England’s water industry issued £10.5bn in ‘green bonds’ despite pollution record | Water industry

Water companies have issued a fifth of the UK’s “green bonds” since 2017, despite having a consistently poor record on sewer pollution, research has shown.

Private water companies in the UK have issued bonds worth £10.5bn linked to projects offering “environmental benefits”, according to an analysis of financial market data by Unearthed, part of Greenpeace UK.

Anglian Water is the largest issuer in the water industry with £3.5 billion, while Thames Water is second with £3.1 billion. The two companies have become the third and sixth largest issuers of corporate green bonds overall since 2017.

Green bond issuers are expected to use the proceeds for defined purposes, such as renewable energy, greenhouse gas control and clean transportation such as electric vehicles. This includes sustainable water and wastewater management. This means that many water companies’ standard operations are in compliance. In turn, companies tend to borrow more cheaply because they attract investors who hope to both benefit the environment and make a profit.

But the privatized water industry in England and Wales has faced persistent criticism over its environmental record in recent years, following years of allegations of underinvestment and large dividends paid to shareholders.

The first green bond issued by a UK water company was in 2017, when Anglian, which provides water to much of the east of England, raised £250 million. But the UK government’s Environment Agency said last month that environmental progress in the sector had slowed last year. Critics of the water industry said the poor performance raised questions about possible “greenwashing” on the bonds.

James Wallace, chief executive of clean water campaign group River Action, said: “This is corporate greenwashing on steroids. UK water companies are raising billions of dollars through green bonds while failing to deliver the environmental improvements these funds should support.”

“Investors are rewarded while crumbling infrastructure continues to kill rivers and put communities at risk. True green finance should not mask ongoing pollution but deliver real benefits for the environment and public health.”

Water companies accounted for 19% of all corporate issuance between 2017 and 2025. This rises to 22% if exports from the Thames Tideway “super sewer” developer are taken into account.

The de facto owners of Thames Water are pressing for the government to be given up to 15 years of flexibility on environmental standards as part of the rescue plan. Unearthed also revealed that Thames had failed to publish impact reports detailing the environmental benefits of its bonds for two years. Although it is not a legal obligation, not publishing reports is against industry standards.

The company said it was still committed to publishing impact reports on its green bonds. A spokesman said: “The 2022-23 and 2023-24 impact report, which includes details of the £1.65bn allocation raised through our green bond issue in January 2023, has not yet been published. We take our reporting responsibilities seriously and on this occasion we have fallen short of expectations.”

An Anglian spokesman said growing the economy while reducing pollution required “significant and sustained investment in infrastructure”, adding that the funds raised were “helping to deliver significant environmental improvements”.

“We know there is more to be done, especially on issues such as pollution, but environmental performance is more comprehensive than just this single measure,” the spokesman said, pointing to carbon emission reductions.

They said it was vital that the government created the conditions for an “investable sector” through regulatory reform.

Water UK, a lobby group for the industry, declined to comment.