Why people do or don't trust water utilities

Last week, I promised to dive deeper into what trust really means for water utilities. Why people would trust utilities, or not trust them - that is the question, Mr Shakespeare, I'm exploring today.

You know, trust can be a tricky thing. It can mean different things to different people. But wouldn't it be great if the water industry could all get on the same page about what makes people trust these essential service providers?

One of the best pieces of work, that I could find, seeking to land a common approach to understanding the drivers of trust, is a study commissioned last year by the Water Services Association of Australia (WSAA). They found that, at the highest level, trust is informed by the utility's perceived ability (competence), benevolence (greater good) and integrity (ethical behaviour).

Across the bigger pond, Ofwat, the water services regulator in England and Wales, has also been putting in the hard yards on this topic. In a recent trust survey, they found some concerning trends around why people are less trusting of water utilities, particularly around environmental responsibility and customer service - a wake-up call we'd do well to heed.

While the findings in both these cases are incredibly valuable, I found especially the WSAA one pretty complex. What we really need is a simple, practical way to think about trust.

I'm agitating for a universal trust framework that can also be applied to the water industry.

I reckon, by their very nature, people don't change how they assess trustworthiness based on the type of organisation they're dealing with. They apply basically the same principle criteria regardless of the sector. That's why I'm drawn to the ESG (Environmental, Social, and Governance) model. It's a globally recognised framework, developed through collaboration between international organisations, regulators, and industry bodies, that provides a straightforward yet comprehensive way to understand and build trust.

And the good thing is, this framework is actually well-aligned with the thinking that came from both the WSAA study and Ofwat's insights.

For me, the beauty of these ESG factors is that they are all interconnected. A utility that excels in environmental stewardship is likely to have good governance practices. One that engages well with its community probably also has strong customer service. It's a virtuous cycle that builds and reinforces trust.

Let's take a closer look at each factor:

Starting with "E" for Environmental. As a key building block of trust, this goes beyond ensuring the quality (and of course aesthetics!) of what comes out of the tap. It requires utilities to consider their broader environmental impact. Are they planning for climate change? Are they implementing water conservation measures? Are they protecting local watersheds? These are the things that would indicate long-term thinking, rather than just a concern for the next quarter's results.

Moving on to the 'S' for Social. This is where the rubber really meets the road in terms of public perception. It starts with customer service. How frictionless, responsive and empathetic is the utility's customer service? Are they simply doing their utmost to solve problems or are they building relationships? What are they doing to keep their services affordable and accessible for all segments of the community? Do they, for example, have programmes for those struggling to pay, or access services – showing that they care about more than being a low-cost provider?

Of course, this building block is not just about being nice. It's about genuine engagement. Are utilities involving the community in decision-making? Are they transparent about their plans and challenges? Are they educating people about water issues? These efforts are critical to establish a sense of shared responsibility and understanding – shared ownership.

So, what's the 'G' for Governance about? Well, in essence, seeking to demonstrate integrity and responsibility, this is the backbone of trust. It starts at the top with ethical leadership. It looks for evidence of honesty and transparency. Are the utility's board meetings open to the public? Are their financial decisions transparent and justified? Are they going beyond minimum regulatory requirements, such as voluntarily adopting stricter water quality standards or implementing more robust environmental protection measures? Is their long-term planning clear and well-communicated, showing they're thinking about future generations, not just quick fixes?

As I said previously, this three-legged stool is increasingly the foundation of how utilities are being judged by not only their communities and customers, but crucially, also by those who enable them to fund their infrastructure work. Rating agencies and investors and/or lenders are paying more and more attention to ESG factors when assessing utilities. They've twigged that there is a very strong link between these factors and a utility's long-term sustainability and trustworthiness.

Simple? Yes. But intuitive? Not necessarily. While the ESG framework offers a straightforward approach to the often over-complicated web of trust drivers, it's not something we can assume all leaders inherently understand or prioritise. It requires dedicated attention and a strategic focus.

In fact, I'd argue that utilities should consider refocusing their Audit and Risk Committees to acknowledge trust-building as a critical strategic area and a potential corporate risk worth paying attention to. Sadly, none of this merely happen by chance. By deliberately focusing on these three main building blocks - environmental stewardship, social responsibility, and ethical governance - utilities can create a practical roadmap for building and maintaining public confidence. It's about taking a pro-active approach to building trust, rather than simply reacting to adverse triggers like water quality incidents, service disruptions, or negative media coverage.

In our next chat, I'm keen to share my thinking on ethical behaviour. While it's a critical component of trust, it's often one of the most challenging areas for leaders to navigate. Why? Because ethical decisions aren't always black and white, are they? They also tend to create a level of discomfort as they don't necessarily contribute to winning popularity contests. They defy ego!

Till next week then!