Content

11.1

The Executive Director City Futures and the
Director of Finance and Commercial Services submitted a joint
report setting out a proposal to launch the first Local Climate
Bond, Sheffield Climate Investment in December 2025. Local Climate
Bonds (LCBs) are regulated financial instruments that enable
residents and businesses to invest directly in local climate action
projects. They offer a low-risk, low-return investment while
providing significant social and environmental benefits, fostering
community engagement, and diversifying the Council’s
financing options.
 
The proposal responds to Council resolutions in
2024 to investigate and develop a Green Bond offer, alongside
growing interest from community groups and the public. The first
issuance is expected to raise up to £1 million, with proceeds
funding green projects with a first potential programme potentially
being the installation of solar panels on maintained schools. After
the first issuance, approval is sought for up to five future
issuances within the parameters outlined in this
report.
 
By introducing LCBs, Sheffield will join a group
of pioneering UK councils that have collectively raised over
£18.4 million to invest in local climate projects. The scheme
will contribute to the Council’s ambition for Sheffield to
reach net zero, deliver tangible community benefits, and provide an
innovative, sustainable approach to
funding.

 

 

11.2

RESOLVED UNANIMOUSLY: That Strategy and
Resources Policy Committee:-

 

 

 

(a) agrees to
launch the local climate bond described in the report now submitted
through the Abundance platform, including the Council instructing
Abundance and entering into associated
documents;
 
(b) - approves
the implementation of Green Finance Framework at Appendix 3 of the
report;
 
(c) agrees to
the issuance of up to five future local climate bonds up until 31
December 2030, including the Council entering
into associated documents. Any local climate bonds issued
pursuant to this approval shall be subject to the following
parameters:
 
(1)  they shall only
be issued through the Abundance platform;
(2)  the maximum raise
for each issuance shall be £2 million;
(3)  each loan shall
have a maximum term of 5 years;
(4)  the interest rate
for each loan shall not exceed 1% over PWLB rate.
(5)  capital will
either be repaid by regular instalments and / or as a lump sum on
maturity; and
(6)  funding shall
only be used for eligible green projects as defined by the green
finance framework.

 

 

11.3

Reasons for Decision

 

 

11.3.1

The LCB provides
funding to local climate projects. These projects are currently not
being delivered through standard borrowing methods. These projects
will help contribute toward the Council’s climate
ambitions.

 

 

11.3.2

The projects delivered from the funding of the LCB will provide
a return to payback the borrowing, alongside providing potential
additional revenue.

 

 

11.3.3

LCB creates a sense of ownership and involvement, promoting
broader public support for local climate action. Engaging citizens
through LCBs strengthens trust, transparency, and the link between
local authorities and their communities.

 

 

11.3.4

This report has been produced in response to the Full Council
motion, which demonstrated the demand for this approach and the
subsequent Committee decision.

 

 

11.4

Alternatives Considered and
Rejected

 

 

11.4.1

Business as Usual
 
Finance climate initiatives through the normal Capital Programme
with borrowing taken for the Capital Financing Requirement (CFR) as
a whole. This is simple and the most cost-effective way for
Councils to manage their capital programme. Financing through the
CFR method allows the Council to delay borrowing which is desirable
in a falling interest rate environment. For a climate capital
programme, although an effective route for borrowing, this does not
offer the same benefits in terms of engagement with citizens to
help finance local climate initiatives.

 

 

11.4.2

No other options were considered, as this paper follows directly
from the policy decision made at the Strategy and Resources Policy
Committee in December 2024, which included an options appraisal
comparing the use of a Local Climate Bond with prudential borrowing
from the Public Works Loan Board, and resolved to: “Agree to
Officers developing a Local Climate Bond (LCB) issuance proposal,
including a Green Finance Framework, and that Officers will seek
full approval from the Strategy and Resources Policy Committee to
launch a ‘Sheffield Climate Bond’ in 2025.” This
decision provided a clear and specific mandate to progress the
Local Climate Bond as the preferred financing mechanism, rather
than to explore alternative funding or delivery
models.