The Green Finance Institute (GFI) has published its Local Climate Bonds (LCB) Toolkit to help local authorities unlock £3bn of green investment opportunities.
LCBs, a type of community municipal investment, enable local authorities to raise capital to fund decarbonisation projects in their communities such as wind farms, solar panels and rewilding. LCBs are open to all investors from £5 via a crowdfunding platform hosted by Abundance Investment.
The GFI has launched its LCB Toolkit to provide local authorities with a source of information on the bonds. It outlines the optimal issuance process and aims to tackle common misconceptions.
Since 2020, eight councils have launched LCBs, with West Berkshire and Warrington councils being the first to pilot the bonds, which raised £1m each in 2020.
Miles Ashton, the GFI’s local government lead, said: “LCBs have enabled eight pioneering councils to raise millions for green projects, while engaging with and empowering local residents.
“The toolkit aims to make the issuance process easier to understand for councils exploring a LCB.”
Research by Abundance Investment and the University of Leeds has calculated that LCBs could raise £3bn if issued by all 343 councils in England.
West Berkshire was the first UK council to issue the LCB, which attracted 640 investors and financed sustainable projects in the area including solar, tree planting and wildlife restoration.
The authority’s LCB had a Public Work Loans Board discount of 0.49% and an investor return of 1.2%.
Joseph Holmes, executive director (resources) and section 151 officer at West Berkshire, said: “We were delighted to successfully launch the first local climate bond in the country and have been really pleased with the public response we have had. The bond was simple to launch and has enabled us to communicate our work on helping to deliver our environment strategy.”
The GFI’s Toolkit also features the case study of Westminster City Council, which was the fastest authority to raise an LCB. The issuance raised £1m of private finance in nine days from 485 investors.
This LCB, termed the Westminster Green Investment, will fund a range of green projects, including energy efficiency measures for council owned buildings or community owned sites, such as schools and community centres.
The authority’s LCB had a Public Work Loans Board discount of 0.30% and an investor return of 4.2%.
David Boothroyd, cabinet member for finance and council reform at Westminster City Council, said: “We want to support residents and local businesses to make a positive impact in their neighbourhoods, by reducing their climate impact and improving the local environment and this new Westminster Green Investment scheme is one way that can help us reach our goal.”
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