Investors do not have to wait for a government bond to go green with their money, thanks to a raft of alternative finance opportunities supporting renewable energy projects.
Chancellor Rishi Sunak unveiled plans last month to issue the UK’s first ever sovereign green bond to help the UK meet its 2050 net zero target and other environmental objectives.
It will not be launched until next year but there are already ways to support clean energy projects in the peer-to-peer lending and crowdfunding space.
Abundance has worked with councils this year to provide community municipal bonds that support renewable energy projects in a local area. More than £2m has been raised so far for West Berkshire and Warrington councils.
Bruce Davis, managing director of the ethical crowd bonds platform, said there are more council projects in the pipeline.
“We are expecting four or more raises next year including Leeds City Council,” he told Peer2Peer Finance News.
“We are aware of around 15 councils who are actively considering issuing green bonds.”
He said all P2P lenders should consider how their lending is aligned with the goal the UK has set to become net zero by 2050.
“It would be remiss for a sector which is driven by a desire to change finance for the better not to set an example to the traditional lending institutions as to how that goal can be a central part of a business strategy,” Davis added.
Some alternative lenders such as Downing Crowd, Folk2Folk and Crowdstacker already offer green energy investment opportunities.
Crowdstacker raised £1m last year for a project with Prime Agri, which provides funding for agricultural, horticultural and rural small businesses with a focus on renewable energy.
Chief executive Karteek Patel said its green investments typically attract higher sums and Crowdstacker has more in the pipeline for next year.
“Environmental and social governance is such as buzzword in the investment industry at the moment that it would be easy for it to be just a box ticking exercise rather than a fundamental guiding principle,” Patel said.
“But it needs to be a fundamental guiding principle.”