Thames Water five-year, £1.4bn loan agreement gives incentives for going green

Thames Water today announced it has signed a £1.4bn revolving credit facility which links interest rates to the company’s success in meeting its environmental responsibility targets for the next five years.

In a move designed to rebuild public trust in the company after a series of scandals including a £20m fine last year for pumping untreated sewage into the Thames, the UK’s biggest water company will use the facility until 2023, with extension options until 2025.

Thames Water will pay higher interest rates on its loans if it misses its environmental targets, but lower interest rates if it meets them, filtering all financial gains into the company’s charitable fund.

The loan agreement has been provided by a syndicate of 13 banks, co-ordinated by BNP Paribas.

Brandon Rennet, Thames Water’s chief financial officer said: “Over the last two years we’ve set a new strategic direction to build trust in Thames Water as a responsible water and wastewater services provider.

"This facility closely follows the creation of our Green Bond Framework and underlines our commitment to sustainability and the pursuit of the UN Sustainable Development Goals. We’re delighted to have the support of our relationship banks as we do the right thing for our customers and the environment."

Cecile Moitry, director of sustainable finance and investment at BNP Paribas said: “We are proud to support Thames Water in advancing its environmental and social objectives through this innovative transaction. It’s a tangible example of where financing can be aligned with positive impact incentives to encourage sustainable activities.”