WealthDFM | May 2021
LGIM
Will green gilts get the green light from investors? Are accusations of greenwashing well founded? Are they worth the “greenium”? As the UK Government looks to capitalise on the growing interest in sustainable investing, Legal & General Investment Management (LGIM) examine the differences between green gilts and the more traditional gilt-edged securities that we’re so familiar with.
WHAT ARE GREEN GILTS? At his ‘Future of the UK Financial Services Sector’ speech in Parliament on 9 November 2020, the Chancellor of the Exchequer announced that "to meet growing investor demand, the UK will, subject to market conditions, issue our first ever Sovereign Green Bond next year [2021]. This will be the first in a series of new issuances, as we look to build out a "green curve" over the coming years, to help
LGIM have been long-term advocates for integrating ESG (environment, social and governance) factors into their investment process
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fund projects to tackle climate change, finance muchneeded infrastructure investment, and create jobs across the country". It was subsequently announced in the Budget 2021 that the government will issue its first sovereign green bond - or green gilt - this summer, with a further issuance to follow later in 2021 as the UK looks to build out a "green curve". According to the UK Debt Management Office (DMO), planned green gilt issuance for the financial year will total a minimum of £15 billion. The green gilt framework, to be published in June, will detail the types of expenditures that will be financed to help meet the government's green objectives. LGIM have been long-term advocates for integrating ESG (environment, social and governance) factors into their investment process. They are also recognised by advisers as being strong supporters of fostering innovation
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