West Berkshire Council and Abundance Investment climate bond scheme exceeds £0.5m
Councillor says very low risk in council bond despite company losses
A FIRST-of-its-kind scheme for people to invest in a greener future for West Berkshire has raised half-a-million pounds.
West Berkshire Council launched the UK’s first Community Municipal Investment (CMI) in July, with the aim of raising £1m by September 15.
The CMI is a bond or loan mechanism issued by a council to the public.
The scheme is provided in partnership with the ethical online crowdfunding platform Abundance Investment, which is authorised and regulated by the Financial Conduct Authority.
The council has said there is little risk to investors, despite Abundance Investment’s annual statement reporting revenue for the year of £1.84m, down from £2.11m in 2018, and total losses of £0.97m against £0.53m.
The report says: “Income fell in 2019, which was primarily due to market uncertainty linked to Brexit.
“This uncertainty acted as a drag on decision making within the firm’s deal pipeline.
“During the period the business continued to invest for growth, specifically building brand awareness and recruiting investing clients.
“The business will continue to invest ahead of income and therefore expects to incur losses over the coming years.”
Asked about any concerns over the losses, the council’s executive member for finance Ross Mackinnon (Con, Bradfield) said: “I think people are getting the wrong end of the stick.
“They are investing in West Berkshire Council, not Abundance Investment.
“Let’s say the worst comes to the worst and Abundance went out of business. If that happened the bond holders don’t lose their money.
“The only way is if West Berkshire Council goes out of business.
“I’m not allowed to say that’s risk-free, but it’s highly unlikely to happen.
“It’s a local authority bond.”
Mr Mackinnon said that although Abundance had reported losses, this was not uncommon in a growing company and that he would have been worried if it was in a net liability position.
He said that the council had conducted a credit check on the company which “came back fine” and “due diligence absolutely was done”.
The climate bond scheme has raised £592,225 from nearly 400 investors since it went live on July 14.
The investments will help finance a series of solar power generation projects, increase biodiversity by enabling more wildflower verges and further activities supporting the district’s move towards achieving carbon neutrality.
Mr Mackinnon said: “We’re absolutely delighted by the response to the CMI. We know that the environment is extremely important to our residents and clearly they are confirming that by helping us to invest in a greener future.
“There’s still plenty of time for local people to get involved and invest.
“It only takes a few seconds to sign up to the bond and investors will receive a financial return while being integral to driving us towards carbon neutrality by 2030.”
Abundance Investment co-founder and managing director Bruce Davis said: “This is an impressive response and reaching over 50 per cent of the target investment is very exciting for us and investors alike.
“Local residents who have backed the project have, on average, each invested just under £2,000.
“However, people can invest as little as £5 to make a difference.”
More information can be found at https://www.abundanceinvestment.com/invest-now/west-berkshire-2025