What are these investments?

Since 2020 Abundance has been working with councils across the UK to help fund their climate action plans by borrowing from their residents and the wider public. We have worked with more than 15 councils so far to issue investments, and many more are looking to launch investments soon.

A climate investment programme funded this way is a powerful way to engage with residents and also offers councils a new and cost-effective source of borrowing.

Is this a new idea?

No. Forty years ago it was common for UK councils to borrow money from their residents as an alternative to borrowing from institutional lenders such as banks, or the Public Works Loan Board (PWLB) which sits in HM Treasury. The high administrative costs of the paper age meant this model of local borrowing and saving fell out of use. Learn more here.

Abundance’s council investments were developed in partnership with the University of Leeds in 2020, as a reinvention of the old idea of councils borrowing from residents for the internet age. Using the innovation of crowdfunding, they are a way for councils to raise money from residents and the general public to fund green projects.

Is there demand for this type of investment?

Yes there is. Research by Place Climate Action Network, based on a survey with 2,000 adults across the UK, found that 73% of savers and investors are interested in lending money to their council if it helps deliver environmental or socially beneficial projects.

And there is a lot of money that could be invested in this way. ONS data shows that the average group of 100,000 people in the UK holds £4bn in savings and investments. The vast majority of this wealth currently flows out of communities into national or international saving and investment products.

These investments offer a unique way to keep that money delivering positive action in local communities. They also offer really compelling benefits for people who want to invest like this - see here for more.

Why would a council want to offer an investment like this?

There are a two main reasons:

Cost effective Abundance investments offer councils a competitive source of borrowing which can help save them money. The interest rate on the loan, plus the fees charged by Abundance, are set to match or beat the rate available from Treasury through the Public Works Loan Board at the time of issuing the loan.
Engage residents Offering a climate investment creates a new platform for engaging and communicating with local residents. Research from the Local Government Association indicates that higher levels of local government transparency and communication increase residents’ support and trust. In the context of climate action, an investment like this is a tool for demonstrating and communicating action, and can help build residents’ confidence to act in their own lives.

Some of the key features of Abundance council investments

Investment type

The investment is technically what is called a ‘peer to peer loan’ - but in practical terms it is simply known as an investment.

Use of funds

Councils use the money raised to fund green projects and must comply with the Green Loan Principles. Each council reports on how they have spent the money. Learn more about that here.