Back in 2020 UK chancellor Rishi Sunak has set out plans for new “Green” Gilt-edged bonds which he believes will help the UK reach its carbon emission and climate change commitments and help to establish the UK as a green finance hub.
Green Gilts offer investors the chance to invest in climate change
The decision followed similar moves in Germany, France and the Netherlands and comments from European Commission president Ursula von der Leyen, who suggested that almost a third of the EU’s Covid recovery program should be funded through the issue of sustainable and environmentally friendly debt.
How do Green Gilt bonds work?
The Green- Gilt bonds will function in the same way that any other debt issued by the UK govt does, however, the funds raised through the issuance will be specifically targeted at low carbon projects. Helping to finance a reduction in carbon emissions from transport, retrofitting homes to make them more environmentally friendly and building out low carbon infrastructure and sustainable sources of power generation for example.
The chancellor also introduced a requirement for all UK- listed companies to disclose the climate change risks they face by 2025 and make necessary provisions against those risks.
Investing in climate change is likely to be front and centre on the global agenda after Joe Biden takes over as president in the USA in January 2021, and he has already committed to rejoining the Paris climate accord.
Where can you buy Green Gilts?
Investors should be able to apply for the green gilts through their stockbroker or bond brokers and banks, or via the debt management office’s own purchase and sale service.