ABI welcomes UK’s green bonds launch

The Association of British Insurers (ABI) has praised the launch of new  ‘green’ savings bonds in the Budget, giving investors the opportunity to buy into projects dedicated to accelerating the UK’s push to become a net-zero economy.

Money raised from the sale of the sovereign debt will be invested into programmes underpinning the transition to a low-carbon economy, create green jobs and support efforts to tackle climate change, according to the government.

These include renewable energy and clean transport initiatives deemed key to Britain meeting its goal of cutting greenhouse gas emissions to net zero by 2050.

Describing the bonds as “world-leading” Chancellor of the Exchequer Rishi Sunak claimed they would “give all UK savers the chance to support green projects.”

The notes, whose size, price, yield, term and structure has yet to be determined, will be offered this year through National Savings & Investments, the government-backed scheme which also offers Premium Bonds.

Commenting on the launch, Huw Evans, (above) the ABI’s director general, said:

“We welcome the launch of Green Bonds. They will help the Government raise funds to invest in renewable energy and green projects, with savers playing their part in helping speed up the UK’s transition to a low carbon economy.

“As large-scale institutional investors managing £1.6trillion of assets, insurance and long-term savings providers have a crucial role to play in supporting infrastructure and green investment. The reviews of Solvency II and the Future Regulatory Framework for Financial Services are key in unlocking investment in green infrastructure and support the Government’s net zero ambitions.”

The announcement has been seen as part of the government’s attempt to enhance its green credentials ahead of the COP26 climate summit in November and capitalise on growing investor interest in assets designed to fund environmentally-friendly spending.

Laith Khalaf, financial analyst at AJ Bell said: “The new NS&I Green bonds are likely to sell like hotcakes, seeing as environmental concerns are really beginning to take hold with savers and investors.

“The product is expected to land in summer, hopefully enough time for NS&I to sort out the administration problems it has encountered of late, before it’s hit with a fresh wave of demand.

“The interest rate paid on the bond will be a key determinant of its success. Too low, and it won’t put bums on seats, too high and there are inevitably questions about costs to the taxpayer.”

France and the Netherlands have also issued similar bonds with Italy announcing its first move into the market last week.

Money raised from the sale of the sovereign debt will be invested into programmes underpinning the transition to a low-carbon economy, create green jobs and support efforts to tackle climate change, according to the government.

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