How the mismanagement of Thames Water turns up the heat on business leaders to not be greedy

27 Jul 2023


As Britons wilted under a sweltering summer heatwave in late June, government officials were – somewhat ironically – discussing contingency plans for the potential collapse of Thames Water. The UKs largest water company, grappling with an overwhelming £14 billion debt, was on shaky grounds, casting doubt on its capacity to service its customers effectively.

Providing service to 15 million customers across London and the southeast of England, Thames Water has been the subject of mounting pressure due to its appalling record on leaks, sewage contamination, outsized executive pay and lavish shareholder dividends. 

Sarah Bentley, its CEO for the last three years, resigned and attempted to water down her impact, saying: The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”

However, the reality is starkly different. Thames Water, owned by a pension and sovereign wealth fund consortium, is now a pariah. Its shareholders are increasingly wary of injecting further funds into what appears to be a sinking organisation. 

Once the news of the companys plight hit the headlines, public shock quickly turned to disbelief when details about its lack of investment in new systems and unprincipled asset-stripping emerged. It is a lamentable case of woeful mismanagement that will mean consumers will likely have to splash out more on their water, which will have a ripple effect on other companies and industries. Its absurd, though, that Thames Water is even in this position.

Smarter solutions

This sorry saga offers a timely reminder that poor management, greed, and short-term thinking have severe repercussions. However, the fiasco at Thames Water is more than a classic tale of corporate mismanagement; its a stark warning of the dire consequences of not investing in innovation or utilising available resources more judiciously. 

There are other examples. For instance, despite the abundance of water resources in the country, a hosepipe ban has been in place since last August in Cornwall. How can that be? So much water is running down from the hills there, and the moors are likely to act as a sponge. On top of that, the county is surrounded by water. 

Similarly, I was in Devon when hosepipes were banned a few months ago. It was raining like there was no tomorrow. The water was rushing down. All that fresh water was not being captured but running into the sea.

These situations are puzzling, given there must be smarter solutions to alleviate this challenge. The bans demonstrate the urgent need for better water management and more effective resource utilisation.

The Thames Water saga also brings to light the grim reality of water contamination. Anecdotes from sea swimmers avoiding specific beaches, due to sewage overspills, highlight a broader issue not limited to Thames Water alone. 

Indeed, a closer inspection of other water companies may reveal equally alarming findings. Moreover, the collective outrage directed towards Thames Water is perhaps a foretaste of the brutal judgement that awaits other companies heading down a similar path. 

Toxic mix

Business leaders must strike a careful balance between fostering company growth and avoiding excessive greed while continually investing in innovation. An unnerving parallel exists between the present scenario and child labour abuses that were big news some years ago. Both situations depict a blatant disregard for ethical responsibilities with the underlying pursuit of profit, regardless of the wider consequences.

Today, the Thames Water crisis is a harsh reminder that business leaders can no longer ignore public sentiment and consumer voices. Companies that fail to meet their ethical obligations will inevitably face the wrath of their customers, and others, even if the effects arent immediately apparent. In essence, Thames Water may only be the first domino to fall in what could become a more comprehensive exposé of corporate greed and mismanagement.

This turn of events also foretells an imminent tightening of regulations. Avarice and unethical practices have no place in our society, particularly in industries critical to public welfare. Failing to act responsibly now will undoubtedly have severe financial consequences before long if their course does not change.

Ultimately, the toxic mix of excessive greed, a lack of foresight, and mismanagement will sink not just a companys reputation but also its bottom line. Its time for businesses to heed the warning, demonstrate ethical leadership, and commit to sustainable innovation, lest they find themselves navigating their own crisis in the not-so-distant future.

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