Pennon Group, has set up a sustainable financing framework for its investment funding which includes a £30m green finance loan to fund South West Water’s £60m Mayflower advanced water treatment plant scheduled for completion in autumn this year.
Like a green lease includes commitments to sustainability made by landlord and tenant, the green loan incorporates an agreement between Pennon and the lender, HSBC, as to how the building is to be occupied, operated and managed in a sustainable way.
Head of Energy and Sustainability at HSBC, Scott McClurg, said: “We believe this will prove to be the starting gun for widespread green financing following Green Loan Principles in the corporate market.” He went on to say green loans were a “counterpoint” to green bonds and offered “a clear indication that a company is investing in ways to reduce emissions, which is critical for investor sentiment.”
Under Pennon’s financing framework the margin paid on financing will be linked to “advancements in sustainability metrics.” The group’s investment programme includes £1bn in proposals for South West Water between 2020-2025.
Mayflower is, under Green Loan Principles, an eligible green asset as, according to Pennon, it will be the first in the UK to use ceramic membrane filtration which uses less chemical treatment and energy in reading raw water than conventional processes.