Green Bonds Flow in Water Industry Despite Pollution Concerns

Privately owned water companies in England have issued £10.5 billion in green bonds since 2017, a fifth of the total national issuance, according to market analysis. These bonds, marketed as tools for funding environmental improvements, have been predominantly offered by Anglian Water and Thames Water, raising £3.5 billion and £3.1 billion respectively. The funds are directed toward initiatives including renewable energy, greenhouse gas control, clean transportation, and sustainable water and wastewater management. This access to green finance has allowed companies to secure cheaper borrowing in exchange for a commitment to support environmental objectives.

During this period, the water sector has come under heightened scrutiny for its environmental performance. The Environment Agency recently highlighted a deterioration in sector standards, raising concerns about the effectiveness of investments intended to protect water quality and ecosystems. Campaigners argue that the continued issuance of green bonds, despite ongoing pollution incidents, may represent corporate greenwashing. James Wallace, chief executive of River Action, described the situation as greenwash on steroids, voicing criticism that infrastructure problems and pollution persist while investors benefit from the green label.

Water companies have accounted for 19 percent of all corporate green bonds issued in the UK since 2017, or 22 percent if projects such as the Thames Tideway super sewer are included. Anglian Water broke new ground with the UK’s first water company green bond in 2017 and has continued to raise funds for environmental projects. Both Anglian and Thames Water have cited the importance of sustained investment to achieve regulatory and environmental targets, though challenges remain. A spokesperson for Anglian Water emphasised achievements such as reduced carbon emissions, whilst acknowledging the ongoing need to address pollution and infrastructure challenges.

Transparency in the use of green bond proceeds remains an area of concern. Thames Water has not published impact reports for the past two years, despite industry expectations to do so. Although this disclosure is not mandated by law, its absence has been criticised for undermining public trust in green finance. The company has pledged to release the outstanding reports covering the £1.65 billion raised via a January 2023 green bond. It acknowledged falling short of expectations, but reiterated its commitment to responsible reporting.

The debate over the water industry’s use of green finance highlights broader questions about accountability and effectiveness in delivering environmental improvements. Campaign groups and regulators are calling for strengthened oversight to ensure that green bonds fulfil their promise of contributing to cleaner rivers and more resilient infrastructure.