Corporate Responsibility

Sustainable finance.

Last reviewed:
Solid and sustainable financing is crucial as we invest to ensure the future provision of our essential services, while keeping bills affordable and protecting the environment around us.

Investing in flexible flood resilience.

Over the last 13 years we’ve been investing, on average, over £1 billion a year in our business, yet our current bills remain the second lowest in England and Wales at £383 a year (2018/19). As a provider of essential services to over 15 million people across our region, our customers rely on us to spend their money wisely – this is something we take very seriously. With some of the UK’s poorest areas in our region, we recognise the need to provide extra support for customers who are in financially vulnerable circumstances. You can find more about this in our Putting Customers First section.

Closing our Cayman Island companies.

As part of our revised approach to managing the company, we’re committed to simplifying our structure and closing our Cayman Islands subsidiaries is part of this. While these companies provided no tax advantage to us or our shareholders, they complicated perceptions. We’ve made significant headway in our process to close them, such that at the end of September 2018 these companies were put into liquidation and they will be formally dissolved by the end of March 2019.

Responsible funding.

To ensure our investment programme is affordable for customers, we borrow money to bridge the gap between bills and spend. For every £1 from customers we need an extra 22p to fund our spending (2017/18). By spreading the cost of our investment and managing our debt over a number of years, we also ensure the generations that will benefit from the improvements are those who will be helping to pay for it – this makes our bills fairer and more sustainable.

Resilience and diversity in our funding portfolio are important drivers in ensuring our financial stability over the long term. During the year we successfully placed both our first Canadian bond and our first green bond. With so much of our activity focused on delivering environmental protection, it makes absolute sense for us to be an ‘early adopter’ of this type of debt issuance in the UK. It’s also a good example of our sustainability policy in action and aligns with our focus on the UN Sustainable Development Goals.

The green bond was a £705 million US Private Placement (USPP), which allowed us to raise long dated funds with an average maturity of around 10 years, at historically low interest rates. As a USPP, the bond has also provided an opportunity to diversify our source. This debut green bond has been used to refinance projects such as the upgrade of Deephams sewage treatment works, extensions to our metering programme, mains replacements and the Thames Tideway connecting works.

As part of the process we’ve established a new Green Bond Framework based on key principles outlined by the International Capital Markets Association. For a progress update on our Green Bond Framework, click on the documents below:

Environment, Social and Governance Statement.

We’re committed to being open and transparent about how we operate our business and we’re going beyond statutory requirements with the publication of our first Environment, Social and Governance (ESG) statement. While we publish ESG data and information in other documents, we’ve published this statement to improve the accessibility of this information. It contains three years of data, with references to the sources for this information, for a range of key performance measures to give balance and context for our latest performance information.

A fair dividend policy.

In order to attract the long term profile of investor that benefits a company like Thames Water, we are committed to distributing dividends when it is appropriate to do so. The Board is also mindful of the privilege of our position as a monopoly provider of essential services and has agreed the parameters of a new and fair dividend policy, with full support of shareholders. This can be found in our Annual Report and Annual Performance Report 2017/18.

While we focus on meeting the performance expectations of customers, our investors support our decision not to pay dividends to external shareholders for the rest of this regulatory period so the money they would have received can be reinvested. In addition, during the 2020-2025 period we have agreed we will only issue modest total dividends of around £100 million, meaning a total dividend expectation to shareholders of only £100 million over eight years. When dividends are paid we will be clear about their level, how they relate to delivery for customers and why they have been awarded.


We take pride in fulfilling our responsibilities on tax and are transparent about how much we pay and why. You can find our tax strategy here. We pay around £192 million a year in taxes such as business rates, payroll taxes and environmental taxes. We incur around £138 million directly, mainly through business rates, and collect and pay around £54 million on behalf of our employees.

The UK Government allows companies to claim tax relief on capital investment and also provides tax relief for interest costs on debt which has been raised to fund investment. As such, due to our capital investment programme – currently over £1 billion a year - and interest costs on debt, we don’t currently pay any corporation tax. It is only our customers who benefit as the reduced cost is fully passed to customers through lower bills. We are not expecting to pay any corporation tax in the current, or next, regulatory period.

Gearing and financial resilience.

We are financed by a combination of debt from our lenders and shareholder equity retained in the company. Our level of debt has increased over the last decade, driven largely by the scale of our investment programme. We are very focused on ensuring we run the business efficiently and effectively for the benefit of all stakeholders – and an important component of that means being financially resilient.

Our level of gearing (as at 31 March 2018) is 81.3 per cent and we have strong investment grade credit ratings with two of the major credit ratings agencies – Moody’s and Standard and Poors. By maintaining a credit rating stronger than that required by Ofwat under our licence we are, in the long run, able to keep our bills lower than they would otherwise be.

During the development of our plan for 2020-25 we spoke to nearly a million customers and took their views on a range of issues. Customers told us they want us to be more financially resilient and we aim to reduce gearing to 76.2 per cent and increase the equity buffer from around £2 billion to £4.7 billion between 2020 and 2025.


Our approach to remuneration directly aligns reward with our vision and what our customers value most. Our Chief Executive Officer (CEO), Steve Robertson, has agreed not to take bonus payments until 2020, as a personal commitment to improving the performance of the business. He will only receive a bonus payment following the end of the current regulatory period (2015 – 2020) if we meet our critical customer commitments.

Longer term incentives for the CEO and other senior leaders are determined by delivery of regulatory outcomes for environment and asset health, as well as stretching targets for customer service performance. Shorter term incentives focus on delivery of the programmes which will achieve these outcomes. For more information about our finances, see Our finances explained.