United Utilities : Our approach to Environmental, Social and Governance

Our approach to Environmental, Social and Governance:

a guide for investors

About United Utilities

"As CFO, I recognise and embrace the importance of ESG. Ensuring United Utilities creates value for all stakeholders in a sustainable manner is a significant pillar of my role. I hope you find the guide useful and I look forward to discussing these topics with you in more detail in the months to come."

Phil Aspin, Chief Financial Officer

Our purpose drives us to deliver our services in an environmentally sustainable, economically beneficial and socially responsible manner, looking after the interests of the stakeholders with whom we interact. The provision of water and wastewater services creates a deep connection between the company and the stakeholders we serve. For investors, this means offering a financial return and, increasingly, demonstrating how we manage, and perform, on issues relating to environmental, social and governance (ESG) matters.

We have a wide-ranging impact on the communities, environment and economy of the North West.

By delivering on our purpose we are creating long-term value for all of our stakeholders.

Providing clean water and removing wastewater from properties is our major contribution to the health and wellbeing of 7 million people in the region.

We believe passionately in using our investment programme to help keep the North West economy moving - generating jobs through our capital investments, providing income for North West residents. Our supply chain provides a stimulus for the development of skills and jobs the region's economy needs.

Protecting and enhancing the natural environment through our activities to help improve rivers, lakes and bathing waters supports a thriving regional tourism industry.

Where we outperform our financial targets, we reinvest in a way that benefits communities, such as enhancing long-term water resilience.

Our	To provide great
water and more
purpose
for the North
	West.
Our vision	To be the best UK
water and wastewater
	company.

Our strategic	The best service to customers
themes	At the lowest sustainable cost
	In a responsible manner
Our core values	Customer focused
Customers are at the heart of everything
	we do, and we aim to provide a great
	and resilient service at the most
	efficient cost.
	Innovative
	We continually look for new ways
	to make our services better, safer,
	faster and cheaper.
	Trustworthy
	We make promises knowingly
	and keep them, behaving
	responsibly towards all of
	our stakeholders.

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ESG is fundamental in fulfilling our purpose

Understanding what matters to stakeholders

How we manage ESG matters is essential to how we deliver our purpose and operate in a responsible manner. It starts with understanding which ESG matters are most relevant to our stakeholders and then demonstrating to them we have delivered

Environmental

We rely on the environment as one of our key resources so it is important for the sustainability of our business that we protect and enhance it. We engage with interested groups such as environmental regulators, non-governmental organisations, customers and communities.

Environmental	Greenhouse	Catchment
performance	gas emissions

against the performance expectations we have set.

Our approach to materiality

We consider stakeholder priorities alongside our own assessment of what has the biggest impact on the company and its ability to create value, and the output is presented in our material issues matrix. This stakeholder materiality assessment informs decisions about what we

Social

Our work puts us at the heart of local communities, places where customers and employees live and work. We seek to develop strong relationships based on mutual trust, respect and an understanding of the impact our work has on their everyday lives.

Affordability and	Health, safety	Community
vulnerability	and wellbeing	investment

report in documents such as the Annual Performance Report. Setting out issues in this way helps ensure we understand key stakeholder priorities and consider their interests in strategic decision making, helping us create long-term value. Understanding these priorities is fundamental to being a purpose-driven organisation.

Governance

Being open, honest and transparent about what we do and how we perform is key to building and maintaining trust and legitimacy with all. Stakeholders expect us to operate in a responsible manner. They want to know what contribution we are making to the region.

Our approach	Innovation	Responsible
to corporate		finance
governance

For more information, please visit: unitedutilities.com/corporate/responsibility/ our-approach/materiality/

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Measuring how we deliver our purpose

Read more about our external accreditation on page 17

We have a strong track record of leading and delivering on ESG matters. It is more important than ever before that we demonstrate how we are performing against these measures that create value for all.

Focus on Environmental

Sector-leading rating with the Environment Agency

Environmental performance is key for regulator confidence in the water sector. We have achieved 'Leading 4-star status' for three of the last four years in the Environment Agency's annual assessment.

Key point

Catchment systems thinking builds on the legacy of Sustainable Catchment Management (SCaMP) with targeted investment designed to improve environmental performance further by 2025. Our plan includes delivery

of 21 natural capital solutions to achieve £4 million added natural capital value.

Focus on Social

Transforming how the sector supports vulnerable customers

North West England has 41 per cent of the most deprived areas in the country, so helping customers struggling to pay their water bills is especially important.

Key point

£71m of voluntary funding to provide financial assistance to customers that need it, helping over 65,000 customers out of water poverty by 2025.

Focus on Governance

Highest levels of trust and confidence in our reporting

Being open, honest and transparent about what we do and how we perform is key to building and maintaining trust and legitimacy with all.

Key point

Prudent financial risk management and best-in-class pensions position mitigating risk for employees and shareholders.

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