Green gilts set for Sept 2021; schemes face further climate disclosure requirements

The UK’s first sovereign green gilt will be issued in September, subject to market conditions, the government has revealed.

The government also announced that pension schemes and financial service firms will be required to disclose their risks and opportunities from, and impact on, the climate and environment through implementing integrated Sustainability Disclosure Requirements.

"The government will work closely with the regulators to ensure strong coordination and a coherent approach across the economy, and will publish a roadmap setting out its approach to sustainability disclosures ahead of COP26," it stated.

HM Treasury and the Debt Management Office published the UK Government Green Financing Framework, which stated intentions for more issuances “to build out a green yield curve” and outlined how the government plans to use the money raised through green gilts.

The government plans to raise at least £15bn through the sale of the gilts, with this money going to fund clean transport, climate change adaptation, energy efficiency, living and natural resources, pollution prevention and control, and renewable energy.

Additionally, due to the principles of some sustainable investors, nuclear energy, fossil fuel and ethanol-based vehicles, fossil fuel exploration and exploitation, large scale hydroelectric projects, Weapons, tobacco, gaming, palm oil industries, and direct manufacture of alcoholic beverages will be excluded.

The framework stated that further green investment would drive job creation, estimating that projects such as wind and hydrogen energy production, along with retrofitting old buildings, could create almost 300,000 new roles by the end of the decade.

The Green Financing Framework argued that the gilts “will play a central role” in the UK government’s “efforts to mainstream green finance products, attract dedicated funding for climate and environment objectives, deliver much needed infrastructure improvements, and create green jobs across the country”.

Speaking about the publication of a document dubbed A New Chapter for Financial Services, which sets out post-Brexit aims for the UK’s financial services sector, Chancellor Rishi Sunak said he was delivering on his proposed vision for an “open, green and technologically advanced” sector.

A green savings bond from National Savings and Investments (NS&I) will also go on sale later this year for individual investors.

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