Unity becomes first UK bank to invest in Local Climate Bonds

Published: May 7, 2025

Unity Trust Bank has become the first UK bank to invest in Local Climate Bonds, committing an initial £15 million alongside Esmee Fairbairn Foundation’s commitment of £1 million match-funding.

LCBs, or council green investments, were created by the Green Finance Institute and Abundance Investment as an innovative way for residents and organisations to support local councils’ environmental projects.

According to the UK government, 82% of all greenhouse gas emissions fall within the scope of local authorities’ influence, positioning them as key actors in the country’s transition to net zero[1].

Since 2019, over 320 local authorities (75%) in the UK have declared a climate emergency and committed to delivering net zero ambitions in their communities.

Unity’s mission is to contribute to a better society and the inclusion of green municipal investing within our Treasury portfolio aims to strengthen the bank’s support to the public sector to deliver positive social and environmental impact.

Joshua Meek. Chief Impact Officer at Unity Trust Bank, said: “Unity is excited to lead the way and become the first UK bank to make a commitment to green municipal investing and further strengthen our support of the public sector and local councils.

“We believe investing this way in councils provides the ideal platform for communities and organisations like Unity to work together and support local solutions to climate change, and we would encourage other impact-driven investors to consider how they too can support the vital work of grassroots authorities.

“As a ‘double bottom line’ bank committed to delivering sustainable returns alongside real benefits to society, municipal investing supports inclusive economic growth, sustainable solutions to climate change and a positive investment opportunity for Unity.”

Esmée Fairbairn, one of the UK’s largest independent social and impact investors, has committed £1 million over the next two years to match-fund the amounts from residents into local authority green investments.

Gillian Dickson, Social Investment Manager at Esmee Fairbairn Foundation, said: “We are excited to be partnering with Abundance on this initiative to demonstrate and scale an alternative climate focused approach to deliver the climate outcomes we care about.

“The match funding of investment by local residents will support communities to have a greater stake in local regeneration and build citizen agency around local climate action.

“When it comes to the places we live in, we are proud to back people and organisations who are making their local communities more vibrant, confident and economically resilient.”

A range of vital green projects will be funded through these investments, including greening measures for community buildings, expansion of green infrastructure such as rain gardens and natural flood management, and energy efficiency upgrades for a school. For every pound invested by local residents.

Cllr Tony Dyer, Leader of Bristol City Council, said: “This commitment to additional funding is very welcome and demonstrates the confidence that Esmee Fairbairn and Unity Trust Bank have in councils like Bristol City Council and our ability to take both climate action and build community wealth.”

Miles Ashton, Associate Director, Local Green Investment at the Green Finance Institute, said: “The Green Finance Institute is proud to have championed this approach to investing in councils, providing leadership in developing innovative financial solutions that meet the urgent funding needs of local authorities while engaging communities directly in the transition to net-zero.

“The success of Abundance’s platform in mobilising citizen investment demonstrates the strength and scalability of the model, and it’s incredibly exciting to be in a position now where we are not only supporting local authorities but originating deals with institutional investors and foundations to accelerate the growth of this market.”

Karl Harder, Co-founder and Joint Managing Director of Abundance said: “Esmee and Unity publicly investing alongside citizen investors is a pivotal moment in the growth of municipal investments, and a vote of confidence in councils and our platform.

“This isn’t just a cost-effective borrowing source for councils. It is a way to build a community that is really engaged in their climate action plans.

“We are excited to see more councils using the model as a result of Unity and Esmee’s involvement.”

Visit Green Finance Institute for more details.

[1] HM Government (2021), Net Zero Strategy: Build Back Greener, https://assets.publishing.service.gov.uk/media/6194dfa4d3bf7f0555071b1b/net-zero-strategy-beis.pdf