Anglian Water: Green Bonds
Anglian Water provides water and water recycling services to around six million people in the East of England. Operating in one of the driest, yet fastest-growing and economically important, regions of the UK. Anglian Water recognizes that water is vital to the success and long-term future of the planet, the region and the company.
This practical example has been taken from the A4S Essential Guide to Debt Finance.
What?
Anglian Water has always raised its debt through UK registered companies, and this debt is listed on the London Stock Exchange. In 2017 the company became the first European utility company to issue a sterling green bond. The £250 million, eight-year bond will mature in August 2025 with a return to investors of 1.625%. The order book peaked at £800m at one point, with nearly 80 investors participating. Since the successful launch of that debt transaction, Anglian Water has raised a further £580m of green bonds to UK and US investors. Anglian Water now proposes to raise the majority of its finance in accordance with the Green Bond Framework.
Why?
Increasingly, environmental and social risk management is influencing the debt markets and investors are attracted to companies that take a sustainable approach to managing their businesses. Green finance has enabled Anglian Water to access funds from a wider group of investors than previously.
How?
The sustainability focus at the heart of the business means that all capital expenditure meets the requirements of the underlying Green Bond Principles, although for reporting and monitoring purposes some of its largest and stand-out schemes were chosen to be financed through the bonds. These include:
- Innovative water abstraction projects
- Drought and flood resilience schemes
- Progressive water-recycling and water-resource management projects
Anglian Water has now spent £792 million on the projects funded by the green bonds. With the first bond, it is on track to reduce greenhouse gases by 85,410 tCO2e. More information can be found in the company’s Green Bond impact report.
Top tips from Anglian Water
- Spend plenty of time talking to investors about what you do, across the full ESG agenda.
- Work with experienced banks to develop your green bond framework. Ultimately, it is a marketing document about your organization and needs to demonstrate your sustainability credentials.
- Don’t try to develop internal processes just to issue a green bond. Investors are looking for confidence that sustainability is at the heart of the organization, from the Board down to employees, and rushing to communicate a new, untested process may not be successful.
- Engage with the right second-opinion provider for your business. As Anglian Water had PAS2080 accreditation across its capital programme, the second opinion provider understood the company’s way of working as it was accredited to review that too, and so was already familiar with what Anglian Water had to demonstrate.
- Don’t ignore the numerous ESG questionnaires that come through – it is, increasingly, harder to change bad and ill-informed opinions than it is to spend time getting across the right message.
“Sustainability is simply how we do business, all day, every day. We were able to issue this green bond because of our continuous drive to generate value for our customers while delivering environmental savings, all of which is made possible by investor confidence in our strong financial structure, governance and reporting.”
Jane Pilcher, Group Treasurer, Anglian Water Group
Bond facts
| £250m initial bond value |
| Eight year term |
| £800m peak order book value |
| 1.652% return to investors |
| £580m in additional bonds |
