Prime Minister Rishi Sunak is set to announce the launch of the UK government’s first “Green Gilts.” This is used to increase low-carbon investment capabilities.
These targeted bond mechanisms will support the government’s efforts to invest in green infrastructure projects, including the Boris administration’s commitment to expanding UK offshore wind capabilities, following the initiative of 16 countries, including Sweden and Germany.
The move towards Green Guilt, or “Green Sovereign Bond,” follows the moves of the Bank of England and the European Central Bank, which coordinate strategies to more specifically coordinate their asset purchasing strategies towards low carbon discharge companies. It could also preempt the change in pond tone as President-elect Joe Biden speaks out about his intention to put weight behind the low-carbon changes in US energy.
It also follows a move by financial conduct authorities that starting January 1, 2021, all “premium listed companies” need to make “better” disclosures about how climate change will affect their businesses.
Commenting on Sunak’s green gold leaf and what is at least in the next iconic phase of the green transition, Fran Boait, executive director of Positive Money, said:
“The market is currently full of ‘green washing’, with the farce of big carbonated companies, such as oil companies and airports, where big carbonated companies issue ‘green’ bonds. You need to make sure these green government bonds are actually used for ambitious investments in the green transition. ”
“The Bank of England will also help to support a fair green recovery by purchasing Green Guilt through quantitative mitigation programs currently skewed towards high carbon companies, including Shell and BP. There is a high demand from private investors for sovereign green bonds, but banks can sell from these new green government bond contamination companies and reinvest the funds.”
