and build long term partnerships with community groups indicate it is working along the right lines. With a concerted effort, the case for a comprehensive community affairs programme can surely be made, even to a sceptical public of water consumers.

The real question concerns the extent of its corporate programme. On Per Cent Club guidelines, a Group making well over £200 million profit each year should have a programme of at least £1 million, and be aiming for £2 million. Currently Thames Water is at just a tenth of that figure. Can it truly take its place alongside other great private sector companies until that improves?

FactFile

Thames Water Plc

Year ended 31 March 1992

Chairman: Sir Roy Watts

Main business: supplying water and disposing of sewerage throughout London and the Thames Valley

Turnover: £899m

Profit before tax: £236m

Employees: 9,348

FT top UK 500 ranking: 94

Declared charitable donations: £106,000

Declared total community contribution: £181,000

% of profit: 0.04% (donations); 0.08% (contribution)

Memberships: BITC

Community affairs contact: Julian Le Patourel

Address: Nugent House, Vastern Road, Reading RG1 8DB

Phone: 0734 593690 (fax: 0734 560977)

Corporate Citizenship Briefing, issue no: 6 – October, 1992