Local Climate Bonds have the potential to raise millions of pounds for green projects in the UK. They are finance products launched by councils to access cost-effective local funding for specific decarbonisation projects.
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Local Climate Bonds have the potential to raise millions of pounds for green projects in the UK. They are finance 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.
What are Local Climate Bonds (LCBs)?
- Pioneered as Community Municipal Investments by Abundance Investment in 2020, they are regulated debt instruments issued by local authorities to raise money directly from the public.
- They create a powerful model for councils to engage with citizens as investors, with anybody able to invest £5 or more via a crowdfunding platform accessible to ordinary investors.
Why would a local authority decide to issue one?
- LCBs allow local authorities to create interactions with their local community while diversifying their sources of funding and help meet their Net Zero targets.
- Local investors may decide to donate all or part of their interest payments back to the council to finance specific projects, making the solution even more cost effective.
What types of projects have been developed with the funds raised through LCBs?
- With the LCB Pledge, local authorities aim to raise funding for specific local Net Zero projects, committing to set and share publicly their target dates for completion, and to provide public updates on their measurable positive impacts.
- This means that LCBs need to be deployed in funding councils’ Climate Emergency and Net Zero Plans, for example through the installation of solar panels on council facilities, the development of EV charging points, or urban tree planting.
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