Raising the bar for water utilities: What meaningful engagement delivers

Posted on January 28th, 2026

by Colin Baines, Stewardship Manager

Since early 2023, Border to Coast has engaged the UK water utility sector as part of an investor collaboration with Royal London Asset Management (RLAM). As the engagement programme comes to an end, we assess the progress made and highlight Border to Coast’s role in raising the bar for the sector, protecting and preserving long-term investment outcomes on behalf of Partner Funds.

Read the full report here: 2025 water sector engagement report.

The UK water sector faces major challenges and risks. It has received fines from regulators totalling hundreds of millions of pounds  and  urgently needs to replace and upgrade aging infrastructure, meet regulatory and public demand for improved environmental performance, manage customer affordability, and improve climate resilience. Using the collective strength of our voice as an investor to engage  is crucial to achieving positive outcomes and safeguarding long-term value.

With RLAM and others, we engaged 11 water utility companies, 10 of which are held in Border to Coast’s internal and externally managed fixed income funds.

Border to Coast led the engagement with Yorkshire Water and Northumbrian Water on behalf of the collaboration, as well as supporting the engagement with United Utilities.

Our aim was to improve practices and encourage a faster pace of change in persistently lagging companies, across specific focus areas:

• Sewage pollution
• Water leakage
• Climate change mitigation and adaption
• Nature-based solutions and biodiversity
• Antimicrobial resistance
• Affordability

To underpin our collaborative engagement, we developed a set of 19 minimum and advanced investor expectations and rated each company against them. In early 2025, we re-assessed the companies, considering outcomes from our engagement and a review of their subsequent plans for the 2025-30 period.

State of the sector  

The main report offers an in-depth look at the sector, areas of improvement and remaining weakness, and an overview for each of the companies under engagement.

Overall, it finds that there has been a significant improvement from the baseline scores. Only two of the 11 water utilities score marginally worse now than in 2023, two are marginally better, and seven score significantly better, including all of those originally identified as laggards.

This improvement is largely attributed to the substantial increase in investment in their business plans. The two which score worse are primarily due to their poor pollution performance and a lack of ambition compared to their peers in areas around climate adaptation and biodiversity.

Case study: Yorkshire Water

We held several well-attended meetings from 2023-2025, involving the CFO and key directors at Yorkshire Water. The company acknowledged our assessments as fair and welcomed our deep engagement, recognising the value it added. Yorkshire Water’s score improved with progress made across all areas of engagement. We noted a significant improvement in the following expectations:

• Investment and training to reduce repair times to flood, leak and pollution events
• Ensuring abstraction is sustainable to support water supply resilience, and
• Developing and using nature-based solutions for flood management and drought resilience.

We were pleased to see pioneering work being progressed on nature-based solutions, with low-carbon, chemical-free treatment methods implemented, such as constructed wetlands, which enhance water quality and contribute to biodiversity net gain.

However, we advised the company that further improvement was needed regarding pollution discharges that breach targets.

Place-based engagement

The primary motivation for our engagement is always investment risk and opportunity. But in this instance, we could add a complementary place-based dimension, with Yorkshire Water, Northumbrian Water, and United Utilities covering most of Border to Coast’s Partner Fund regions at that time.

We welcomed Yorkshire Water bringing forward sewage infrastructure investment in Scarborough and the surrounding area, which our engagement had highlighted as in need of attention following beach closures, and similarly United Utilities’ new infrastructure investment and stakeholder partnerships to improve water quality in Lake Windermere, Cumbria. This is helping to manage a significant risk to local economies, in addition to investment risk.

Material risks remain

Whilst we saw improvement across the sector in all areas of engagement and this collaborative engagement has now concluded, significant risks remain, particularly regarding pollution. Border to Coast will continue to engage the sector to manage and mitigate risks.

Border to Coast applauds the positive response we have had to our engagement from most of the sector, and we would like to congratulate Royal London Asset Management on the inception and co-ordination of an impressive programme of engagement that has added value to companies and yielded meaningful change.

We hope other investors will make use of the 19 investor expectations in their assessment of material risks and engagement with the sector.

 

 

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