Our response on the Fifth Round of the Climate Adaptation Reporting Power consultation

Agree

The proposed objectives and principles seem reasonable and achievable.

Disagree

CCW feels that reporting should be mandatory for all sectors or organisations that are subject to the annual reporting power (ARP). This would ensure
that these sectors and organisations can gather, and have access to, data with the right level of detail to drive meaningful and effective action.

However, after the first round of reporting, Defra made reporting voluntary. Now that Defra is seeking to reverse this decision in some circumstances, it is unclear to us what criteria Defra has applied when deciding which organisations will be covered by its test to determine who should report.

CCW’s view is that, at the very least, reporting should be mandatory for any sector that provides essential goods or services during emergency or disaster situations, such as drought or extreme flooding. This would cover water, energy, transport, communications, as well as those organisations and sectors with relevant interdependencies. See also our response to questions 4, 5, 7 and 8 (on whether we agree with the proposed tests, what criteria should be used, whether reporting should be expanded to include strategic authorities and whether this should be mandatory).

Agree

CCW agrees that any test should cover water companies, as statutory undertakers but we feel that these tests do not go far enough.

We set out our criterion for targeting mandatory reporting in response to the previous question. Applying this criterion would mean that any test would have to capture all of these organisations, including any statutory organisations that are not undertakers but still have a key role to play in maintaining essential goods and services. This includes organisations such as strategic authorities.

The criterion also needs to cover any organisations that are not public bodies, such as water retailers and new appointees under the NAV regime. To do
otherwise is to increase the risk for business customers, as well as a small but growing number of domestic customers who receive water and sewerage services under the NAV regime.

Yes

If mandatory reporting is to be targeted, CCW feels that the criteria for applying this should be purposeful.

As set out in response to question 3 (on whether there should be targeted mandatory reporting) CCW’s view is that targeted reporting should cover any sector that provides essential goods or services during emergency or disaster situations, such as drought or extreme flooding.

We feel that this is an important criterion to apply on behalf of water customers. The water industry is further ahead than other sectors in planning and
investing in climate change mitigation, which water customers already pay for through their bills. At PR24, Ofwat has allowed around £104 billion of total expenditure for 2025–30, a substantial proportion of which relates to environmental improvement and climate resilience.

Companies have to address climate adaptation in many areas, including water resources management plans, drainage and wastewater management
plans, investments to improve environmental compliance and schemes to develop long-term resilience. This means customers are already paying for climate resilience across multiple investment lines.

This investment is funded through customer bills and is intended to ensure that water services remain resilient to climate risks such as drought and extreme weather.

As part of this, water companies have planned around scenarios that include a range of climate-related effects, from severe droughts to extreme
flooding. This planning and investment could be rendered ineffective, or even pointless, if other sectors are inadequately prepared.

Agree

If reporting remains voluntary, additional incentives could raise the profile of the issue and encourage engagement. The water industry is based around comparative competition, so we have some experience of understanding how successful voluntary incentive mechanisms work.

Based on this, CCW feels that publishing non-reporting organisations is likely to be the most effective incentive, as reputational risk is a proven driver of behaviour in regulated sectors. In addition, if water and wastewater companies comply with environmental obligations, this can help to improve
customer levels of trust.

It could also be effective to publish this list alongside a list of organisations who have submitted reports, especially for sectors with patchy compliance. Organisations may not want to see themselves on a ‘naughty’ step if others in the sector are on the ‘nice’ list. In addition, listed companies, especially those who are keen to share their Environment and Sustainability Governance credentials, may also be encouraged to respond if this results in them having a charter mark.

Ipsos’s synthesis report into the progress with the ARP so far (published alongside the consultation) sets out some barriers to engagement in section 6.
These include lack of time, lack of in-house expertise, lack of clarity around the process and lack of alignment with other processes. Defra’s proposal to develop general and sector-specific guidance will help with some of this.

Having said this, CCW’s experience of the water industry is that, for significant issues such as preparing for climate change, water companies are best incentivised to take action if there are mandatory requirements for them to do so, and if those requirements are aligned to the regulatory price setting process. This also ensures that the industry response is consistent and meets a minimum baseline necessary to drive change.

Agree

We agree that reporting should be expanded to include strategic authorities, for the reasons set out in response to question 3 (on whether there should be targeted mandatory reporting).

Mandatory

We consider all reporting should be mandatory but if targeted reporting is introduced, it should cover strategic authorities, for the reasons set out in response to question 3 (on whether there should be targeted mandatory reporting).

CCW is not in a position to answer this.

We feel that any cross-sectoral review needs to be undertaken by individual water and wastewater companies because of company-level variations in circumstances and risks.

The Ipsos review identified interdependencies as an area where reporting remains underdeveloped and inconsistent. However, collective reporting risks masking local variations and could reduce accountability if solely relied on.

This is important for water customers as they are already paying for significant investment in climate change resilience for their local area. The effectiveness of this investment depends on interdependent sectors being equally prepared.

Agree

CCW agrees with this proposal. We feel this will be of particular use for any sectors that are relatively new to engaging with the ARP and/or lack a clear, statutory responsibility for climate resilience.

The objectives of the ARP have shifted in line with each round of climate change reporting. These changes have reflected how the best reporting organisations have engaged with the process.

There is a risk, therefore, that the objectives could create a big step change for those organisations that have delayed engagement or are late to the process. Introducing sector-neutral and sector-specific guidance (see our answer to the next question) should help to address this gap.

However, Defra needs to ensure that sector-neutral aligns with existing guidance on climate change planning. For example, water and wastewater
companies already have to comply with guidance from the Environment Agency, Ofwat and other regulators on how they should cover climate change resilience and adaptation in their water resources management plans (WRMPs) and drainage and wastewater management plans (DWWMPs). Additional guidance should enhance reporting, not duplicate what is already in place.

This is particularly important for this round of planning since water sector reforms may lead to a rationalisation of the overall number of plans. There is an opportunity with this round of adaptation reporting to streamline the climate change elements of WRMPs and DWWMPs into a single report, aligned to the regulatory price setting process.

If the ARPs are to be effective in water, they need to have traction at Board level and improve the way risk is managed. The best way to achieve this is for Defra to ensure that they feed into the regulatory price setting process. Ideally, the regulator would signal early that this is their intention and that they expect to see ARP reports as part of the price review.

Agree

Similar to our response to the previous question, CCW agrees that guidance may be needed for any sectors that are relatively new to engaging with the ARP and/or lack a clear, statutory responsibility for climate resilience.

For the water industry, however, we are yet to see any evidence of significant gaps in reporting that sector-specific guidance would address. The Environment Agency, Ofwat and other regulators already produce guidance on how water and wastewater companies should plan for climate adaptation in their WRMPs and DWWMPs.

Unsure

CCW can provide information and evidence on customer preferences and views. However, as set out in response to the previous question, we are unclear about the benefit of sector-specific guidance for the water industry.

Following the recommendations of the Independent Water Commission, Ofwat and relevant functions from bodies such as the Environment Agency and Natural England will be merged into a single water regulator. We will continue to work with this new regulator on these issues, to ensure that the views and preferences of customers are prioritised.

Unsure

We have no direct sight of how ARP reporting aligns with WRMPs or DWWMPs that water and wastewater companies produce. However, we note that Ipsos found no significant gaps between ARP and the WRMP and DWWMP processes.

Unsure

Please see our response to the previous question.

No response provided.

Agree

This seems a sensible approach. CCW understands that the content of the WRMPs and DWWMPs is broadly aligned with the requirements of the ARP, so it should be relatively straightforward for water and wastewater companies to provide this information.

We have no view on the timescale for reporting but any reduction should be proportionate and aligned with existing reporting cycles. Setting deadlines that are too short risks reducing the quality of reporting.

Agree

CCW acknowledges that there are benefits to collective reporting but that this can reduce the level of detail available, for example on infrastructure assets and services.

Energy and telecommunications sectors provide essential goods or services during emergency or disaster situations. For this reason, in line with our response to question 3 (on whether there should be targeted mandatory reporting), we feel that these companies should be subject to mandatory reporting and should report individually.

Unsure

Where sectors do not provide essential goods and services, collective reporting is a useful and proportionate first step to engaging them in the ARP. However, the end goal has to be that any sectors or organisations that will be affected by climate change take all of the necessary steps to plan their response, including producing individual reports if this is what they need.

Useful

We agree this would be useful as it will help these two sectors to identify, understand and collaborate on any necessary action to strengthen climate change planning. In addition, it would be useful to have the energy and water regulators do a joint report on how their approaches to regulation join up to facilitate action to be taken on interdependencies.

CCW is not in a position to answer this.

Overall, CCW supports the shift towards more targeted and mandatory reporting.

From a customer perspective, Defra must ensure that climate resilience is delivered consistently across all sectors that provide essential services. Customers are already funding significant investment in climate resilience, particularly in the water sector. The effectiveness of this investment depends, in part, on other sectors being equally prepared.

The ARP therefore has an important role to play in improving transparency, strengthening cross-sector coordination, and ensuring that climate risks are managed in a way that protects customers and communities.