Corporate Governance & Business Ethics

Corporate Governance

Strong corporate governance practices support our strategic direction, culture of ethics and reputation. At American Water, effective corporate governance means:

  • Having a high quality, diverse Board of Directors who reflect our customers;
  • Implementing policies and procedures that promote governance quality, operating in stakeholders’ best interest and engaging stakeholders;
  • Promoting the integrity of governing bodies, such as independence of the chair;
  • Ensuring clear lines of accountability for material environmental and social topics, including Board engagement on sustainability topics; and
  • Demonstrating transparency and accountability to stakeholders though public disclosures.

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Governance Structure

Our corporate governance structure helps to ensure accountability and integrity across the organization. Our Board of Directors has the following standing committees:

  • Audit, Finance and Risk (AFR)
  • Executive Development and Compensation
  • Nominating/Corporate Governance
  • Safety, Environmental, Technology & Operations1

Each standing committee abides by its charter, available in the Downloads section.

1Includes cybersecurity governance
405-1, EEI 7.2, EEI 7.3

Board Diversity

We are committed to Board diversity, ensuring that the skills and experiences in the boardroom continue to reflect the needs of our business, align with our long-term strategy and reflect the communities we serve. We have a longstanding commitment to gender equality at all levels of our company, acknowledged by our inclusion on the Bloomberg Gender-Equality Index and continued commitment to Paradigm for Parity, to further diversity in leadership.

As of July 25, 2019 three additional Directors were added to the Board of Directors increasing the size from eight to 11 members. The three new additions represent gender, racial and experience diversity, and increase the women on the Board to six out of 11 directors, or 54.5%.

Our Board of Directors receives regular updates about the company’s overall corporate responsibility/sustainability performance.

Women comprise 54.5% of American Water’s Board of Directors.

Infographic Expertise and Skills

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ESG Governance

Our Safety, Environmental, Technology & Operations Committee oversees practices and performance across numerous environmental and social areas. The Safety, Environmental, Technology & Operations Committee assists the Board in the oversight and review of:

  • Employee and public safety;
  • Environmental policies and practices, including without limitation, water quality and emerging contaminants;
  • Technology policy, strategy, and governance, including physical and cybersecurity matters related to the company’s operations; and
  • Operational performance and risks (other than risks covered by another committee of the Board).

To demonstrate our commitment to ESG governance and transparency, we report through the following global frameworks:

  • Global Reporting Initiative (GRI)
  • CDP (formerly Climate Disclosure Project) Climate Change
  • SAM Corporate Sustainability Assessment (CSA)

Additionally, we have voluntarily aligned with National Institute of Standards and Technology (NIST) standards since 2014, demonstrating our commitment to protecting critical infrastructure.

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Business Ethics

We are committed to doing things the right way, so we promote open and direct communication and require our employees and partners to operate ethically, fairly and respectfully. In addition to observing applicable laws, regulations and American Water’s policies and practices, we expect our employees, suppliers and business partners to comply with our Code of Ethics, which focuses on:

  • Avoiding Conflicts of Interest
  • Conduct in the Workplace
  • Fair Dealing
  • Handling Sensitive Information
  • Safeguarding Financial Information and Controls
  • Government Relations
  • Equal Employment Opportunity
  • Non-discrimination
  • Non-retaliation
  • Harassment-Free Workplace
  • Health and Safety Support

Compliance with our Code of Ethics is a condition of employment. Failure to abide by the Code or to report a known violation can lead to disciplinary action up to and including termination of employment.

We maintain a confidential Ethics Hotline that is available to employees and external stakeholders, including suppliers and customers.

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Our Code of Ethics

To ensure employees understand our expectations, we provide annual training on the Code of Ethics and require all employees to participate. In our annual Code of Ethics training, employees view videos hosted by Executive and Senior Leadership Team Members, and most importantly, review scenarios from real-life events and incidents. Every employee is given time to complete the training by his or her local manager. In addition to annual Code of Ethics training, the Compliance and Ethics team provides targeted training throughout the year to certain employee groups based on specific events that arise in the business. All employees are eligible for the Annual Performance Plan (APP) Bonus, but they will not receive their payout unless they have completed the Code of Ethics training.

The Chief Compliance Officer oversees the response to all calls made to the ethics hotline, as well as all ethics issues reported through different channels. When appropriate, the Chief Compliance Officer will escalate a case to the Compliance and Ethics Committee (comprised of the Executive Leadership Team) and/or the Board’s Audit, Finance and Risk Committee. The Chief Compliance Officer reports through a matrixed hierarchy directly to the head of the Board’s Audit, Finance and Risk Committee to further ensure independence.

We design our policies and practices to combat corruption and anti-competitive behavior, promote transparency and ensure integrity in all our activities. Our Procurement Policy requires all employees involved in procuring goods or services work to ensure that the company achieves the best value for its spend, protect the company from risks and liabilities in the procurement process, ensure suppliers share our values and ethics and ensure fair and equitable competition amongst suppliers.

ethics training