Second UK Green Gilt raises further £6 billion for green projects

The second sale of the UK’s Green Gilt has raised a further £6 billion to help fund green projects across the country, drive progress to net zero and create jobs across the UK.

Together with the first sale last month – which was the largest green issuance by any country – a total of £16 billion has been raised from the UK’s Green Gilt for projects like zero-emissions buses, offshore wind and schemes to decarbonise homes and buildings.

The order book was 12 times oversubscribed, showing the large demand for the UK’s Green Gilt. The combined size of the two transactions now means the UK is one of the top three biggest national issuers of green bonds in the world.

The UK continues to be world leaders in green finance and by launching the Green Gilt in the run up to COP26 next month, the UK is demonstrating its commitment to tackling environmental challenges and the vital role that green finance plays in this fight.

The Chancellor of the Exchequer, Rishi Sunak said:

“Our Green Gilt shows that the UK continues to be world leaders in green finance, helping to fund vital projects across the country and creating jobs as we drive progress to net zero.

“The demand for our Green Gilt in the run up to COP26 shows that investors are keen to help in the collective fight against climate change, and the important role that private finance plays in that endeavour.”

Government bonds, or gilts, are sold to institutional investors and provide a fixed rate of return until their expiry. The UK’s second Green Gilt is a 32-year bond, maturing on 31 July 2053, making it the sovereign green bond with the longest maturity in the world and reflecting the UK’s long-term commitment to reach net zero by 2050.

By issuing Green Gilts at several maturity points, the UK has set a baseline for green sterling debt, making it easier for companies to price their own green bonds. Green Gilts have also demonstrated the benefits of green finance to business, with high demand for green products leading to better rates for issuers.

The Green Gilt will be followed by the world’s first standalone retail Green Savings Bonds, issued by NS&I. These two products will give UK investors and savers the opportunity to join the collective fight against climate change while creating green jobs across the country.

As set out in the government’s Green Financing Framework, published earlier in the summer, the money raised by the Green Gilt and Green Savings Bonds will be used to finance expenditures in clean transportation, energy efficiency, renewable energy, pollution prevention and control, living and natural resources, and climate change adaption.

And in a first among comparable sovereign issuers, the UK has committed to reporting on both the environmental impact, and the important social co-benefits of green expenditures financed by Green Gilts and Green Savings Bonds, such as job creation, access to affordable infrastructure and socioeconomic advancement.

Earlier in the week the government published its Greening Finance Roadmap that set out plans for requiring companies, pension schemes, financial services firms and their investment products to report on the impact they are having on the climate and environment – as well as the risks and opportunities facing their business.