Without action from Local Authorities, the UK will not meet its 2050 net-zero target. According to the Government’s Net Zero Strategy, Local Authorities have influence over 82% of all emissions in the UK. Over 80% of councils have also declared a climate emergency. However, after 13 years of austerity policies, council budgets have shrunk, meaning less cash available for this crucial climate action.

Research estimates we will need £1.4 trillion of investment to reach net-zero by 2050. To date, Local Authorities have yet to fully embrace the green finance options available to them, with the Public Works Loan Board (PWLB) remaining the largest contributor to Local Authority borrowing – with over 75% still coming from PWLB.

But there are innovative green finance options out there, including an option that engages and empowers local residents. One that is accessible and fair, enabling residents to invest alongside their local council in local climate solutions – from as little as £5. A solution that speaks to core Co-operative Party values, helping to share power and the wealth created from climate investments among local residents.

That solution? Issuing Local Climate Bonds (LCBs).

First created during a project led by the University of Leeds, LCBs are a form of “Community Municipal Investment”. Eight pioneering councils have since issued LCBs, raising almost £7m, while everyone from the Committee on Climate Change to the Local Government Association to the UK Government have promoted them as a solution for councils.

My council – Westminster City Council – launched its “Westminster Green Investment” in March, and met its £1m fundraising target in just nine days.

LCBs have multiple benefits for all those involved. For councils, they provide access to a new source of finance and are cheaper than the equivalent debt from PWLB – the usual cheapest form of borrowing for a council. For residents, it allows them to have a stake in local climate action, and provides a financial return better than most on offer in savings accounts. And for everyone, they ensure we edge nearer towards our climate goals.

Councils have used these additional funds to invest in multiple different initiatives, including installation of solar PV, EV charging points and energy efficiency improvements in buildings. Additionally, residents who are pleased with the impact of their investments on the local community can choose to donate their financial return back to the council – with one in six investors in West Berkshire doing this at the first opportunity – which enables the council to invest in initiatives that do not generate revenues, such as planting trees and rewilding verges.

Local Climate Bonds are still new to many councils. But as these pioneering councils have shown, they are popular, effective and cheap, and enable councils to scale up their climate action, while empowering and involving citizens. Research suggests that they could raise as much as £3 billion if issued by all 343 Local Authorities in England alone.

We have barely begun to scratch the surface of their potential. It would be fantastic to see more Co-operative Councils embrace this solution. This is the crucial decade to act on climate change, and with LCBs we as local Councillors have an opportunity to benefit our residents, improve our local area and help ensure we play our part in avoiding climate disaster.