England’s privatised water companies have raised £10.5 billion ($13.2 billion) through green bonds over the past eight years while continuing to discharge record levels of untreated sewage into rivers and coastal waters, according to a new investigation by Unearthed, Greenpeace UK’s journalism unit. The findings have intensified concerns that the country’s sustainable-finance system is failing to prevent greenwashing in sectors with high environmental impact.
Unearthed’s analysis shows that water firms account for nearly 20% of all UK corporate green-bond issuance, despite facing consistent criticism for their pollution records and chronic underinvestment in wastewater infrastructure. Issuers include some of the sector’s worst offenders, such as Thames Water, Anglian Water, Severn Trent and Welsh Water, which have collectively reported millions of hours of sewage spills in the past year alone.
Green bonds are intended to fund projects that deliver environmental benefits, such as reducing emissions, expanding renewable energy or improving resilience to climate change. But environmental campaigners say the water sector’s use of these instruments reveals a widening gap between financial labels and environmental reality.
According to the investigation, many water companies use green bonds to support carbon-reduction programmes — such as solar installations or energy-efficiency upgrades — while diverting far less investment to urgent wastewater improvements. As a result, firms can comply with green-bond frameworks based on climate metrics even as water quality declines.
Environmental groups warn this approach masks the scale of the sewage crisis. Data released by regulators in 2024 showed untreated sewage was discharged for more than 3.6 million hours, a figure that continues to rise. Several rivers are now considered unsafe for swimming, and wildlife populations in freshwater ecosystems are collapsing.
Critics argue that water companies have prioritised financial engineering over environmental stewardship. Since privatisation in 1989, the sector has paid out over £72 billion in dividends, while many companies have taken on substantial debt. This highly leveraged model, the investigation notes, limits the industry’s capacity to upgrade ageing sewer networks and treatment plants.
Green bonds, researchers say, have become a “reputation management tool” that allows firms to promote environmental commitments without demonstrating improvements in pollution outcomes. Because green-bond criteria focus heavily on climate mitigation, especially carbon reduction, they often overlook biodiversity and water-quality metrics central to the companies’ primary environmental obligations.
The Unearthed investigation also highlights shortcomings in regulatory oversight. Neither the Environment Agency nor the Financial Conduct Authority currently requires companies to show measurable ecological improvements before issuing green-labelled debt. As long as proceeds are allocated to projects that fit within approved categories, bonds qualify — even if the companies’ broader environmental performance is deteriorating.
Sustainable-finance experts say the investigation exposes a structural weakness in the UK’s green-finance regime. “If a company can pollute rivers at record levels while issuing billions in green bonds, the system is clearly not working,” one analyst told Unearthed. “These instruments risk losing credibility unless real-world environmental outcomes are central to how they are designed and monitored.”
The revelations come amid growing public anger over sewage pollution. Local councils, river advocacy groups, anglers and coastal communities have mobilised to demand tougher action. Political pressure is also mounting: Opposition parties have proposed stricter limits on dividends, expanded regulatory powers and, in extreme cases, restructuring or renationalising failing water companies.
Water companies maintain that green bonds are an essential part of financing long-term environmental improvements, pointing to investments in renewable energy, nature-based solutions and emissions reductions. However, campaigners argue that these efforts do little to address the immediate crisis of sewage spills and failing infrastructure.
As the UK seeks to position itself as a leader in sustainable finance, the Unearthed investigation raises a fundamental question: Can green bonds meaningfully contribute to environmental protection if they are not aligned with the most urgent ecological challenges?
