An Environment Agency pension fund owns stakes in a number of UK water companies – despite the watchdog calling for industry bosses to be jailed for staggering levels of pollution, the Guardian can reveal.

An analysis of the Environment Agency Pension Fund’s investments shows it owns £28m worth of shares or bonds in six of the biggest water companies.

Emma Howard Boyd, chairman of EA, last month called managers and members of the board of directors face imprisonment if they control serious, repeated pollution because They seemed undeterred by coercive measures and court fines for violating environmental laws.

The EA found that seven water companies saw an increase in serious incidents last year compared to 2020, with 62 serious pollution incidents in 2021 – the highest since 2013.

Filings for the year to 31 March 2022 show the fund invested more than £3m in Southern Water, which the agency said last month had the highest overall pollution levels in 2021. Southern was fined a record £90m last July after the deliberate dumping of billions of liters of untreated sewage in protected seas, following a case brought by the Environment Agency.

The fund’s biggest water holding is in Thames Water, a supplier that dumped dirty sewage into rivers, with £12.8m. 5028 times in 2021.

The investor, which manages the pensions of retired and current government agency staff, has also invested in United Utilities, Severn Trent, Yorkshire Water and Anglian Water. Anglian handed over its chief executive Peter Simpson last month over £1 million in pay and bonuses despite the low level of pollution.

When asked about the investment, the former Undertones frontman Firgal Sharkeywho is now campaigning for water, said: “This once again proves the utter shambles that has become the regulation of the water industry.

“When a Parliamentary-appointed regulator whose function is to oversee and minimize the environmental impact of the water industry is actually profiting from that environmental impact in the same way as company executives and other shareholders, this is an obscenity that must be stopped. »

The Environment Agency Pension Fund, which is part of the Local Government Pension Scheme, has 39,500 members, of whom 11,300 are contributors, and manages £4.5bn of assets. His vast portfolio includes investments in blue-chip stocks such as Tesco and Vodafone, as well as infrastructure companies.

Howard Boyd, who is also the government’s trade adviser and a former director of City fund manager Jupiter, will step down as chairman of the agency in September. She also chaired the investment sub-committee of the Environment Agency’s Pension Fund until November 2020.

Sharkey said the investment role, as well as her position as chair of a government agency, represented a “major conflict of interest.” He added: “She must be sensitive enough to see the irony that water and sewerage companies are currently under investigation by the EA and Ofwat for what the EA says is widespread serious non-compliance with regulations. It should have occurred to them not to invest in water utilities.” The joint investigation of wastewater treatment started last year.

A spokesman for the Environment Agency Pension Fund said it was “legally separate” from the operational and regulatory functions of the Environment Agency and was subject to “different legal rules, governance and decision-making”. Investment decisions are made by a third-party asset manager, not the fund itself.

He added: “Wherever the EAPF has exposure to the investments of UK water companies, it is through portfolios managed externally by Brunel Pension Partnership, a pooling provider for local authority pension funds.”

The agency is currently dealing with the effects of Europe’s worst drought in decades, which is damaging homes, factories, farmers and freight across the UK and the continent.

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The Liberal Democrats called on the heads of water companies to be were forbidden to give themselves bonuses until they fix theirs perforated pipes. The party has revealed that chief executives of English water and sewerage companies have rewarded themselves with bonuses worth around £27m over the past two years.

A study of the fund’s investments did not detail the split between stocks and bonds held by water companies.

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