World-first bond tied to achieving carbon targets five times oversubscribed

Anglian Water last week said it had “once again made financial history” – this time by becoming the first water company in the world to launch a sustainability-linked bond connected directly to achieving its newly set interim carbon targets by 2025.

Anglian has committed to reduce net operational carbon by 30% from 2018/19 levels by 2025, and capital carbon by 65% from a 2010 baseline by the same date. These new targets mark transitional points on the journey towards its 2030 targets of net zero operational carbon and a reduction of 70% in its capital carbon emissions from the same baselines.

The order book for the seven-year, £300m bond was significantly oversubscribed with orders peaking at £1.6bn. Anglian said linking its carbon targets specifically to a bond allowed it to raise funds at a more competitive rate. The coupon was set at 2%, the lowest coupon for a debt instrument of this type. The bond was the first of a series of planned net zero bonds aligned directly with achieving these tougher targets.

The £300m proceeds will be spent on capital investment schemes that will help ensure future resilience for the east of England in the face of climate change and a rapidly growing population.

Chief executive Peter Simpson, said: “The launch of this bond, the first of its type for any utility in the world, further amplifies our commitment to the environment and the reduction of our carbon footprint. Linking it directly to delivering on our tough carbon targets demonstrates how determined we are as a responsible business to invest in resilience for our region in the most sustainable way – and highlights our willingness to be held to account on our progress.”