Local Climate
Bonds

Local Climate
Bonds

Local Climate Bonds have the potential to raise millions of pounds for green projects in the UK. They are regulated investment products launched by Councils to access cost-effective funding for specific decarbonisation projects, offering local people an opportunity to invest in their area in a way similar to crowdfunding and to make a return from doing so.

Pioneered as Community Municipal Investments by Abundance Investment in 2020, the first Local Climate Bonds have proven that citizens can play a significant and meaningful role in financing local authority climate emergency roadmaps.

Community Municipal Investments can be issued as regulated bonds and now also as regulated peer to peer loans. Peer to peer loans give the opportunity for the investment to be held in an Innovative Finance ISA, which allows residents to access ISA tax benefits, enabling councils to reach new investors and begin to tap into the £650 billion ISA market.

Example projects range from rooftop solar provision to wind turbine farms, electric vehicle charging infrastructure, retrofitting of buildings and nature-based solutions, such as rewilding.

In July 2021 the Green Finance Institute and Abundance launched the Local Climate Bond campaign, to raise awareness and support participating councils through the process of release their own Local Climate Bonds in the year of COP26.

In September 2021, we announced the first group of five pioneering councils to sign the Local Climate Bond Pledge, committing to issuing a bond or related municipal investment in the 18 months following COP26.

As the appetite for place-based finance products grows, it is hoped that other investment platforms will join Abundance in supporting councils to offer Local Climate Bonds.

Join our Local Climate Bond campaign

  • Join the growing list of Local Authorities committed to launching a Local Climate Bond​, or related municipal climate investment
  • Efficiently finance Net Zero projects in your local area, while communicating action, demonstrating leadership and engaging your residents with your climate emergency plans.
  • Work with us to find joint opportunities to showcase the impact of the Local Climate Bonds Campaign in the run up to and during COP26​.​

Illustrative Structure

Types of Community Municipal Investments

Local Climate Bonds Municipal Climate Investments
Original pilot investments issued in 2020 by West Berkshire and Warrington structured as a regulated investment bond. New product available in 2021 following regulatory authorisation for Municipal Investments to be structured as regulated p2p loans.
Not eligible for the Innovative Finance ISA Eligible for the Innovative Finance ISA
Bond structure now used for investment terms greater than 5 years in maturity. P2P loans available for investment terms up to 5 years in maturity.
Fixed interest rate competitive with equivalent sources of funding from UK Government (Public Works Loan Board). Fixed interest rate competitive with equivalent sources of funding from UK Government (Public Works Loan Board).
Capital repaid in instalments or at maturity Capital repaid in instalments or at maturity
Fully transferable and tradeable investment Fully transferable and tradeable investment

 

These Councils have already committed to the campaign:

We are keen to support you in your journey to launching a LCB.
Contact us localclimatebond@gfi.green for more information or to arrange a conversation with our team.

Case studies

The delivery of the bond has been a real success for us and has enabled the Council to not only achieve an engaging way of utilising a cheaper form of borrowing for our net zero ambitions, but we’ve also leveraged in further donations to our successful wildflower verges projects to enhance biodiversity in the local area.

Ross Mackinnon, West Berkshire Council’s Executive Member for Finance and Economic Development

This gives people a fantastic opportunity to make a positive contribution towards a carbon neutral future while providing them with a financial return and deeper engagement with one of Britain’s most environmentally-focused local governments.

Russ Bowden, leader of Warrington Borough Council

Further reading

Financing for Society

Place-based Climate Action Network

UK Climate Change Committee

Local Government Association

Coalition for the Energy Efficiency of Buildings

Financing Wales’ Housing
Decarbonisation

Community Municipal Investments (CMIs)

Community Municipal Investments (CMIs) Explainer Video

Podcast

Episode two: Louise Wilson, co-founder and joint managing director, Abundance Investment

How can local authorities leverage the power of the crowd to finance local green solutions? Hosts Helen Avery and Ryan Jude are joined by Louise Wilson of Abundance Investment to dive into Community Municipal Investments, which allow the general public to invest as little as £5, through their local authority, in green projects such as hybrid battery storage and solar projects. With two local councils in the UK having launched their CMIs this summer, Louise discusses her organisation’s ambitions to scale up the initiative. Helen also asks Louise about a nature climate bond launched in Scotland which helps part fund green spaces and nature.

Our Supporters

The Green Finance Institute is not in any way affiliated with any finance providers listed on this webpage, and makes no statement as to the sustainability of any financial providers or any specific financial products. Finance providers listed on this webpage are listed solely to reflect the fact they are offering services related to the issuance of Local Climate Bonds. The Green Finance Institute does not recommend any particular financial providers or financial product. Other finance providers are available