Why does it always rain on Thames Water?

The company’s sustainability record has been disappointing, despite the issuance of green bonds. While the proceeds have been earmarked for water management and water recycling projects with a reduced climate footprint, they have seemingly failed to improve the company’s track record on sustainability. This contributed to regulatory fines amid growing financial challenges.

Though the fate of the company hangs in the balance, there are some lessons for the broader UK water sector. Investors, issuers and stakeholders need mechanisms that better align their incentives when it comes to meeting sustainability objectives and defining more meaningful performance targets, particularly in sectors that provide critical infrastructure. Sustainability-Linked Bonds (SLBs) offer one way to achieve this alignment.

About the authors

Jonas David

Research Director

Based in London, Jonas researches the role of fixed income markets in the climate transition, focusing on key sectors, sovereigns and development finance. He previously worked in emerging markets fixed income at Morgan Stanley Investment Management and UBS.

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.