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Welcome to the latest edition of American Water's the Pipeline, a quarterly resource for all things water. We see this as one more way to stay connected.
A Note from Val Armstrong
ESG: What It Really Means and Why You Should Care
American Water has a long-standing history of executing Environmental, Social responsibility and Governance (ESG) fundamentals as a trusted and reliable water and wastewater services provider – and ESG considerations are playing an increasingly influential role across the corporate landscape.
What started in early 2004 as a set of principles developed by then UN Secretary-General Kofi Annan and representatives of the world’s largest institutional investors, has, over the last two decades, become a guiding point for businesses and investors seeking to evaluate corporate actions from a holistic perspective. At its core, ESG means what is good for the environment and society can also be good for business.
This installment of the Pipeline explores the environmental components, or the “E” of ESG. Subsequent editions will examine other aspects of the ESG framework.
“E” for Environmental
The nature of water service is intrinsically linked to environmental stewardship. Environmental conditions directly impact the availability of water, and its quality, which means that natural events can disrupt water and wastewater service. Pollution, extreme weather, and water scarcity driven by climate variability all impact water utilities like American Water. For these reasons, and because of our commitment to delivering safe, affordable, and reliable water and wastewater services to our customers, we take the “E” in ESG very seriously.
Over the last several years, American Water has engaged in comprehensive planning and benchmarking to operationalize our commitment to help address a range of environmental challenges.
Greenhouse Gas (GHG) Emissions Reduction.
American Water is on pace to achieve its short-term GHG emissions goal of reducing scope 1 and scope 2 emissions by more than 40% by 2025 from a 2007 baseline.
In addition, American Water has set two new ambitious goals, which are science-based and aligned with the Paris Agreement— by 2035, reduce our absolute scope 1 and scope 2 emissions by 50% from a 2020 baseline, and by 2050, achieve net zero scope 1 and scope 2 emissions. To accomplish these goals, American Water has developed a responsible approach that considers all of our stakeholders’ interests, prioritizing customer affordability, resiliency, and environmental justice.
Recently, the United States has seen an increase in extreme weather events. These events place customers’ health, safety, and water service at risk, particularly when system assets are beyond their useful life. Aging infrastructure is vulnerable, so continued investment is needed to maintain, improve and modernize water systems. American Water is doing its part to upgrade its critical infrastructure, while balancing customer affordability — we plan to invest $30-34 billion over the next ten years, 70-80% of which is allocated to infrastructure renewal and resiliency.
Climate variability can also impact water availability and communities across the country can face water scarcity challenges. Stakeholders have taken a number of steps to address the issue of water scarcity. For instance, California recently passed SB 1469, which provides regulated water utilities with the tools necessary to encourage water efficiency while ensuring financial stability. At American Water our capital investments help address leaks through detection monitoring, advanced metering, and other technology to provide real-time data to better manage water use and monitor loss. We also work to educate customers about the importance of water conservation and ways they can help protect water availability.
Water quality is dependent in part upon the environment where the water is sourced. Water providers must be prepared to contend with any number of threatening contaminants including PFAS - Per- and polyfluoroalkyl substances/manufactured chemicals used in many household products including nonstick cookware (e.g., Teflon™), stain repellants (e.g., Scotchgard™), and waterproofing (e.g., GORE-TEX™)., algal blooms, and a myriad of other threats.
To this end, the water sector has implemented a number of technologies and processes to monitor environmental conditions in and around source water as well as throughout infrastructure as well as treatment to help protect customers. One such system is Watersuite — a cloud-based platform that integrates data from multiple sources which helps decision-makers manage risks to drinking water.
Environmental Compliance, Policy Solutions and their Costs.
Compliance with ever-changing regulatory standards requires intentional and planned investments. To continue bilateral communication and education between the company and policymakers, American Water hosts site visits of our facilities to demonstrate policies in practice. For instance, New Jersey American Water recently held a plant tour of its Delaware River Regional Water Treatment Plant for members of the Assembly Environment Committee, including: Assemblywoman Bethanne McCarthy Patrick, Assemblywoman Shama Haider, Chairman James Kennedy, and Assemblyman Don Guardian.
These tours give policymakers a view into plant operations and the importance of continued infrastructure investments. As decision-makers promulgate new compliance standards, the cost of adherence to these regulations rises. This underscores the need to establish environmental riders and other mechanisms to capture the costs of these investments and stabilize impacts on customers over time to manage affordability.
Investing in our systems, employees and the communities we serve is not just the right thing to do — it’s good business and has contributed greatly to our company’s success. Despite our national footprint, we are also the local water and wastewater company in the communities we serve— our employees live and work in those communities and at the end of every water pipe we know that there is a family or business that depends upon us.
We look forward to exploring the “S” and the “G” of the ESG framework in the next edition of the Pipeline Newsletter!
American Water wants to be a source of information for you. Through active outreach and engagement with a variety of stakeholders, American Water has taken part in a great exchange of ideas, issues and insights about challenges and opportunities impacting the water and wastewater industry. Please reach out to us on any water or wastewater topic. Here are resources that provide background on the topics we covered:
- 2019-2020 American Water Sustainability Report: American Water's most recent Sustainability Report
- American Water Sustainability Goals
- ESG Data Summary
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