Local Climate Bonds Toolkit guides councils to £3billion green funding

Local authorities face a major funding shortfall for essential services, leaving little in the pot for decarbonisation. A new resource can help guide regional powers to new funding streams. 

Published by the Green Finance Institute, the Local Climate Bonds (LCB) toolkit has been developed to support local authorities in their efforts to reduce emissions and carbon impact.

According to research by Abundance Investment and the University of Leeds, the 343 councils in England could stand to raise as much as £3billion through this approach. Of these, 75% have now declared a climate emergency, triggering work alongside residents and other organisations to do more to protect the environment in their area.

However, limited access to, and knowledge of how to tap into potential capital remains a huge barrier to progress. Overcoming this is essential, with Downing Street’s own Net Zero Strategy suggesting 82% of all greenhouse gas emissions fall within the sphere of local government influence. 

LCBs offer an approach to community municipal investment for major decarbonisation and net zero projects. For example, wind farms, solar panels, rewilding, retrofitting publicc sector buildings such as schools, and installing new electric vehicle charge points. The scheme was first piloted by West Berkshire and Warrington councils, which raised £1million each in 2020. 

Rather than looking for a large-scale backer, LCBs allow funds to be raised from large numbers of individual donors. People can invest as little as £5 into a crowdfunding platform developed by Abundance Investment, which is then transferred to a specific project funding stream. 

To date, around 2,000 people have invested in this way, all of who are guaranteed a return on their money, which can only be used to support climate action. Meanwhile, the system also presents a key opportunity for authorities to better engage with the public on environmental issues. 

The new toolkit aims to provide policymakers, planners and other teams with a succinct mine of information guiding them through the LCB process and debunks many misconceptions about the scheme. Case studies also feature, including West Berkshire – the UK’s first example of an LCB – and Westminster, which currently claims the fastest raise of any LCB. 

‘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,’ said Joseph Holmes, Executive Director (Resources) and s151 Officer at West Berkshire Council. ‘The bond was simple to launch and has enabled us to communicate our work on helping to deliver our Environment Strategy.’

‘Local authorities will be vital to the UK reaching its net zero target. Over 75% of local authorities have declared a climate emergency and have ambitious targets to reach net zero before 2050,’ said Mike Ashton, Local Green Investment Lead at GFI. ‘Local Climate Bonds have enabled eight pioneering councils to raise millions for green projects, while engaging with and empowering local residents. This toolkit aims to make the issuance process easier to understand for councils exploring a Local Climate Bond.”

More on local government funding and climate: 

Local government needs defined duties, devolved powers, lasting finance to restore nature

Limiting local authority powers doubles down on Britain’s climate inaction

The Future Is Local, says new Chris Skidmore net zero report

Image: Joshua Rawson-Harris