Pennon Signs Pioneering Green Lease with HSBC UK
Photo by Vincent Lit
Funding to support investment in cutting-edge water treatment technology
Pennon is at the vanguard of UK green finance
Pennon Group, the FTSE-250 listed owner of South West Water, Bournemouth Water and Viridor, one of the UK’s largest environmental infrastructure groups, has become an early adopter of a sustainable financing framework. Pennon’s future investment funding will be considered against this framework, linking the margin paid on financing to advancements in sustainability metrics.
Across water and waste, the Group is currently completing its £1.5 billion investment programme in Energy Recovery Facilities by 2021 and has proposed up to £1 billion more investment in South West Water between 2020-2025.
As part of the framework, Pennon has announced that South West Water has signed the UK’s first green finance lease. The £30m green finance lease completed with lenders HSBC, in accordance with the Green Loan Principles set out in March 2018, to help finance the cutting edge Mayflower Water Treatment Works in Devon.
Mayflower under the Green Loan Principles is an eligible green asset as the Treatment Works will be the first in the UK to use innovative ‘ceramic membrane’ filtration using less chemicals and energy than traditional processes to treat raw water. Clean treated water will be supplied to over 250,000 customers in and around Plymouth. Mayflower will cost £60m in total and is on schedule to become operational in late autumn 2018.
Chief Finance Officer Susan Davy, Chair of CBI South West and member of the Accounting for Sustainability (A4S) CFO Leadership network, said:
“As a leading UK company with the environment at the heart of our business we are delighted to be an early adopter of sustainable finance. At Pennon, we are committed to ensuring that our significant investment in the UK brings about positive social, economic and environmental outcomes for our customers, communities and shareholders.”
Scott McClurg, Head of Energy and Sustainability at HSBC Corporate Banking, added:
“With this pioneering deal, Pennon is at the vanguard of green finance in this country. We believe this will prove to be the starting gun for widespread green financing following the Principles in the corporate market.
“Green loans are a counterpoint to the green bond market and will offer fresh access to finance to businesses keen to drive the green agenda.
“A green loan is a clear indication that a company is investing in ways to reduce emissions, which is critical for investor sentiment. In this respect, Pennon’s statement of intent could not be clearer.”