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UK’s first Green Gilt raises £10bn for environmental projects

The Green Gilt was initially announced as part of Rishi Sunak's Budget in March. Image: HM Treasury.

The Green Gilt was initially announced as part of Rishi Sunak's Budget in March. Image: HM Treasury.

In the UK’s first Green Gilt, £10 billion has been raised for projects like zero-emissions buses, offshore wind and schemes to decarbonise homes and buildings in this financial year.

It was the largest inaugural green issuance by any sovereign, according to HM Treasury, helping to demonstrate the UK’s commitment to tackling environmental challenges in the run up to COP26.

“Green finance is vital in helping us to tackle the environmental challenges we face, and the launch of our first green bond is a signal that the UK continues to be a world leader in this area,” said the Chancellor of the Exchequer, Rishi Sunak.

“This funding will be used to finance vital green government projects across the country, including things like clean transportation, renewable energy and preserving our natural environment. In helping us to build back better and greener, it will also help to create jobs as we transition to net zero.”

This initial funding round will be followed by a second issuance later in the year, with Green Gilts set to raise a minimum of £15 billion for green government projects. These government bonds, or gilts, are designed to be sold to institutional investors and provide a fixed rate of return until their expiry.

The inaugural Green Gilt is a 12-year bond, which will mature on 31 July 2033.

Within the Green Financing Framework issued by the government earlier this summer, clean transportation, energy efficiency, renewable energy, pollution prevention and control, living and natural resources, and climate change adaption were identified as the areas to receive funding through the Green Gilt.

The gilt was announced as part of the government’s Budget at the beginning of March, along with a “world-first” infrastructure bank and further support for the offshore wind industry.

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