Government set to unveil NS&I ‘green bond’

Savings deal is the first of its kind since the Second World War.

National Savings & Investments (NS&I) is to help savers go green later this year with the launch of a green savings bond.

Chancellor Rishi Sunak is due to unveil the world’s first sovereign green savings bond for retail investors in his Budget tomorrow, letting savers help drive the country’s transition to net zero by 2050.

The funds raised will be earmarked for projects such as renewable energy and clean transportation and the products will be offered through NS&I.

Further details about the product such as the minimum deposit and interest rate are still to be revealed ahead of its release later this year.

Sunak says:“In a world first, we’re launching a new green savings bond that will give people across the UK the opportunity to contribute to the collective effort to tackle climate change.”

It is believed to be the first bond focused on a specific cause to be run by NS&I since its predecessor offered war bonds.

National savings certificates were issued during the First and Second World Wars to help finance the war effort.

National War Bonds were first issued in 1917 to fund the ongoing cost of the First World War.

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Savers initially received 5% interest before this was cut to 3.5% following the great depression and the stock market crash in the 1930s.

Savers and investors can already boost their green credentials by backing environmental, social and governance-focused funds.

Platforms such as Abundance Investment offer community municipal investment bonds that back local council-run green projects such as solar farms.

These are investments rather than savings though and there is no Financial Services Compensation Scheme protection, unlike with NS&I, which is also backed by the Treasury.

Bruce Davis, managing director of Abundance Investment, says: "The proposed green national savings bond will be an important boost to the UK’s efforts to invest in a greener economy, and a powerful sign of our leadership globally because the bond is open to all citizens, not just big corporates.

“It’s also notable that as the UK economy seeks to recover, green investment bonds offer a radically healthier alternative to wild consumer spending post-lockdown that will fuel self-destructive inflation.”