URL: https://democracy.sheffield.gov.uk/ieDecisionDetails.aspx?ID=4742

Decision Maker: Strategy and Resources Policy Committee

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: No

Purpose:

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.  

Date of Decision: November 12, 2025