Feature: How local authorities can attract green finance

Green finance – mobilising and accelerating flows of private finance into clean growth and environmental improvement – has a pivotal role to play in meeting both economic and sustainability goals. Hannah Bartram, Chief Executive of the Association of Directors of Environment, Economy, Planning & Transport (ADEPT), talks about the importance of green finance for local authorities.

If the UK is to achieve its net zero 2050 ambition, it is estimated that 75% of the investment needed will have to come from the private sector. Additionally, we know that local authorities have a key role in delivering net zero and that local climate action brings more benefits than national action alone.

Green finance is recognised as an integral part of growing an economy in an environmentally sustainable way and we recognise the increasing importance of green finance for local authorities.

We know there are plenty of potential investors out there and there is plenty of capital looking for green investment opportunities. Local authorities – individually and collectively – need to get the incentives right and to package projects appropriately in order to attract that investment.

However, we need to have the skills and capacity to attract, coordinate, prioritise and allocate capital to make it happen. Public funding is no longer the default option: we need to make the case for a place-based approach being the most effective and inclusive channel for green investment.

With this in mind, at ADEPT we have been developing a series of joint webinars on net zero and green recovery/growth in collaboration with other partners, designed to increase knowledge and share learning across the sector. Our latest training event was held in partnership with the Chartered Institute of Public Finance and Accountancy (CIPFA). Aimed at local authority place leaders and senior finance business partners, the Green Finance training day was designed to provide some tools, techniques and some practical learning for local authorities to take away and use.

The event covered how local authorities can access green finance, looking at new sources of investment for climate and environment projects, over and above traditional capital financing routes. It also looked at how local authorities can use this new investment within the normal rules and safeguards of public finance management. Finally, it considered how climate and environment projects can be packaged into a programme that is both investment-ready for private finance and affordable for local authorities.

The training event was facilitated by CIPFA’s Mark Williams and was fast-paced, attracting local authority members from across the country. 10 guest speakers attended, with contributions from a wide range of organisations including BEIS, Innovate UK, Abundance Investment, and the UK Infrastructure Bank. There were also case studies from London and Glasgow.

Most contributors acknowledged that ‘successful’ places, in terms of mobilising new local net zero investment, are those where the local authority is prepared to lead, take risks, and innovate. The various local strategies – for net zero, climate resilience, local plans, local growth, public health and social inclusion – must be aligned. However, the challenges of aligning these strategies cannot be underestimated, given the issues around reducing budgets, political short-term/electoral cycles, the lack of joined-up government policy and long-term funding, and a lack of skills and capacity.

Despite this, there is a huge amount of expertise and advice to draw on. BEIS is taking more of a place-based approach to allocate funding streams, and provide support through its local hubs. Innovate UK has recently offered grants through its Net Zero Living Pioneer Places scheme. UKIB can offer loans and guarantees as well as advice and helping to attract private finance. Abundance has several successful examples of local authorities using crowdfunder bonds to raise net zero finance from citizens, rather than financial institutions, which can help encourage communities to become engaged in transition projects.

Green finance opportunities therefore do exist, but the money isn’t freely available without considered strategy and action. Local authorities need to be clear about their goals to deliver their climate and environment action plans, understand the costs and risks involved and – crucially – the costs and risks of inaction, and get out there to draw on the expertise and experience that already exists. This can include the use of tried and tested good practice business cases and programme/project management documentation, developed by the successful case study local authorities. We need to turn our local assets and plans into investable propositions.

We will continue to run further training courses for ADEPT members, helping them to learn and network and giving opportunities to develop practical skills and access good practice templates.

To find out more about ADEPT events, please visit: www.adeptnet.org.uk/news-events/adept-conferences 

Photos provided by ADEPT and Noah Buscher