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 a consistently poor record on wastewater pollution during this period, research shows.

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

Anglian Water was the biggest emitter in the water sector, with £3.5 billion, followed by struggling Thames Water in second with £3.1 billion. The two companies were overall the third and sixth largest issuers of corporate green bonds 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. Sustainable water and wastewater management is also included. This means that standard operations of many water companies qualify. In return, businesses tend to be able to borrow more cheaply because they attract investors hoping to benefit the environment while making a profit.

Yet the privatized water industry in England and Wales has faced persistent criticism over its environmental record in recent decades, following years of alleged underinvestment and paying large dividends to shareholders.

The first green bond issued by a UK water company was in 2017, when Anglian, which supplies much of eastern England, raised £250 million. However, the UK government’s Environment Agency said last month that environmental progress in the sector had declined over the past year. Critics of the water sector said the poor performance raised questions about possible “greenwashing” in relation to the bonds.

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

“Their crumbling infrastructure continues to destroy rivers and put communities at risk while investors are rewarded. True green finance should deliver real environmental and public health benefits, not hide ongoing pollution.”

Water companies accounted for 19% of all corporate emissions between 2017 and 2025. If emissions from “super sewer” developer Thames Tideway are taken into account, this rises to 22%.

Thames Water’s beneficial owners are lobbying for leniency from the government on environmental standards for up to 15 years as part of a bailout. Unearthed also revealed that Thames had not published impact reports detailing the environmental benefits of its bonds for two years. Although not a legal requirement, failure to publish reports contravenes industry standards.

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

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

“We know there is still much to do, particularly on issues like pollution, but environmental performance goes beyond this simple measure,” the spokesperson said, highlighting reductions in carbon emissions.

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

Water UK, an industry lobby group, declined to comment.