Rebuilding confidence in the UK water sector

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.

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.