West Berkshire launches UK’s first local government green bond

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WEST Berkshire Council is today launching the UK’s first-ever local government green bond using the Community Municipal Investment (CMI) developed by ethical investment platform Abundance, to help the district build back greener after the pandemic.

CMIs allow councils to offer a regulated investment directly to their residents for the first time.

The West Berkshire investment launching today is the first of six pilot schemes, backed by extensive research, which have the potential to be rolled out across every local authority in the UK.

Bruce Davis, co-founder and Managing Director, Abundance Investment, commented on the news: “150 years since the first local authority investments were sold directly to the public by the Chancellor of the Exchequer, Lord Goschen, Community Municipal Investments open a new chapter for financing local council investment in vital local infrastructure.

“Working with several councils, Abundance has drawn on the best of this legacy to create an innovative model for the 21st century which provides a powerful tool for tackling the major challenge of our time: climate change.”

For hard-pressed councils struggling with the dual challenges of economic recovery from COVID-19 and responding to the climate crisis, CMIs are being hailed as a ‘breakthrough’ in delivering green projects, jobs and economic stimulus.

West Berkshire is kicking off the programme, launching its green bond to raise £1 million from its citizens to fund solar panel installations on five council-owned buildings, including a building at Greenham Common and two local schools.

The CMIs are arranged by Abundance, which is regulated by the Financial Conduct Authority, and has previously raised over £100 million for green and social infrastructure projects.

However, CMIs are a brand new, lower risk investment product; the result of four years of research and development in collaboration with the University of Leeds funded by government and EU grants.

CMIs have a lower risk profile than previous Abundance products – they are comparable with government-backed investments – and with a minimum investment of just £5, accessible for a broad range of investors.

Mr Davis added: “We believe that using CMIs to issue green bonds to can really supercharge the green economy, and help us take the real action we need today to build the resilient, sustainable communities we need for tomorrow.

“There is a lot of talk about the need to build back greener, but CMIs are the direct, tangible investments that can deliver the projects that will actually make that happen.

“We’re really pleased to be launching the first of these with West Berkshire to help them achieve net zero 20 years ahead of the UK’s target.

“They are demonstrating that local authorities can be powerful engines of green growth for the future.”

West Berkshire declared a Climate Emergency a year ago, following this up with an Environment Strategy which has an ambitious target of making the district net zero by 2030.

Its green bond to fund new solar power in the district is one of the first deliverables of its strategy.

Ross Mackinnon, West Berkshire’s Executive Member for Finance and Economic Development, added: “We are very excited to be the first council to offer CMIs to our residents and community groups.

“They are a ground-breaking way to put residents’ money to work to help us build back greener after the pandemic.

“Communities investing directly with us will provide us with a cheaper alternative to conventional sources of funds reducing the overall cost of borrowing to all taxpayers across the district as well as making a positive contribution toward our target to be carbon neutral by 2030.”

West Berkshire is the first of three local authorities who will be launching the first wave of local government green bonds through Abundance, with Warrington and Leeds councils set to follow suit later this year.

All will be using their CMIs to finance rooftop and ground mount solar installations. Abundance is also working on a pipeline with several other local authorities.

Research shows a strong appetite for these investments.

A recent report from Abundance, funded by the Place-based Climate Action Network (PCAN) showed that 73% of UK savers and investors would consider investing in a CMI.

Abundance’s analysis also shows that CMIs could have a potential impact of as much as £3 billion if taken up by all 343 local authorities in England, matching the Chancellor’s recently announced green stimulus package of £3 billion.

This represents just a small fraction of the £157 billion UK citizens currently lend to the UK government via National Savings and Investments.

The West Berkshire CMI offers low risk returns of 1.2% per year over a five-year term and uses an annuity structure to repay capital in instalments over the life of the bond.

More information is available here