A group of asset managers and investor groups, representing £10 trillion in assets, have launched the Green + Gilt proposal, calling on the government to issue sovereign green bonds to help finance the country’s green recovery plans. The initiative is being led by the Green Finance Institute, Impact Investing Institute and the LSE Grantham Research Institute on Climate Change and the Environment, and has been signed by 30 investors and asset owners.
Earlier this week, Prime Minister Boris Johnson announced new “build back greener” commitments for the UK, including investments in wind power, and a reiteration of the country’s net zero targets. The Green + Gilt movement has responded to these initiatives with its call, outlining the benefits of taking a sustainable finance route to fund the green investments.
The Green + Gilt proposal highlights several of the benefits that would be gained through the issuance of a green sovereign bond, including tackling climate change by creating funding for projects that contribute to a resilient, net-zero economic recovery, creating green collar jobs, providing the government with low cost funding and a cost-neutral way of diversifying the gilt investor base, and appealing to the deep pool of UK and international green investors. Additionally, the signatories point out that a UK green bond issuance would help to further develop the sustainable finance market, forming a template for further issuance by the private sector and localities.
Dr Rhian-Mari Thomas, Chief Executive of the Green Finance Institute, said:
“This is the time for the UK to showcase our ambition in green and sustainable finance. Issuing a Green+ Gilt will provide finance for green infrastructure, create green jobs and catalyse the sterling green and social bond market.”
Sarah Gordon, Chief Executive of the Impact Investing Institute, said:
“Issuing a Green+ Gilt would help the City maintain a competitive edge in sustainable finance, directing capital to address the UK’s social and environmental challenges, and setting an example for businesses to follow.”
Nick Robins, Professor in Practice – Sustainable Finance at the Grantham Research Institute, London School of Economics and Political Science, said:
“The Green+ model is one that is not only suited for the UK, but could be an attractive approach for sovereign bond issuance by other countries, generating financial momentum in the run-up to COP26.”
Investors and organizations who signed the letter include Affirmative Investment Management, AXA Investment Managers, Association for Financial Markets in Europe (AFME), Barclays, BlackRock, Confederation of British Industry (CBI), City of London Corporation, Credit Suisse, Columbia Threadneedle Investments, Institutional Investors Group on Climate Change (IIGCC), Impax Asset Management, Legal & General, Legal & General Investment Management, London Stock Exchange Group, NatWest, Ninety One, Pension Protection Fund, Principles for Responsible Investment (PRI), Schroders, TheCityUK, and the UK Sustainable Investment and Finance Association (UKSIF).