Debt capital markets are instrumental to the sector’s prospects. Over the period 2025-2030, the regulator envisions a quadrupling of new investment to GBP 44bn by the sector. Bond investors will have to supply some of this financing. We recommend they use this leverage to push for improved sustainability performance.
Sustainability-linked bonds (SLBs) have proven effective at making companies more accountable to their public environmental pledges. They can also drive better sustainable performance. In this research note, we highlight the potential benefits of SLBs to the UK water sector, and suggest companies issue bonds aligned with Ofwat’s targets to align incentives across stakeholders.
