It’s safe to say that climate change is a hot topic that politicians across the spectrum, for the most part, are working to mitigate, so much so that over 300 councils in the UK have now officially declared a climate emergency.
Despite such widespread support for change at the local level, it is unclear how much material impact these declarations have had on individual boroughs. Many have levied the criticism that declaring a climate emergency has provided local governments with an opportunity to appear green while doing very little concrete work towards tackling climate change.
Given the impact of austerity and continual cuts to council funding, this may be an unfair criticism, as few councils have spare funds to spend on new green projects.
However, some councils, of which Islington is the third in the country and the first in London, have worked with a regulated crowdfunding platform, Abundance Investment, to develop a new scheme called ‘community municipal investments (CMIs)’, to fund projects that tackle climate change at the municipal level.
Community municipal investments (formerly known as local climate bonds) were co-created through research led by Dr Mark Davis at the University of Leeds in 2019. CMIs are essentially bonds (or loans) issued by the council.
They were first trialled in 2020 by West Berkshire Council and Warrington Borough Council. Both councils met their £1m targets ahead of the closing date. Piggybacking off the increased news traffic afforded to climate change issues surrounding COP26, Islington council announced on the 7th of October 2021 that they too would be starting their own CMIs, attempting to reach the same target of £1m.
Islington council have outlined that CMIs will play a key part in their commitment to creating a net-zero carbon borough by 2030. West Berkshire used the investment to install EV charging points throughout the district, over 100 have already been installed, and install solar panels to the roofs of council buildings to develop an additional 21.5 MW of renewable energy.
Islington Council has provided a list of projects which they intend to fund with the investment from the CMIs, including efforts to improve air quality, zero-carbon recycling and waste collection, electric vehicle charging points, Improved local recycling facilities, LED lighting on public buildings and Installation of solar panels on public buildings.
CMIs could also aid councils struggling finances that have been under increasing strain since the advent of austerity. CMIs have the potential to provide councils with a “simple, low-risk mechanism for diversifying borrowing sources and a new way of boosting non-repayable capital for councils” that gives them access to the funds required to support climate change specific policies in their communities.
Furthermore, Nick Robins (Professor in Practice in Sustainable Finance, Grantham Research Institute) argues that CMIs have another purpose in “providing a fresh way for local authorities to engage with their residents and communities”, especially those who would not normally engage with local public policy.
Investing in CMIs offer a great opportunity for climate concerned citizens, who will receive a healthy profit on their investment. The annual interest is 1.55 per cent, and the investment is incredibly safe because the council explicitly shoulders the risk.
Additionally, CMIs provide an avenue for people to directly invest in their local council/community for the express purpose of addressing climate change, which could have political advantages over raising council tax to pay for green initiatives.
Councils all over the country could exploit this scheme to help decarbonise the economy. According to HMRC, there is around £4bn of investable wealth per 100,000 people in the UK and councils across the country have utilised this with differing approaches.
Newport City Council took a slightly different route by partnering with Egni Coop, a solar panel co-operative. Funded by the co-operative’s ongoing community share offer, which is similar to CMI in practice, they were able to install 6,713 solar panels across 27 sites, with an estimated annual generation of over 1,900,000 kWh of clean electricity. This cut the council’s carbon emissions and their electricity bill and provides an ideal model for further collaboration between councils and ‘green’ co-operatives.
According to a report by the Place-based Climate Action Network, “a majority (73%) of UK investors are interested in the concept of Community Municipal Investments and would consider investing in the product”.
Islington Council is hoping that 73% will help them meet their climate targets. New features, such as democratising funds, could be added to give extra incentive to investors, but with the help of local investors, CMIs could provide a pathway to a greener future for councils across the country.
If you want to invest in Islington’s Council CMI, you can do so here. You do not need to be a resident to invest.