The UK government has announced it will issue its first green gilt, also known as a green UK government bond, in 2021, subject to market conditions.1 We expect issuance before the 2021 United Nations Climate Change Conference (also known as COP26) in November 2021.
Chancellor Rishi Sunak said the issue is planned as the first in a series of issuances as the government looks to “build out a ‘green curve’ over the coming years helping to fund projects to tackle climate change, finance much-needed infrastructure investment, and create green jobs across this country”2.
Green bonds are debt instruments issued by an entity to achieve a positive environmental objective. Examples of the categories typically targeted by a green bond include renewable energy, green buildings, clean transportation, water management, biodiversity conservation, sustainable land use and climate change.
To date, European governments have led the way in sovereign green bond issuance, with recent examples including Germany and Sweden. A sharpened focus on environmental, social and governance (ESG) considerations within the investment community means the UK could potentially benefit from strong demand and augment its investor base by issuing green bonds.
Joshua Kendall, head of responsible investment research and stewardship, Insight Investment.
1 UK Government. Chancellor sets out ambition for future of UK financial services. 09 November 2020.
2 UK Government. Chancellor statement to the house. 09 November 2020.