Climate Community Municipal Bonds: Accelerating their Potential

Lead Participant: Abundance Investment Ltd

Abstract

The C19 pandemic has carved a hole in the budgets of councils, leaving them with impossible decisions on what to prioritise. And it has put a significant dent in their scope to press ahead on the climate emergency which remains no less pressing. Two thirds of councils have declared a climate emergency, but even before the pandemic, they would not have reached their local NetZero targets without new sources of borrowing, non-repayable capital and the active participation of residents. The dent to their resources makes this need ever more pressing.

Launched in partnership with West Berkshire, Warrington and Leeds City Council, Climate Community Municipal Bonds (CMB) are a response to this challenge. A Climate CMB is a bond issued by a council to residents (and general public) investors via a crowdfunding platform. It enables anyone to lend from £5 to help councils deliver their NetZero plans while offering a new low risk investment option. For councils, it creates a competitive source of capital which builds engagement and a collective sense of purpose within the community.

CMBs were developed through research, culminating in the 2019 Financing for Society (FfS) report led by University of Leeds, 3 law firms, KPMG and BDO, working alongside us. As well as competitive capital, the research project showed that CMBs have potential to build trust and engagement between councils and the public. UK investors hold £3.89 trillion of investable wealth and a recent demographically representative survey of 2000 adults, showed that 73% of them support the idea. Councils borrow on average £5bn a year, increasingly to fund NetZero plans.

**Innovation**

The grant will fast track the research, design and delivery of further innovations identified through recent consumer research as offering the potential to increase CMBs attractiveness and social impact.

The research was reviewed and published in a Place Climate Action Network report in June 2020 and:

\* Confirmed the potential for CMBs to enhance council transparency and thereby enhance local networks of trust and engagement with council plans. As the C19 lock down demonstrated trust and engagement are essential for maintaining collective action. The grant will fund the R&D to create the additional innovations enabling CMB to deliver on this promise.

\* Identified a desire by respondents to donate interest earned back to the council to support hard to fund elements of NetZero plans. The grant will fund the R&D required to optimise the delivery of this innovative way for councils to access non repayable capital.

\* Identified CMB secondary markets as a barrier to scale, the grant would fund R&D to deliver an innovative scalable secondary market.

Combining investment, community engagement and philanthropy within the context of local government finance is a global first, but one that transforms council resident relations and can accelerate NetZero delivery.

Abundance the UK's first regulated crowdfunding platform has raised £100m to date and has a senior team with over 100 years of combined innovation and financial services expertise. University of Leeds are a project partner to assess the impact of the innovations.

Lead Participant

Project Cost

Grant Offer

Abundance Investment Ltd, London £263,443 £ 174,979

Publications

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