We want to increase the flow of public and private capital to address environmental and social challenges. Those capital flows are vital in achieving the transition to a net-zero carbon world, which should be inclusive and socially beneficial – a concept commonly referred to as a ‘just transition’.
What we have done to achieve it
With the backing of a large group of leading investors and industry bodies, we developed a joint proposal for a UK Green+ Gilt, a sovereign bond combining social with environmental impact.
The coronavirus pandemic has shown that the need to address both the consequences of climate change and the social impact of a transition to a net-zero economy has never been more important. Our Green+ Gilt proposal argues that environmentally sound investments should also create high-quality jobs and skills and contribute to “levelling up” regional inequalities in the UK, with local solutions targeting deprived areas and communities.
Market appetite for bonds combining social with environmental impact
The proposal was developed in partnership with the Green Finance Institute and the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, and with input from fixed income market participants. It also gained the support of 40 leading asset owners and managers, representing more than £10 trillion in assets, as well as influential professional bodies. In October 2020, shortly after the publication of our proposal, the UK government announced its plan to issue the first of a series of green bonds in 2021.
To build on the success of our Green+ work and help address the need for the sovereign green bond to deliver jobs, skills and levelling up, we have established a working group to develop robust and measurable metrics for these social impacts that could be used in the design process.