Thames Water has signed a £1.4 billion, five year Revolving Credit Facility with the interest rate tied to sustainability performance – outperforming an Environment, Social and Governance (ESG) benchmark will result in a lower interest rate.
The company is the first UK corporate to tie the interest rate it will pay on the RCF to its Infrastructure GRESB score (Global Real Estate Sustainability Benchmark). The new facility matures in 2023, with extension options to 2025, and will be used for general corporate purposes. It has been provided by a syndicate of 13 banks, co-ordinated by BNP Paribas. In September 2018 the company was recognised by the GRESB infrastructure survey for its commitment to sustainability. With a score of 86/100 for infrastructure, Thames Water ranked 3rd in Europe out of 173 participants, Thames Water finished seventh globally for ‘Infrastructure’ of 280 businesses that took part in the evaluation and top globally in the ‘Water and Sewerage’ category.
In November 2018 the water company reinforced this by tying the interest rate on the RCF to its sustainability performance – the innovative loan will see its cost of debt on the loan tied to its annual performance against ESG metrics. GRESB is an independent, external ESG benchmark which assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide.
Commenting in its interim results report, the water company said it is committed to improving ESG performance and the last six months had seen it significantly enhance its sustainability disclosures, attracting positive external recognition.
Thames published its first ESG statement in October this year, going beyond statutory reporting requirements. The statement outlines how the utility is delivering against ESG criteria, bringing together three years of data in an accessible format.
Outperforming the ESG benchmark will result in a lower interest rate, with any financial gains boosting Thames Water’s charitable fund. Conversely, any underperformance will be borne by Thames Water.
Brandon Rennet, Thames Water’s Chief Financial Officer commented:
“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.” Click here to read more.