The financial markets want bonds that deliver a Green New Deal

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One of the first campaigning documents I ever wrote was on the need to issue bonds to finance green investment. It was then good to see this in the FT this week:

Large asset managers are urging the UK government to issue green sovereign bonds after politicians passed a historic motion to declare an environment and climate emergency.

Columbia Threadneedle, the £352bn investment group, has written to John Glen, the City minister, Michael Gove, the environment minister, and Robert Stheeman, head of the UK’s Debt Management Office, calling on the government to issue “green gilts”.

“We believe there is significant appetite from pension funds, insurance groups, endowments and family offices across the globe, for investments that provide a financial return while supporting the [UN’s] sustainable development goals,” wrote Simon Bond, director of responsible investment portfolio management at Columbia Threadneedle, in the letter sent on Wednesday.

“We encourage the government to consider addressing the climate emergency through green gilts issued to fund sustainable development projects.”

The views were echoed by Insight Investment, the UK’s second-biggest fund manager by assets, which runs £648bn, mostly for pension funds. “There is demand [for green gilts] but a lack of supply,” said Joshua Kendall, senior environmental, social and governance analyst at Insight. “The government should be recognising this.”

It's taken some time, but now the finance sector realises that what we need are bonds to finance a Green New Deal. So why won't the government deliver what the market wants?