Her Majesty's Treasury (HMT) announced that UK's first ever Green Gilt raised GBP 10 billion for green projects. This is the largest inaugural green issuance by any sovereign. This will be followed by a second issuance later in the year. Green Gilts will raise a minimum of GBP 15 billion for green government projects such as zero-emissions buses and offshore wind and schemes to decarbonize homes and buildings in this financial year. Later in the year, the National Savings and Investments is expected to issue the world’s first standalone retail Green Savings Bonds.
Government bonds, or gilts, are sold to institutional investors and provide a fixed rate of return until their expiry. The UK’s inaugural Green Gilt is a 12-year bond, maturing on July 31, 2033. As set out in the Green Financing Framework of the government, published in June 2021, the money raised by the Green Gilt will be used to finance expenditures in clean transportation, energy efficiency, renewable energy, pollution prevention and control, living and natural resources, and climate change adaption. In a first among comparable sovereign issuers, the UK has committed to reporting on both the environmental impact and the important social co-benefits of green expenditures financed by Green Gilts, such as job creation, access to affordable infrastructure, and socioeconomic advancement. By launching the Green Gilt in the run up to the United Nations Conference COP26 next month, UK is demonstrating its commitment to tackling environmental challenges and the vital role that green finance plays in this fight.
Keywords: Europe, UK, Banking, Securities, Green Financing, Framework, ESG, Climate Change Risk, Green Bonds, Green Gilts, Sustainable Finance, HM Treasury
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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