Citizens have crowdfunded £15 million for local green projects in just five years, with institutional investors recently committing an additional £16 million to an innovative funding initiative.
Co-created through research led by Professor Mark Davis from the University of Leeds School of Sociology and Social Policy, Community Municipal Investments (CMIs), or Local Climate Bonds (LCBs) as they're marketed, are a form of crowdfunding in which local people invest in their council's green projects.
The model enables councils to borrow directly from residents and institutions to fund tree-planting, solar panels and other projects to help local authorities reach Net Zero.
Just ahead of the fifth anniversary of the CMIs first piloted by Councils in West Berkshire and Warrington, Unity Trust Bank and the Esmée Fairbairn Foundation committed to providing an additional £16 million to accelerate projects across the UK.
Research-driven innovation
Three in four UK councils have declared a climate emergency since 2019, with many collaborating with residents to develop action plans. Research found that local authorities did not have the financial capacity to deliver the changes required to reach net-zero in their communities.
Professor Davis worked with local authority partners in Bristol, the Isle of Wight and Leeds, as well as the Green Finance Institute, Abundance Investment and the public sector organisation Local Partnerships to create the solution - CMIs.
Professor Davis said: "Reaching £30 million in investment marks more than just a financial achievement—it signals a shift in how we shape the future of local climate action. CMIs are laying the groundwork for a new and inclusive model of democratic finance, where communities don't just support change, they help to direct it."
CMIs could raise up to £3 billion if adopted by all English councils, according to a report by Professor Davis, funded by UKRI Innovate UK
What are CMIs?
Introduced by Abundance Investment in July 2020, CMIs were designed to help councils access long-term, low-cost funding by enabling citizens to invest directly in their community's future.
Residents and institutions invest in a council's CMI offer to earn a return, with their capital being directly and transparently directed toward delivering local Net Zero infrastructure projects in their communities.
Piloted by West Berkshire Council and Warrington Borough Council, each met their £1million target ahead of the close date.
Remarkable Generosity
West Berkshire and Warrington Councils were the first local authority in the UK to take part in the Community Municipal Investment project in 2020.
As part of the Floral Way Reservoir and South East Thatcham Flood Alleviation Schemes, West Berkshire Council planted 150 new trees across two sites. Later that year, an additional 35 trees and over 350 metres of new hedgerow were planted at a new reservoir site. These initiatives provided flood protection to more than 570 properties in Thatcham.
The Council also installed solar panel systems on six of its buildings. Over the course of the first year, two of these installations demonstrated significant energy generation and carbon savings.
Investors received regular "Investor Updates," which shared the outcomes of the projects they had contributed to, establishing greater trust in the council and proving its delivery on its aims.
Councillor Iain Cottingham, West Berkshire's Executive Member for Finance and Resources, said: "Launching the UK's first Community Municipal Investment was a bold move, but one that's delivered far more than just financial benefit.
"At its heart, the idea was simple and sensible - to enable local residents to invest directly in their council with the purpose of tackling climate change, offering a cost-effective alternative to traditional borrowing and reducing financial pressure on taxpayers across the district.
"What's been truly remarkable, though, is the generosity of our investors. Many chose to forgo their interest payments, allowing us to reinvest those funds into projects like our beautiful wildflower verges. It's a powerful display of community spirit and commitment to protecting and enhancing our local environment.
"We're very excited to be launching our second CMI later this year."
Growing Momentum
Since 2021, the Green Finance Institute (GFI)has played a pivotal role in scaling CMIs, offering guidance, resources, and national advocacy. In November 2023, GFI launched the LCB Toolkit, a practical guide to help councils navigate the CMI issuance process. CMIs are now poised to scale and unlock the UK's £76 billion impact investing market.
Miles Ashton, the GFI's Associate Director for Local Green Investment, originated the investment commitments from Unity Trust Bank and Esmée Fairbairn Foundation and is actively engaging mission-aligned investors to accelerate the growth of this transformative asset class.
"When it comes to the places we live in, we are proud to back people and organisations who are making their local communities more vibrant, confident and economically resilient."
Karl Harder, Co-founder and Director of Abundance, said: "The early success of CMIs—issued as Local Climate Bonds—inspired a national campaign by the GFI to provide a cost-effective way for local authorities to fund hundreds of green local projects."
Spurred on by the GFI's campaign, 15 councils across the UK have gone on to launch their own LCBs, mobilising over £14 million.
Thanks to this support, nearly 3,000 citizen investors have already taken part, unlocking over £14 million in private investment for vital environmental and social projects. Deepening community engagement and accelerating their journey to net zero.
Gillian Dickson, Social Investment Manager at Esmée Fairbairn Foundation, added: "We are excited to be partnering with Abundance on this initiative to demonstrate and scale an alternative climate-focused approach to deliver the climate outcomes we care about.
"When it comes to the places we live in, we are proud to back people and organisations who are making their local communities more vibrant, confident and economically resilient."
Joshua Meek, Chief Impact Officer at Unity Trust Bank, said:
"We believe investing in councils this way provides the ideal platform for communities and organisations like Unity to work together and support local solutions to climate change. Municipal investing supports inclusive economic growth, sustainable solutions to climate change and a positive investment opportunity for Unity."
As citizen-led climate finance takes root, Professor Mark Davis underscored its power to reshape local decision-making. He said: "As more UK councils adopt this approach, we're seeing the emergence of a powerful place-based tool that can align small and larger scale investments with public purpose - giving residents a real voice in building a fairer, greener future.
"We urge councils, communities, and citizen or institutional investors to step forward, explore the LCB Toolkit, and be part of shaping the next chapter in local climate action."