Cross-sector sustainability benchmarking of major utilities in the United Kingdom

Nathan L. Walker, David Styles, Paul Coughlan and A. Prysor Williams

Utilities Policy, 2022, vol. 78, issue C

Abstract: Benchmarking can be a useful tool for utility companies to improve their efficiency, offering many potential positives such as assessing performance objectively, exposing areas where improvement is needed, and identifying best performing companies, ultimately illuminating possible strategies for poorer performers to implement. Despite these positives, the challenge remains of how to compare the performance of different organisations from different sectors. This research aimed to develop a methodology to effectively compare companies across sectors using UK utilities across the water and sewage, energy, and communications sectors as a case study. A methodology was constructed based on service, environmental, and financial metrics, and cross-sector benchmarking was undertaken, which generated performance scores based on company metrics relative to sector peers. This circumnavigated issues of indicators often being mismatched across sectors and the lack of relevance and context when sectors do use similar indicators. Results showed that the sample of 18 utilities had two distinct clusters, one of eight sector leaders and the other of ten lower performers. Sky had the highest overall score of 13.5 (maximum 15), suggesting it significantly outperformed the rest of the communications sector. Similarly, British Gas and SSE lead the energy sector, whilst Wessex, Severn Trent, and United Utilities lead the way for water and sewage companies. The two distinct groups of sector leaders and lower performers can be employed to identify other companies that may offer learning opportunities. Top performers can assess top performers in other sectors to identify how they might continue improving, rather than be potentially limited within their sectors. Conversely, lower-performing companies can look within and across sectors to identify best practices to improve their performance. The methodological development and UK utility sustainability results collectively provide novel insight into the water, energy, and communication sectors and contribute to the international academic literature on benchmarking by illustrating an alternative and unique solution to comparing diverse sectors in any region.

Keywords: Cross-industry; Efficiency; Performance analysis; Sustainability; Utility benchmarking (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:78:y:2022:i:c:s0957178722000819

DOI: 10.1016/j.jup.2022.101417

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