Thames Water £1.4bn loan deal links interest rates to sustainability performance
Thames Water has signed a £1.4bn five-year revolving credit facility (RCF), with the interest rate linked to annual performance against sustainability indicators.
It is the first UK corporate RCF that will tie an interest rate to a company’s Infrastructure GRESB (Global Real Estate Sustainability Benchmark) score.
The UK’s largest water and waste services provider will secure a lower interest rate if it outperforms the benchmark, with any financial gains boosting Thames Water’s charitable funding.
“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,” the company’s chief financial officer Brandon Rennet said.
“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 (SDGs). We’re delighted to have the support of our relationship banks as we do the right thing for our customers and the environment.”
The facility was provided by a syndicate of 13 banks, co-ordinated by BNP Paribas. It matures in 2023, with extension options to 2025, and will be used for general corporate purposes, Thames Water said.
Thames Water is seeking to rebuild its public reputation after being hit with a record £20.3m fine for polluting the River Thames with 1.4 billion litres of raw sewage. The firm was among a group of nine of the UK's water companies which recently joined together to create a set of "shared principles" to improve the health of the environment.
In related news, BBVA, BNP Paribas, Standard Chartered and Société Générale have this week pledged to measure the climate-related impacts of their lending portfolios and assist companies they invest in with aligning their respective sustainability strategies with the Paris Agreement goals.
On Monday, oil and gas giant Royal Dutch Shell pledged to link progress made towards its carbon reduction aims to the amount of pay awarded to members of its executive board.