UK raises £6bn for green projects in second green gilt
Treasury claims issuance puts UK in top three national issuers of green bonds worldwide, with £16bn raised so far
The second issuance of UK green gilts has attracted more than £70bn in bids from investors looking to raise funds for green projects, the Treasury announced this afternoon, as it confirmed the second round of its green bond programme had raised £6bn.
The government said the latest successful issuance put the UK in the top three national issuers of green bonds in the world, with the sale coming just a month after the Treasury issued its first green gilt, a £10bn offering that it claimed was the largest green sovereign bond on record.
Chancellor Rishi Sunak said high demand for the sovereign bond was evidence of a healthy appetite among investors for sustainable investment.
“Our green gilt shows that the UK continues to be world leaders in green finance, helping to fund vital projects across the country and creating jobs as we drive progress to net zero,” he said. “The demand for our green gilt in the run up to COP26 shows that investors are keen to help in the collective fight against climate change, and the important role that private finance plays in that endeavour.”
The UK’s second green gilt is a 32-year bond, maturing on 31 July 2053. The government said this timeframe made it the sovereign green bond with the longest maturity in the world and stressed that it reflected the UK’s long-term commitment to working towards its climate goals.
Money raised by the UK inaugural green bond programme – as well as a retail green bond that is set to be issued by National Savings and Investments later this year – will be used to finance clean transportation initiatives, energy efficiency schemes, renewable energy projects, pollution prevention and control, living and natural resources and climate change adaptation measures, under rules set out by the Treasury earlier this summer.
The government has committed to reporting on both the environmental impact and the social benefits that should arise from expenditures financed by its green bonds issuance, such as job creation, access to affordable infrastructure, and socioeconomic advancement.
The issuance comes in the same week that the Treasury announced plans to mandate that large companies, pension schemes, and investors to publish climate-related financial disclosures and net zero transition plans.
It also comes as the department faced fierce criticism from environmental groups and economic experts over its Net Zero Review, which sought to assess the costs associated with the net zero transition. The review acknowledged that delivering on the UK’s net zero goals should result in net economic benefits, but it angered environmental campaigners by appearing to rule out borrowing to fund net zero projects, arguing that the impact on the UK’s debt would be unfair on future generations. The Treasury’s analysis was contested by many observers, who argued that future generations would in fact benefit from low carbon infrastructure efforts to avert escalating climate impacts.
