Hard-up councils are inviting residents to invest their savings into schemes that will help them achieve their net zero goals.
Funding cuts, rising costs and ambitious environmental initiatives are forcing many local authorities to explore innovative ways of raising funding.
Bristol and Hackney councils have recently launched investment schemes to support their green initiatives, allowing residents and businesses to invest with as little as £5, offering a fixed annual interest rate of 4.2 per cent over a five-year term.
According to Abundant Investment, which has partnered with several UK councils to offer these Community Municipal Investments (CMIs), these schemes carry a degree of risk.
The website states: "If the council runs into difficulties, there may be delays to receiving your interest or getting your money back."
Furthermore, unlike savings held in a bank or building society (which are protected up to £85,000 under the Financial Services Compensation Scheme (FSCS), this investment is a peer-to-peer loan, meaning it's not covered by the FSCS, so you would bear the full loss if the borrower defaults.
14 councils are inviting residents to invest their savings into schemes that will help them achieve their net zero goals
Flourish
But generally, these investments are “low risk” as a council cannot be declared bankrupt and then avoid repaying its debts, Abundant Investment notes.
As the interactive map above shows, 14 councils have so far signed up for these investment schemes.
These are:
Bristol City Council
Camden Council
Cotswold council
Hackney council
Hammersmith and Fulham council
Islington council
Lewisham council
Oxfordshire council
Greenwich council
Southwark council
Telford & Wrekin council
Warrington council
West Berkshire council
Westminster council
The number of investments, total invested and what the investment is earmarked for varies.
Bristol's scheme has so far raised £241,522 in taxpayer money, which will go towards installing heat pumps, solar panels and LED lighting.
The £148,243 invested through Hackney Green Investment will help fund a range of environmental initiatives across the borough.
The taxpayer money pot is expected to fund the replacement of windows in a local school to improve energy efficiency, as well as other eligible green projects.
Southwark Council has so far raised a whopping £1,500,000 of taxpayer money out of the £6million it's seeking to raise by 2030.
"We're taking urgent action in Southwark to tackle the climate emergency – but we know the scale of the challenge means we can't do it alone. Southwark Green Investment is your chance to join us as we transform the borough," Cllr Emily Hickson.
The Deputy Cabinet Member for Green Finance added: Every investment, from as little as £5, will not only play its part in helping us hit our ambitious net-zero emissions target, but it will also help us to create a greener, fairer and safer borough," said Cllr Emily Hickson.
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Southwark Council has so far raised a whopping £1,500,000 of taxpayer money out of the £6million it's seeking to raise by 2030
GettyAbundant Investment reiterates the risks involved in these schemes, stating: "Your invested capital is at risk, and you could get back less than you invest. You should look to hold your investment for the long term."
This advice is echoed by Darius McDermott, of financial advisers Chelsea Financial Services, who said: “While these schemes may appeal to those who want to make a direct local impact with their money, they come with clear trade-offs in return, protection, and liquidity. If you want to invest in renewable infrastructure, investment trusts are a much stronger option.
“Renewable infrastructure investment trusts offer higher yields, are fully regulated by the FSCS and FCA and, crucially, are extremely liquid. If you need access to your money, you can sell your shares at market price, whereas these council schemes lock up your cash for five years.”
In England specifically, nearly two-thirds of councils have declared a climate emergency, with many aiming to be carbon neutral 20 years before the national target of 2050.
Declaring a climate emergency helps councils align with national and global climate targets, such as the Paris Agreement and the UK’s legally binding Climate Change Act 2008.
