The UK’s Local Climate Bond (LCB) market has secured a significant £16 million boost from two private investors, marking a pivotal step in empowering local authorities to fund net-zero initiatives.
On 7 May 2025, the Green Finance Institute (GFI) announced that the Esmée Fairbairn Foundation and Unity Trust Bank have committed £1 million and £15 million, respectively, to support municipal green investment projects.
The Esmée Fairbairn Foundation’s £1 million will serve as match-funding to encourage citizen investment through the Abundance Investment platform. The first £165,000 of this funding has already been deployed to support green projects in Bristol, Hackney, and Hammersmith & Fulham.
Unity Trust Bank becomes the first institutional backer of the initiative with a £15 million commitment. These funds will be co-invested alongside resident contributions to finance projects such as school energy retrofits, flood resilience schemes, and green infrastructure.
The GFI and Abundance Investment have collaborated to establish the local municipal investment model, enabling councils to borrow directly from citizens and institutions to fund local climate action. So far, 14 councils have utilized the platform, raising £11.5 million from over 2,750 citizen investors. The new institutional backing is seen as a key milestone in scaling the market, with GFI hailing it as a “pivotal moment” for the asset class.
Councillors from the participating boroughs have welcomed the news, highlighting the benefits of combining grassroots and institutional investment to drive low-carbon projects and community wealth-building.
Local authorities in the UK are responsible for delivering a range of services, including education, transport, and waste collection. The UK government estimates that 82% of all greenhouse gas emissions fall within the scope of local authorities. However, local governments are facing mounting cost pressures due to over a decade of budget cuts. They are increasingly turning to alternative financing options amid concerns about the adequacy of central government support to meet net-zero targets. A recent survey by the Local Government Association found that over two-thirds of councils lack confidence in achieving net-zero under current funding arrangements.
The £16 million investment marks a significant step towards addressing these challenges and accelerating the UK’s transition to a low-carbon economy.
