Green savings bond allows investors to support climate projects

‘Overall, the benefits to the taxpayer and to individual investors have the potential to be far-reaching’

SAVERS will be able to invest in efforts to tackle climate change under a new national savings bond to raise money for green projects.

The product will be launched through National Savings and Investments (NS&I) this year as the Government tries to get the country behind its efforts to cut carbon emissions to net zero by 2050. Hitting the target will require up to £50billion in investment per year, according to estimates from the climate change committee, which advises the Government, with major overhauls and changes in consumer behaviour required in sectors such as heating, power and transport.

Details have yet to be announced, but the Treasury said the new savings product would be closely linked to the framework of a new sovereign green bond, also confirmed in yesterday’s Budget, which should issue at least £15billion this year.

The NS&I product will “give all UK savers the opportunity to take part in the collective effort to tackle climate change, benefiting from the innovative reporting standards planned for the green gilt programme”, the Treasury said. Green projects that could benefit include those which would otherwise struggle to raise money as they are at an early stage, such as carbon capture and storage schemes.

Returns are expected to be “competitive” but details have yet to be announced. Gareth Mee, UK financial services partner at EY, said green bonds were “interesting and innovative” but must be managed carefully.

He said: “The accounting and monitoring of both these initiatives are complex and will require best-in-class accounting and reporting frameworks to ensure that green funds are used appropriately and in a transparent manner. Overall, the benefits to the taxpayer and to individual investors have the potential to be far-reaching.”

The bonds are on top of a new UK

Infrastructure Bank, based in Leeds, to leverage billions into efforts to cut carbon emissions and develop regional economies.

However, many in the energy sector were underwhelmed by the measures in the Budget, given the huge investment needed to hit the legally binding net-zero target.

Emma Pinchbeck, chief executive of Energy UK, the trade body, welcomed the new bank as well as plans to upgrade ports to help develop offshore wind turbines. But she added: “Meeting the most ambitious climate change targets of any major economy will require more ambition than was in today’s Budget. We need a concerted, cross-government approach.

“The energy sector is ready to continue reducing emissions, supporting jobs all around the country and driving economic growth. The question is how the Government plans to turn their ambition, and our willingness to invest, into a plan of action.”

Alison Murrin, from the law firm Ashurst, said: “It does feel that the measures announced today only scratch the surface.”