Westminster Council issues second round of municipal green bonds

Westminster City Council is hoping to raise £2mn for energy efficiency and decarbonisation projects by selling green investment bonds.

In September 2022 the council approved plans to allow it to borrow money via a community municipal investment scheme which allows residents and local businesses, or anyone else, to invest as little as £5 towards helping the council reach its climate action goals.

A council report in March 2023 stated: “This is an alternative financing route, which will help facilitate the Council’s commitment to becoming a carbon neutral council by 2030 and carbon neutral city by 2040.”

The green bonds will be sold through a peer-to-peer loan scheme in partnership with crowdfunding platform Abundance Investment Ltd.

The first round of municipal green bonds were sold in 2023 raising £1mn in just nine days, and funded energy saving measures at Queen Mother Sports Centre, Beachcroft House Care Home, and Mayfair Library, says Westminster Council.

This latest round will support green projects across the city, including the refurbishment of the Seymour Leisure Centre in Marylebone, which is due to be completed in mid-2026.

Lenders will get a return on their investment with interest of 4.1 per cent being paid out every six months over the five year bond term.

“Thanks to the Esmée Fairbairn Foundation, every investment from Westminster residents will be match funded, giving a significant boost to achieving the £2mn target,” says the council.

Cllr Ryan Jude, cabinet member for climate action, ecology, culture and air quality, said:

“We have recently updated our Climate Emergency Action Plan, strengthening our commitment to tackling the climate crisis through actions such as improving energy efficiency of council buildings and social homes, adopting a retrofit-first policy and expanding our electric vehicle charging network.

“Now, the second round of Westminster Green Investment gives residents and businesses another chance to make a lasting difference in the neighbourhood.”

Potential investors are however warned that the bonds are long term, may be hard to sell before their maturity date, and the money invested is not covered by the Financial Services Compensation Scheme.

Other local authorities have run similar schemes. In 2022, Camden Council launched Camden Climate Investment, also in partnership with Abundance Investment Ltd.

The Local Government Association and Local Partnerships published a Green Finance Guide to support councils in finding ways to finance their green ambitions.

Westminster City Council, Community Municipal Investment report to the cabinet member for finance, 2 March 2023. Westminster Green Investment is open until 1 March 2026. More information is available here.

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