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Clarke Willmott expert predicts strong demand for new green bonds

Bethan Evans, a partner and banking and finance expert at national law firm Clarke Willmott LLP, predicts a huge demand for green bonds following a recent announcement by Chancellor of the Exchequer Rishi Sunak on financial support for the green industrial revolution.

She said it was inevitable the UK would follow suit after several European countries either issued or announced plans to issue green bonds to help rejuvenate their economies because of COVID-19.

“Pressure had been mounting from several quarters, including over 30 asset owners and high-profile institutional investors responsible for a reported £10 trillion worth of assets under management.  Additionally, Andrew Bailey, Governor of the Bank of England, also commented that climate change posed a greater challenge than COVID-19 in the long term and tackling it is vital.

“Therefore, it was no great surprise that Rishi Sunak, Chancellor of the Exchequer, announced at the Green Horizon Summit that the UK will issue its first sovereign green bonds as part of the COVID-19 recovery plan.  These bonds, which are also referred to as gilts, will be launched in 2021,” said Bethan.

The bonds can only be used for green or clean energy projects and a new UK Green Technical Advisory Group is being set up by the Treasury, implementing a green finance taxonomy, which will define what green projects and activities will be permissible, which must be compatible to achieving NetZero.   

Bethan added: “It is likely that there will be considerable demand for the green bonds, particularly from pension funds which are increasingly being mandated to invest in low carbon activity and sustainable industry and is an important further step to building a UK-wide greener economy.  

“The Chancellor’s speech, which also included the introduction of more stringent rules on exposure to climate risk reporting by publicly listed companies, is another important step on the road to achieving NetZero.  I will be looking out for details from the UK Green Technical Advisory Group on what green projects will be permissible.  Additionally, I await with interest the launch of the Government’s Energy White Paper and further announcements of the 10-point green industrial revolution plan.”

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