Pennon Group and its subsidiary South West Water have signed £80 million worth of green finance deals as part of the company’s “commitment to sustainable finance”.
It has entered into new credit arrangements with Societe Generale Corporate & Investment Banking and Natwest.
Pennon said the bilateral impact loan revolving credit facilities (RCF) are “among the first of their kind” in the UK and will support the company’s environmental and social governance (ESG) priorities for the future.
The agreement with Societe Generale in London represents £30 million for Pennon Group and £20 million for South West Water. In addition, South West Water has also signed a £30 million green RCF with Natwest.
“The new facilities represent an important milestone as Pennon seeks to incorporate environmental and social values into its wider banking facilities as part of its recently-launched sustainable financing framework,” the company said.
It added: “This is the first credit facility of its kind with a margin directly dependant on the company’s sustainability rating.”
Susan Davy, chief finance officer, Pennon Group, said: “The recent launch of our sustainable finance framework formally recognises our commitment to investments which bring significant environmental and social benefits across a range of areas and we are delighted to be entering into arrangements that support this approach.
“The new GBP bilateral impact loan revolving credit facilities will support our ambition to achieve sector-leading sustainability performance and an enhanced environmental and social governance score.
“This includes through the investments we are making in improvements to bathing water quality – over and above our business plan commitments given its critical importance to the environment and economy of the South West Water region.”
Pennon Group has developed the framework, in alignment with the ICMA green bond principles, social bond principles and the LMA green loan principles.
Under the framework, Pennon can issue securities as well as enter into financing relationships to support investment across the group’s activities.
Sadia Ricke, Societe Generale’s chief country officer UK, said: “We continue to develop our finance offering that integrates environmental and social values so that we can fully support our clients who are committed to a long-term ESG strategy. This transaction fits with our own objectives to be a leading player in terms of corporate and social responsibility.”
Peter Dooley, head of UK energy and utilities for Natwest, added: “We have worked with South West Water for a number of years and are delighted to have been able to support them with this revolving credit facility.
“Natwest is committed to becoming a more sustainable bank and supporting the UK’s ambition to become a low carbon economy is an important part of this.”
South West Water recently announced it has been granted a licence expansion to cover the Isles of Scilly, which will lead to infrastructure investment of around £40 million by 2030.
The licence expansion has been agreed by the Department for Environment Food and Rural Affairs with support from Ofwat following customer consultation. It is subject to an amendment to the Water Act and the company’s licence.
Services on the five islands are currently provided by a combination of the Council of the Isles of Scilly, the Duchy of Cornwall and the Tresco Estate.