Could the UK's first Green ISA create a £60bn investment pot?
The UK's first 'Innovative Finance ISA' launched today (6 April) from investment platform Abundance, allowing investors to finance renewable projects through an operative tax ISA that could boost the green economy by £28.5bn.
Abundance launched the new scheme after feedback revealed that around 60% of ISA holders – representing £28.5bn - would invest in renewable projects if an ISA was available. Abundance also revealed that transfers from existing ISAs could add a further £30bn into the market, creating a green investment pot of almost £60bn.
Abundance Investment’s managing director Bruce Davis said: “Until now it’s been difficult for people who support renewable energy to invest their money in a tax efficient way, so their cash sits there doing nothing. Our green Innovative Finance ISA is encouraging more people to save for the future by providing a tax-efficient vehicle aligned with their personal values, unlocking money which could really help to stimulate green growth in the UK.
“Our ISA will allow savers and investors to put their ISA money directly into renewable energy projects for the first time, and because we fund individual projects they can choose exactly what their money is doing. And as well as making sure their money is generating something good for society and the environment, investors can also expect bank-beating returns.”
Abundance has suggested that there is a huge demand for green financing and has exemplified this through its ‘Great British Money Survey’ – highlighting that 60% of those surveyed would back green investment through ISAs.
The company has around £2m in new projects available for investors, spread across three different bond products, which offer returns between 6-7.5%.
Funding the change
More than 70 financial institutions from across the globe have already pledged to scale-up energy efficiency investments in an attempt to tackle climate change and take advantage of a "huge business opportunity".
Despite the huge potential in this market, Britain may have thrown away its chance to be the world centre of green finance, according to Abundance. Davis told edie that representatives from the Peoples Bank of China are currently in London looking for investment, but that recent Government policy changes were placing these opportunities at risk.