West Berkshire Council has today launched what is being described as the UK's first local government green bond in a bid to raise £1m from residents to fund solar panel installations on five council-owned buildings, as the local authority pushes towards its goal of net zero emissions within the next decade.

The green bond has been launched using a Community Municipal Investment (CMI) framework developed by ethical investment platform Abundance, and marks the first of six pilot schemes the firm hopes to roll out with other UK local authorities in a bid to "supercharge the green economy".

Both Warrington and Leeds councils are set to follow suit with their own green bond issuances via Abundance later this year, with all the CMIs used to finance rooftop and ground-mount solar panels. The firm said it was also working on a pipeline of green bonds with several other councils.

With cash-strapped councils forced to juggle both responding to the challenge of the looming recession alongside long-term goals to tackle the climate crisis, Abundance believes CMIs could provide a breakthrough tool for helping local authorities deliver green projects and jobs in the wake of Covid-19.

It claims CMIs have a lower risk profile than previous Abundance products and are comparable with government-backed investment instruments, while also being accessible for a broad range of investors with a minimum investment level of just £5.

"150 years since the first local authority investments were sold directly to the public by the Chancellor of the Exchequer, Lord Goschen, CMIs open a new chapter for financing local council investment in vital local infrastructure," said Bruce Davis, co-founder and managing director of Abundance Investment. "Working with several councils, Abundance has drawn on the best of this legacy to create an innovative model for the 21st century which provides a powerful tool for tackling the major challenge of our time: climate change."

The CMIs are arranged by Abundance, which claims CMI's could have the potential to raise as much as £3bn for local green projects if the green bond instruments were taken up by all 343 local authorities in England.

The CMI green bond launched today by West Berkshire council - which declared a 'Climate Emergency' a year ago and is targeting net zero by 2030 - offers returns of 1.2 per cent per year over a five-year term and uses an annuity structure to repay capital in instalments over the lifetime of the bond.

Ross Mackinnon, West Berkshire council's executive member for finance and economic development, said CMIs were "a ground-breaking way to put residents' money to work to help us build back greener after the pandemic".

"Communities investing directly with us will provide us with a cheaper alternative to conventional sources of funds reducing the overall cost of borrowing to all taxpayers across the district as well as making a positive contribution toward our target to be carbon neutral by 2030," he said.

The move comes just days after the UK100 group of local authorities published a major new report highlighting how local energy projects could help mobilise £100bn of investment creating 300,000 jobs.