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Most interest in Climate Bonds is likely to come from institutional investors, especially pension funds, for whom long-dated bonds exert a particular appeal. As well, only institutional investors will be able to deliver the levels of investment needed to develop renewable energy and energy efficiency measures on a sufficient scale.
However, in a time of heightened community awareness of climate change, many people may, if given the option, choose to invest in Climate Bonds that help green their energy supply or their cities. Just as during World War II, when millions ploughed their savings into War Bonds, so today many people might choose to invest in Climate Bonds to help fight climate change. Such retail bonds could be available for purchase over the internet or through post offices, providing an attractive alternative to Premium Bonds or existing savings accounts.
The asset-backed nature of Climate Bonds could be used to promote regional offerings, such as Welsh Wind Power Bonds, or Birmingham Energy Efficiency Bonds.
Whilst even the most successful retail fund-raising is likely to be modest in scale compared to the financing need, retail Climate Bonds would have powerful ancillary benefits:
- Engaging the public in a national effort to tackle global warming.
- Help build support for steps to address climate change, at a time when disappointment about the outcome of UNFCCC Copenhagen negotiations is likely to be realised.
- Draw attention to the constructive role of participating institutions, both government and financial, at a time when public confidence in those institutions needs bolstering.