Our view: Green Savings Bonds by NS&I

In October this year, the government announced the introduction of Green Savings Bonds in an attempt to raise money for green infrastructure projects such as building offshore wind farms, accelerating the transition to electric vehicles and revamping homes and public transport. Carbon’s investment director, Barry O’Neill, was asked to comment by local press on the introduction of Green Savings Bonds:

“Let’s look at the positives first.

The government are raising funds and earmarking Green Savings Bonds for use to help meet our 2050 net-zero commitment. That has to be a good thing, surely?

The investment is open to all due to the very modest minimum deposit.

The negative reaction to the interest rate of Green Savings Bonds being offered is understandable, but I think it is somewhat missing the point. The people drawn to a green bond will be those with an environmental, ethical or sustainable savings and investment objective. They are often willing to accept a lower return on their money and view this as a price they are willing to pay to stay true to their values.

All investment decisions involve risk and reward. The more risk you are being asked to take, the higher your expected reward should be. The security on offer from HM Treasury is greater than any bank or building society, so it really doesn’t have to compete for funds by offering market-leading interest rates in the same way as the less well-known banks that populate the ‘best buy’ interest rate tables. How many of those have you actually even heard of? Sure, you have up to £85,000 of protection from the compensation scheme if a bank goes bust, but do you really want the hassle and delay of the claims process if it happened?

For those who are prepared to think about longer-term investment, the good news is that it is now possible to invest sustainably without compromising on returns. Our clients have access to a range of sustainable portfolios that deliver a significant reduction in the greenhouse gas emissions of the underlying companies, without altering the expected return. Making it easy for people to invest sustainably is an obvious way for us to help make our future more secure.”

If you have any questions about Green Savings Bonds or Carbon’s approach to Sustainable investing then please speak with your Carbon Financial Planner or contact us on 0131 220 0000 or enquiries@carbonfinancial.co.uk

Barry O’Neill is an Investment Director at Carbon. Contact him via email at barry.oneill@carbonfinancial.co.uk
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The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.

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