As we push towards a greener planet, the British government has issued its first ‘green’ gilt with demand from investors pushing £90bn plus of investment.
What are Gilts?
These are government bonds or government debts. The British Government, along with many other governments, has a need to borrow money, the so-called public sector borrowing requirement. Overseas, government borrow money and issue government bonds. In the UK, they are known as gilt edged securities i.e. gilts.
UK’s First Green Gilt
This is the British government borrowing money to invest and develop green infrastructure and projects. This first issue, has already taken £90bn in orders despite its lowly coupon/interest rate of 0.87% until 2033 and then your money is repaid to you.
The front runners in snapping up this Green Gilt Issue and major banks investment arms.
Growth in ESG
Demand for Environmentally friendly, Socially responsible and corporate Governance (ESG) investing is at an all time high. This is in part powered by people power and the wish to invest ethically and responsibly but also the Paris Climate agreement and the UK’s desire to be the epicentre for sustainable and socially responsible investing.
Large companies, fund managers and now financial advisers are all required to have ESG on the agenda and discuss with investors etc, so it is no wonder that investor demand is high and this 1st issue has been so well received that a further two Green Gilt issues are expected later this year.