Planet

Taking a Holistic Approach

Each of the following inextricably linked areas of focus play a role in our strategies for delivering a sustainable supply of safe, affordable water to our communities while reducing our environmental footprint:

• Managing Water Supply—Effectively managing changes in water availability and demand, particularly those driven by climatic events, including impacts to snowpack, rain-based surface water, and groundwater levels, plays a significant role in our ability to secure a sustainable supply of water for our customers, now and for generations to come.
• Increasing System Efficiency and Reducing Water Consumption—By focusing on extending the efficiencies of our water system and reducing consumption at the customer’s tap, we believe we can reduce the energy required to produce and deliver water and, in turn, support a sustainable water supply while reducing our carbon footprint.
• Environmental Stewardship—Reducing the negative environmental impacts of our operations supports a healthier planet, protects the watersheds from which we source our water, and helps preserve and improve water quality.

Underlying each of the above focus areas are three cross-cutting imperatives that demand an interdisciplinary set of solutions and a balance of priorities:

• Mitigating Climate Change—The energy we consume to provide water and wastewater services to our customers contributes, in part, to climate change. We work to reduce the carbon footprint of our operations by lowering energy demand through customer conservation measures and by increasing system efficiency and transitioning to carbon-free energy sources in our operations.
• Adapting to Climate Change—Climate change increases the risks associated with rising temperatures, drought, and extreme weather events that may affect the reliability of our systems and the availability of our water supply. To help us prepare for these risks to our business, we rely on our water supply management efforts, conservation programming, and strategic investments in operational and infrastructure resiliency.
• Promoting Affordability—Balancing the cost of delivering a reliable supply of safe, high-quality water with our commitment to water affordability is an ongoing challenge in the face of climate change. To help preserve the affordability of our services, with an emphasis on affordability for low-income communities, we seek to focus on what we believe are the most needed water system improvement projects while also considering operational efficiency, rate design, grant opportunities, and conservation programs.

Planning for a Sustainable Future

We use a series of interrelated planning processes and reports to support our water resource and environmental sustainability efforts, conducting them on a recurring basis to help inform adjustments to our approach as the risk landscape evolves. While these formal plans and studies are developed primarily for our Cal Water subsidiary, some are also used in our other subsidiary states, and we intend to extend this work further in those states in the future.

These foundational assessments informed Phase 2 of our climate change study in 2021. The outcome of this second phase of work, our Climate Change Risk Assessment and Adaptation Framework, identified certain climate-related risks and opportunities that could impact our business over three distinct time horizons. The time horizons considered in our analysis included the following:

• The early century horizon (2016–2045) includes near-term vulnerabilities and adaptation measures to consider for immediate implementation.
• The mid-century horizon (2035–2064) covers longer-term capital investments, such as new facilities constructed after the lifespan of current infrastructure.
• The late century horizon (2070–2099) evaluates long-term adaptation pathways.

Climate projections for each of the 30 years in each time horizon were averaged to account for natural climate variability across shorter time periods. Additionally, following guidance from the TCFD and Intergovernmental Panel on Climate Change (IPCC), we leveraged Representative Concentration Pathways (RCPs) in our analysis to consider climate risks across a range of possible climate futures. RCPs are scenarios that show trajectories of atmospheric greenhouse gas concentrations dependent on different timeframes and emission levels. Based on findings from Phase 1 of our climate change study and the associated literature review, we selected the following RCPs for our risk analysis:

• RCP 4.5 is an intermediate scenario that assumes an estimated global temperature rise between 2˚C and 3˚C from pre-industrial levels by 2100, with anthropogenic global greenhouse gas emissions peaking in 2040.
• RCP 8.5 is a high-emissions scenario that assumes temperature increases of at least 4˚C from pre-industrial levels by 2100, with anthropogenic global greenhouse gas emissions continuing to rise over the next century.

The assets and operations vulnerability assessment leverages the framework in the 2020 California Adaptation Planning Guide, which includes three key elements of vulnerability: exposure, sensitivity, and adaptive capacity. Exposure refers to systems, populations, or assets in areas that make them subject to direct harm; sensitivity is the degree to which a system may be impacted; and adaptive capacity is the ability to prepare for and respond to potential consequences or opportunities.

We evaluated risks at a district level to determine the key risks for each district related to supply reliability and operational assets. We also considered the impacts on Disadvantaged Vulnerable Communities (DVCs), which are often disproportionately exposed to climate hazards and have a lower capacity to adapt to these hazards. We believe the findings of the Climate Change Risk Assessment and Adaptation Framework provide actionable insights and a reliable framework for future planning. By using this tool, we intend to continue to implement programs that capitalize on these adaptation strategies.

In parallel with the broader-focused Climate Change Risk Assessment and Adaptation Framework, in 2021 and 2022 we also conducted a deeper review of the impacts of climate change and other environmental factors on water supply reliability and water quality for 10 Cal Water treatment plants. This study, the Water Supply Reliability Assessment, included an evaluation of climate-driven risks, development of recommendations to prioritize certain sources and facilities for further review, and identification of potential mitigation measures. Subsequent work in this multi-phase process is expected focus on higher-risk facilities and to provide evaluations to further inform risk mitigation measures and adaptive planning.

Predicting Potential Outcomes

Without proper preparation, physical climate-related risks are more likely to damage assets, disrupt operations and services, and impact supply and demand of water over the short, medium, and long term. While the severity of specific risks may vary across climate scenarios and over a range of time horizons, the following graph summarizes the climate-related risks for Cal Water that were identified in the Climate Change Risk Assessment and Adaptation Framework.

In particular, DVCs are often especially exposed to climate risks and face challenges in preparing for and recovering from risk events. We identified Cal Water districts serving a large proportion of DVCs and found that climate risks are particularly prevalent for DVCs in Cal Water districts with limited water supply diversity. Some of the top identified climate-related risks to DVCs include water shortage risk due to variations in water supplies and more frequent and severe droughts, elevated contamination risk due to increased wildfires, reduced precipitation, and increasing temperatures. These risks may compound existing health or economic issues in vulnerable communities.

Specific to water treatment plants, some of the top climate-driven risks identified in the Water Supply Reliability Assessment include impacts on water quality and key staff. Drought, extreme precipitation, high temperatures, and forest fires can contribute to influxes of nutrients in water sources and cause cyanobacterial blooms, which may produce contaminants that must be treated. Wildfires and other climate-related risks may also prevent staff from accessing water facilities and conducting vital operations. A selection of the highest and more moderate risk facilities is expected to be the focus of risk reduction efforts moving forward.

We have also identified a series of transition- and climate-related risks that may influence our evolving climate strategy. These risks include changes in the market and in consumer demands, due to differences in generational behaviors, shifts in population locations based on climate changes, and variations in water needs. Regulatory risks, such as emission trading systems and carbon taxes, could also financially impact our business. Federal and state regulations may further establish requirements for managing water supplies and limiting impacts on local wildlife, while regional plans and legislation could directly affect how we address water issues. As climate-related impacts continue to affect our industry, we intend to assess transition risks to our business more thoroughly and proactively incorporate these considerations into planning and decision-making processes.

We regularly refresh our Enterprise Risk Management program to analyze risks, revise mitigation controls, and update risk summaries. In 2022, we incorporated findings from our climate change studies to enhance our Enterprise Risk Management model. Risk area owners reviewed opportunities to integrate these updated climate-related risks into our existing risk planning.

Managing Risks and Developing Strategies

Managing the impacts of climate-related risks requires climate mitigation and adaptation throughout our business, including sourcing, treatment and distribution, and community engagement. We aim to minimize our own carbon footprint by increasing the efficiency of our fleet, reducing energy requirements throughout our water systems and distribution infrastructure, and transitioning to renewable sources of energy, where possible. We also communicate with our customers to encourage conservation that may lead to associated energy savings.

For more information about our approach to addressing our emissions footprint, see the Energy and Emissions section.

In order to better adapt to the increasingly prevalent effects of climate change identified in our various climate risk assessments, we leverage adaptive planning pathways. Through these pathways, we seek to develop implementation horizons and triggers while maintaining the greatest flexibility to respond to changing climate, financial, and regulatory circumstances. Our adaptation planning framework includes:

• Prioritizing top risks
• Evaluating the applicability of climate adaptation strategies to various climate scenarios and seeking to prepare for the worst-case scenario, where possible
• Undertaking viability assessments of proposed risk reduction opportunities
• Coordinating recommended actions with other planned capital or maintenance work at targeted facilities
• Developing project implementation plans in the short-, mid-, and long-term timeframes

We continue to invest in the resilience of our infrastructure, seek to predict and prepare for changes in service demands, and practice water stewardship and conservation. We regularly monitor and diversify water supplies to support reliability, and we contribute to ongoing research. To learn more about how we promote water supply reliability, see the Water Supply Management, Reliability, and Resilience section. We also strive to adapt to climate change and preserve water availability by saving water in our distribution system and engaging our communities to minimize downstream consumption. For additional information about our efforts, see the Water System Efficiency section and the End-Use Conservation section.

We continue to monitor and maintain the quality of our water, which we have identified as a key climate-related risk area. The Drinking Water Quality and Customer Safety section describes our water quality program. Additionally, we aim to strategically balance our investments to adapt to climate change and protect the human right to access safe and affordable water by advocating for financial support for our customers in need. For more information, see the Water Affordability and Access section.

Measuring Progress and Setting Objectives

We believe that data drives meaningful action. Identifying climate-related risks has emphasized the importance of measuring our performance so we can, in turn, monitor our ability to mitigate and adapt to climate change. Measuring our energy consumption and greenhouse gas emissions data helps Group assess our contributions to climate change and manage our environmental impacts across our operations. In 2022, we worked with an independent third-party to complete an updated inventory of our greenhouse gas emissions in accordance with the Greenhouse Gas Protocol, the global standard for measuring and managing organizational greenhouse gas emissions. This continued progress in developing a more thorough and complete picture of our emissions is a critical step in establishing a baseline from which we can set meaningful reduction targets. Additionally, we track metrics related to water supply, system efficiency, conservation, water quality, emergency preparation and response, and other areas where the impacts of climate change on our business are most prevalent.

For further details on our climate-related metrics and improvements to our greenhouse gas inventory, see the associated data in the Energy and Emissions section. For other information and performance metrics related to climate risk and adaptation strategies, see the Water Supply Management, Reliability, and Resilience; Water System Efficiency; End-Use Conservation; Drinking Water Quality and Customer Safety; and Emergency Preparedness and Response sections.

Maintaining Accountability

We manage climate-related risks and opportunities through multiple levels at Group by employing the following structures of oversight and management:

• Board level: Our Board of Directors periodically reviews and discusses our climate-related risks and opportunities and maintains responsibility for formal approval and oversight of our climate change strategy. Executive leadership regularly reports to the Board on ESG and climate change progress throughout the year. Various departments also provide regular updates to the Board on routine operational priorities relating to climate mitigation and adaptation efforts. Given the importance of climate-related impacts to our business and their interrelation to numerous other ESG focus areas at Group, the Board considers climate-related issues while guiding business strategy, developing action plans, setting objectives, and evaluating company expenditures. The Nominating/Corporate Governance Committee maintains oversight of ESG programs and disclosures, including those related specifically to climate change.
• Executive level: Our executive leadership team, led by the CEO, collaboratively develop, manage, and execute on our climate change strategy. This is primarily accomplished through the Strategy & Operating Committee and ESG Executive Oversight Committee. Our Vice President (VP), Customer Service & Chief Citizenship Officer and Chief Water Resource Sustainability Officer drive our climate-related efforts. Executive-level updates and discussions frequently cover climate-related issues, such as wildfire preparation, water supply planning, and drought response. Our VP, Information Technology & Chief Risk Officer, also leads our Enterprise Risk Management team to factor climate change into our risk analysis and framework.
• Additional oversight and management: Various teams monitor material climate-related issues and collaborate throughout Group to manage these impacts:
  • The Water Resource Sustainability Department, directed by the Chief Water Resource Sustainability Officer, leads our overarching climate change strategy, with a focus on risk assessment and adaptation strategies relating to water resource sustainability.
  • Although our climate change strategy requires inputs from across all departments at Group, our Fleet and Facilities, Operations, Engineering, Rates, and Water Quality teams collaborate closely with the Water Resource Sustainability Department, ESG team, and executive leadership on climate change mitigation and adaptation efforts.
  • We also have multiple, cross-functional ESG Working Groups that focus on the three elements of our climate change strategy: mitigation, adaptation, and reporting and compliance. These cross-departmental working groups include officer sponsors as well as directors, managers, and other subject matter experts from teams with relevant skill sets or areas of responsibility across the Company. The ESG Executive Oversight Committee receives updates on the ESG Working Groups during their quarterly meetings.

For information on ESG governance at Group, see the Corporate Governance section.

ADDITIONAL RESOURCES

• Climate Change Risk Assessment and Adaptation Framework: Executive Summary
• Climate Change Risk Assessment and Adaptation Framework: Highlights Embracing Change to Address Climate Change
• Can You Imagine a Day Without Water?

Operational Efficiency

While our work to minimize energy consumption spans our subsidiary operations, we have focused our more ambitious efforts in California, where greater than 90% of our operations are located.

Leadership in Energy and Environmental Design (LEED) standards guide construction of new and updated employee occupied buildings at Group. To help enhance energy efficiency in existing office buildings, we seek to optimize heating, ventilation, and air conditioning (HVAC) systems, upgrade to LED lighting, and replace copiers and printers with more energy-efficient models at the end of their useful life.

We also regularly conduct performance assessments of pumping equipment to evaluate opportunities for increasing our use of higher-efficiency pumps and motors and replacing inefficient assets as needed. Although we maintain fossil fuel-powered backup generators for pump stations and other facilities required for business continuity during power outages, these generators are not a significant part of our footprint. For information about our energy and emissions data, see the 2022 Highlights section and the 2022 ESG Analyst Download.

Throughout our supply and distribution systems, we utilize demand response systems to reduce our energy use during peak demand times. This is intended to reduce strain on the electrical grid, while also providing associated financial benefits. For example, our Bakersfield peak demand reduction program shuts down wells during emergency electric power shortage events and offer rebates to participating customers. In Hawaii, our “Rider-M” program generates a discount on energy bills by pausing operation of wells during certain times of the day.

To help conserve water and reduce the energy demands required to process and distribute water in our system, we proactively monitor, maintain, and replace pipelines and infrastructure. For additional information about how water efficiency complements energy efficiency, see the Water System Efficiency section. We also encourage our customers to reduce their water consumption, which lowers energy use and reduces our Scope 3 emissions. See our End-Use Conservation section for more information about our engagement with customers about conservation.

Renewable Energy

We continue to invest in renewable energy sources as a way to reduce reliance on fossil fuels and support our transition to a low-carbon economy. To date, we have invested approximately $3 million in renewable power generation infrastructure at our facilities. Our on-site renewable energy portfolio includes solar panels at our Chico District Customer Center, an inline hydro turbine system in our Rancho Dominguez District, and a wind turbine and inline hydro turbine system in our Waikoloa District in Hawaii. Where feasible, we enroll in programs with our electric utility providers that give us the opportunity to purchase more of our energy from renewable sources. In some California service areas, we also purchase electricity from Community Choice Aggregators who sell power with higher renewable energy percentages than other providers.

Fleet Sustainability

Our diesel- and gasoline-powered vehicles represent the majority of fossil fuel assets that we own and regularly operate. We seek to strategically address these investments in fossil fuels by focusing on enhancing our fleet’s sustainability. The degree to which we do this depends on state-specific needs and feasibility:

• Efficient vehicles: We have standardized our vehicle selection approach to replace older vehicles with more fuel-efficient ones. In alignment with California Air Resources Board (CARB) regulations, we replace aging diesel trucks with lower-emitting alternatives.
• Fleet electrification: We also procure hybrid and electric vehicles, where possible. We are developing a fleet electrification strategy, currently focused on California, to phase out the purchase of fossil-fuel passenger vehicles. This is in alignment with CARB regulations, which mandate that zero-emissions vehicles must represent 100% of new passenger vehicles sales by 2035. To support the electrification of our fleet, our San Jose and Bayshore District facilities also provide electric vehicle (EV) charging stations, and we continue to evaluate and build additional EV charging stations in California. For information about current progress on our fleet strategy, see the 2022 Highlights section.
• Route optimization: Our online platform automates our processes to schedule maintenance, communicate with customers, and optimize routes to job sites. This automation also reduces paper documentation and fuel consumption.
• Travel reduction: Video conferencing allows us to limit employee business travel, minimizing emissions and the costs associated with operating vehicles. We continue to evaluate opportunities to further reduce travel, where possible.
• Commuter benefits: In California, our commuter benefits program encourages employees to reduce their personal vehicle emissions by utilizing public transportation and ridesharing.

ADDITIONAL RESOURCES

• Environmental Sustainability Policy
• ESG Governance Matrix

Supply Reliability

Our greatest water consumption activities are those associated with sourcing and delivering water to our customers. We strive to deliver a reliable supply of water to customers while reducing water loss throughout our entire operation. Group considers all of our water sources as freshwater, excluding recycled water, and supports freshwater availability by monitoring water withdrawal on a daily basis and regularly evaluating our sources of supply.

Our forward-looking approach to water supply management requires an understanding of the risks associated with our portfolio. Our climate change study highlighted potential vulnerabilities, such as increases in droughts and wildfires, declines in snowpack storage and natural groundwater recharge, and other risks that could impact water availability. In addition to this study, we determined risk ratings for specific surface water sources based on threat likelihood, consequence magnitude, and vulnerability. This assessment continues to inform our efforts to address climate-related risks to water quality and supply.

In California, we develop Water Supply and Demand Assessments, Urban Water Management Plans (UWMPs), Water Shortage Contingency Plans (WSCPs), and Water Supply Reliability Plans to support long-term water resource planning. These plans summarize and evaluate sources of supply, efficient uses, and demand management. They also inform our water management processes to forecast demand over time and enhance the reliability of water supplies. As we map and account for water risks, we also factor water stress into our ongoing supply evaluation and approach. For more information about our water resource plans, see the Planning for a Sustainable Future table.

We engage regulatory agencies and address legislative requirements with a view to promote water supply reliability. Set in 2014, California’s Sustainable Groundwater Management Act (SGMA) required most water basins to establish a local groundwater sustainability agency (GSA) by 2017, develop a Groundwater Sustainability Plan (GSP) by 2022, and demonstrate progress to protect groundwater resources by 2027. When full SGMA implementation is achieved by 2040, we expect to source nearly all our California groundwater from sustainably managed basins.

The following programs reflect the many ways we manage supply reliability:

• Responsible groundwater extraction: To help preserve the integrity of our water sources, we monitor groundwater levels and avoid sourcing from basins with limited supply, where possible. We also support groundwater recharge by paying well pump taxes that contribute to recharge facilities. Finally, we use surface water supplies in some districts to reduce our groundwater pumping and allow for aquifer recovery.
• Preparing for new water sources: We proactively research, design, and permit new water sources, and seek to comply with regulations set to protect groundwater basins.
• Collaboration with local authorities: We participate in GSAs in our service areas to manage regional groundwater levels, storage availability, seawater intrusion, water quality degradation, and land subsidence. We also contribute to boards and committees of GSAs and review potential projects to enhance local planning efforts.
• Partnership with the Public Policy Institute of California (PPIC): In support of PPIC research, we provide funding and review and supply data for projects that evaluate groundwater management, climate-related impacts on wastewater and recycled water, and drought resilience.
• Water conservation: To support long-term availability, we encourage reductions in customer water consumption. See the End-Use Conservation section for more information about these initiatives.

We continue to invest in recycled water sources and production to reduce dependence on freshwater sources and increase water supply resilience. Ongoing projects include:

• Multiple wastewater treatment plants in Hawaii that provide recycled water for landscape irrigation and green spaces.
• The Tesoro Viejo Wastewater Treatment and Recycled Water Production Plant, which Cal Water operates and maintains for the Tesoro Viejo Master Mutual Water Company (Tesoro Viejo). The treatment plant generates non-potable recycled water for Tesoro Viejo’s customer and community needs, such as landscape and agricultural irrigation and construction dust control.
• Collaboration with the SF Peninsula Regional Pure Water Project (previously the Potable Reuse Exploratory Plan), which aims to explore indirect and direct potable reuse options in the Bay Area and to support the development of standardized water recycling criteria for direct potable reuse.
• Recycled water service provided by Cal Water to the Apple Campus site located in the City of Cupertino. This recycled water, which comes from the City of Sunnyvale through Valley Water’s transmission facilities to the Apple Campus, supports landscaping, internal plumbing, and cooling at Apple Park.
• Continued evaluation of additional recycled water opportunities in the Bay Area, King City, and other areas we serve that would increase availability of recycled water for customers.

Operational Reliability

We continually invest in our infrastructure to promote service reliability. In addition to routine maintenance, we upgrade our systems to improve resilience against climate-related risks. Sea level rise, floods, wildfires, and other threats may disrupt access to electricity and impact our ability to deliver water. Therefore, we invest in emergency generators, power transfer switches, fire hydrants, and new water lines to support water flow during fire events and control water pressures across distribution zones.

Our Water Supply and Facilities Master Plans support improvements for operational reliability. They guide long-term infrastructure investments and forecast future needs for each California district over 30-year timelines. For more information about our plans to manage our water systems, see the Planning for a Sustainable Future table.

Responding to Drought

Our Drought Response Program and WSCPs outline our procedures for mitigating water supply constraints during droughts and supplement our ongoing strategy to monitor and enhance long-term supply reliability. In preparation for extended drought conditions, we pursue capital projects such as increasing our filtering capacity and addressing changing water source quality and quantity. We seek to update critical equipment by replacing treatment filters and pumps in advance of droughts. We also identify and make improvements to bring existing wells back online and provide additional sources of water supply.

In California, our policy is to follow a set of drought severity stages to determine appropriate reductions in water use and support drought management. During these intense droughts, our WSCPs outline measures for increasing conservation and preserving our water sources. For more information about our efforts to promote conservation during droughts, see the End-Use Conservation section.

ADDITIONAL RESOURCES

• Environmental Sustainability Policy
• Urban Water Management Plans and Water Shortage Contingency Plans
• Drought and Conservation Information for Cal Water Customers
• ESG Governance Matrix

Managing Water Loss

We maintain and tailor water loss control programs in each of our states designed to address district-specific needs and regulatory requirements. In states where we must report water losses or meet water loss reduction targets, we develop mitigation plans for systems that exceed water loss limits. To proactively drive our management approach, we track and seek to adhere to regulatory water loss standards and develop internal water loss limits where none exist. In California, we are working to meet the water loss reduction targets prescribed by the California State Water Resources Control Board, which is expected to enforce its regulations starting in 2028.

Group initiatives to target water losses include the following:

• Data analytics and visualization: We use a centralized reporting tool to track water loss to support the reporting of production volumes in a consistent, timely manner in our districts in all regions. Data on supply, demand, and non-revenue water is intended to support our teams to monitor and report on losses in alignment with regulations. We leverage the AWWA Free Water Audit Software in California and Hawaii to support our validation of our water loss limits, and we are evaluating opportunities to use this tool in additional states. We also incorporate data visualization tools to help inform our reporting. Through GIS-based spatial leak dashboards, we monitor leak types, current leaks being repaired, leaks by pipe material, and district-level trends. Our tools are designed to enable quarterly pulse checks to identify and manage errors, anomalies, and key events.
• Meter calibration and testing: Our asset management reliability program includes regular production meter calibrations for wells, treatment plants, and interconnections. We also perform customer meter accuracy testing—and generally conduct testing more frequently for meters that process greater quantities of water. Additionally, we track calibration and meter testing reports for meters owned by our wholesale water providers and neighboring entities.
• Meter replacements: Our customer meter replacement program includes meter replacements at specific intervals for our small- and medium-service size customers to further support data validity. Replacement intervals are intended to comply with industry best practices and standards dictated by the California Public Utilities Commission.
• Leak repairs: We seek to assess, prioritize, repair, and document leaks in accordance with regulatory standards. Our process aims to safely handle infrastructure to minimize water service interruptions and water losses. We also track our leak repair times in an effort to accurately estimate water loss volumes.
• Infrastructure upgrades: Throughout our locations, we seek to evaluate pipelines for risks related to age, material, leaks, and leak location. Based on our analyses, we prioritize certain pipelines for replacement and integrate the data into our GIS mapping tools to visualize the location and replacement timeline. These efforts can lead to significant impacts and direct reductions in water losses. In California, we incorporate replacement recommendations into our General Rate Case Main Replacement Program, and our associated steering committee guides our formal strategy for replacements.
• Water Loss Auditing and Control (WLAC) program: In California, the WLAC program is designed to establish and document water loss auditing and control standards to support compliance with current and future statewide water loss regulations while enhancing our field practices, data management, affordability, distribution efficiency, and accuracy of revenue generation. Our initial Water Loss Control Steering Committee evolved into our current WLAC program team, which includes representatives from a variety of departments and promotes crossfunctional collaboration.
• External engagement: We participated in the development of performance standards for water loss control by the California State Water Resources Control Board. In Washington, we also engage with the public by hosting annual forums about our water-use efficiency efforts.

ADDITIONAL RESOURCES

• Environmental Sustainability Policy
• ESG Governance Matrix

Responsible Conservation

Our Conservation Master Plans direct our ongoing approach to the promotion of efficient water consumption. Produced on a five-year cycle, these plans analyze our water conservation programs and the associated costs of implementation. For more information about our management plans, see the Planning for a Sustainable Future table.

Led by our Drought Steering Committee, our Drought Response Program further guides our conservation efforts to specifically address drought in California. To support our efforts to maintain safe, clean, and reliable water for our residential and business customers, Cal Water follows a set of drought severity stages to determine the level of water conservation needed and assess potential water-use restrictions. We call on our customers to follow actions based on current drought conditions, outlined on our Drought web site. Policies focus on increasing rebates, restricting outdoor landscape irrigation, providing guidelines for commercial businesses, implementing penalties for excessive water use, and installing flow-restricting devices. We promote proactive communication with our customers to explain any changes in drought conditions and water conservation needs.

Even when not in times of drought, we continue to work to increase awareness of the benefits of conservation across our subsidiaries and implement programming in California to help meet regulatory water-use reduction targets set by state agencies.

Conservation is not only intended to help alleviate water supply constraints—in our experience, it also generally corresponds to greater affordability for our customers. To help illustrate this trend, we completed a study in 2021 across five districts in California, which represented different geographies and demographics. We believe the results demonstrated that lower per capita water demand reduced operating costs over time.

We offer multiple programs to encourage customer conservation, including:

• Rebates for replacement of lawns with low-water-use landscaping; conversions from spray to drip irrigation systems; high-efficiency toilets, clothes washers, and sprinkler nozzles; and the installation of smart irrigation controllers
• Our free Smart Landscape Tune-Up program—which focuses on low-income customers—evaluates customer irrigation systems, installs high-efficiency nozzles, provides weather-based irrigation controllers, and repairs leaks in irrigation systems
• Customer conservation kits that offer efficient hose nozzles and showerheads, faucet aerators, and leak detection tablets
• Opportunities to learn about conservation and efficiency through informational fact sheets, online resources, local water conservation reports, and our subsidiary web sites
• Customized incentive programs for commercial customers
• Multiple community engagement initiatives that promote conservation. These initiatives are described further in the Community Support section

We also engage in external partnerships as a way to contribute to a broader array of conservation initiatives. We are members of the Alliance for Water Efficiency, and one of our officers serves on the Board of Directors for the California Water Efficiency Partnership. Additionally, we collaborate with the American Water Works Association and are an Environmental Protection Agency (EPA) WaterSense Partner.

ADDITIONAL RESOURCES

• Environmental Sustainability Policy
• Drought and Conservation Information for Cal Water Customers
• The Economic Value of Efficiency for California Water Service: Lower Water Bills
• ESG Governance Matrix

Stewarding Our Natural Environment

As part of our environmental management program, we strive for zero instances of non-compliance with regulations. In the event of a violation, our expectation is the timely and accurate reporting of such events, consistent with regulatory requirements, followed by root cause analysis and the development and execution of revised operations and response plans to prevent a recurrence.

We also strive to mitigate our impacts on our natural environments by aligning with local regulations, such as the California Environmental Quality Act (CEQA). By designing projects that take local species into account, we believe we can minimize the effects from our construction and installation activities on biodiversity. Project planning and biological surveys help define a process for minimizing impacts on species and sensitive waterways and habitats. We seek to implement best management practices throughout our activities, including site restoration or mitigation to preserve healthy ecosystems.

Discharge Management and Spill Prevention

Our Environmental and Operations Departments work together to support our compliance with relevant permits and regulations that address effluent management, such as the National Pollutant Discharge Elimination System (NPDES). In California, employees receive a Discharge Management Guidance Manual and annual training on effluent, potable, and groundwater discharges. We also oversee proper chemical storage at our water treatment facilities intended to mitigate the risk of chemical spills. We also work to align with applicable regulations in other states. Seeking to proactively prepare for compliance with future mandates, we continue to monitor the regulatory landscape, maintain open dialogue with legislative bodies, and evaluate treatment technologies that can enhance our water effluent quality.

We also conduct audits to support compliance and manage risks. In preparation for emergencies, we outline procedures for responding to infrastructure failures or other events that may cause unregulated releases from potable water and wastewater utility systems. Such releases may contain chlorinated water or untreated wastewater that could harm aquatic species. We seek to proactively incorporate input from third-party biologists and mobilize field teams to neutralize the discharges before potentially impacting water sources and ecosystems.

Wastewater Treatment

Although our wastewater services are far less extensive than our drinking water services, we maintain a team of over 50 certified wastewater treatment professionals to support effective collection and treatment of wastewater before discharging it to the environment or selling it to customers for reuse. It is Group policy to comply with all applicable regulations in each location and maintain the associated treatment facility discharge and recycled water permits for our wastewater treatment systems.

We regularly inspect, clean, and maintain our wastewater collection systems to help reduce the risk of blockages and sanitary sewer overflows. Our team completes video and/or visual evaluations of our systems and often uses Closed Circuit Television Video (CCTV) inspections to avoid more invasive methods. Inspection frequency may vary by type, but inspections typically are completed at a frequency intended to prevent sanitary sewer overflows. Depending on the system, our maintenance activities may include anything from cleaning systems with high-pressure equipment to removing solids or debris buildup. We also proactively engage our customers to help prevent sewer blockages by communicating how fats, oils, and grease can block collection systems and lead to sanitary sewer overflows. Additionally, we work to anticipate periods of increased demand and plan for expanded operation of wastewater systems, as needed.

We use various treatment methods across our wastewater treatment systems, primarily consisting of membrane bioreactors, moving bed bioreactors, and sequencing batch reactors, with minimal operations employing conventional activated sludge and facultative lagoon treatment methods.

To help manage residual biosolids, we utilize land application, composting, dewatering for offsite disposal by third parties, and in very few cases, sludge lagoons. Group continues to explore options for other alternative disposal methods for sewer sludge. Currently, we dispose of it in landfills when alternative methods are not either available or cost-effective.

At many of our treatment facilities, particularly those in Hawaii and California, wastewater is converted to nonpotable recycled water for reuse. For more information on our recycled water programs, see the Water Supply Management, Reliability, and Resilience section.

Waste Management

We promote efforts to reduce, reuse, and recycle various waste streams across our operations, while keeping affordability and feasibility top of mind:

• Hazardous waste: Our environmental team oversees the handling of hazardous waste to support alignment with current regulations. In California, operations and laboratory employees also receive annual training for hazardous waste management. We continue to identify opportunities to minimize hazardous waste. Past efforts have included modifying our water treatment processes to reduce average hazardous chromium waste volumes by 70%. As part of our remediation activities, we have voluntarily removed residual mercury left from previous waste materials, and we often engage local agencies to provide voluntary oversight of waste cleanup during site remediation.
• Production waste: We handle production waste based on the type of waste material and local waste diversion options. First, we prioritize reductions in waste generation, and then we pursue reuse and recycling, as needed. Our efforts include, but are not limited to, initiatives to minimize waste from demolitions and reuse materials from water storage tank cleanings during road construction.
• Office waste: Depending on the services available at each of our locations, we use separate containers to recycle paper products and collect wet compost in our offices where possible. In San Jose, our campus also collects bottles and cans and donates them to a local church that recycles the materials to finance water well installations in developing countries. Additionally, we contract a third-party vendor to recycle batteries and light bulbs.
• E-waste: In California, our Information Technology (IT) Department collaborates with a third party to recycle e-waste, including IT equipment and electronic components. Our team also leverages this partnership in other states and engages local e-waste companies, as needed.

To help safeguard our employees and minimize risks, we provide protective equipment, tools, and training for employees who may interact with potentially harmful waste streams. We also continue to pursue safer, alternative materials that offer lower toxicities, when possible.

Material Sourcing and Consumption

We support sustainable consumption by leveraging environmentally friendly materials and avoiding excessive purchasing where possible. In California office facilities, we source furniture and work surfaces that meet sustainability standards, such as qualifications from the Forest Stewardship Council, Intertek’s Clean Air certification, and the LEVEL standard for responsibly sourcing furniture. We apply our approach to sustainable procurement to all states, where possible, and continue to evaluate additional opportunities for reducing materials consumption.

LEED standards guide our design and construction activities for both existing buildings and new building projects. When we build new buildings or remodel a space, we also install drinking water refill stations to support reusable bottles. For other environmental initiatives in our offices and facilities, see the Energy and Emissions section.

Air Emissions

We manage air emissions beyond greenhouse gases to support our compliance with environmental standards and reduce air pollutants. We hold permits for backup generators, and we select generator technologies that are designed to meet requirements for emissions controls to address California legislation regarding air toxins. We also have permits for a few small wells in California to help manage hydrogen sulfide removal from the water. We do not meet the threshold to require federal air permits, which reflects our lower impact on air emissions overall.

ADDITIONAL RESOURCES

• Environmental Sustainability Policy
• ESG Governance Matrix