The UK government has now set ambitious targets to reduce carbon emissions by 78% before 2035. Corporations are increasingly aware that they need to create a positive Environmental, Social, and Corporate Governance (ESG) impact on their local environment, but do not have easy means. At the same time, local ESG projects struggle to access the low cost gap funding they need to become viable.
This is the context which is seeing the rapid growth of the ‘green finance’ sector, and the UK is taking a lead in this field. For example, the UK’s Green Finance Institute is developing an ‘Advisory Playbook’ for Demand Aggregation Financing, combining demand from households to provide access to cheaper zero-carbon heating solutions. Furthermore, UK Research and Innovation has published ‘Enabling Smart Local Energy Systems: Finance and Investment’ which “builds on extensive research with local government and UK investors to set out recommendations for government, local authorities, energy and financial sectors, and the emerging UK Infrastructure Bank.”
Bristol is doing its bit. The excellent Bristol and Bath Regional Capital CIC is paving the way to establish investment for ESG projects. And Bristol-based Triodos Bank has a mission to “help create a society that protects and promotes quality of life and human dignity for all.”
Now Bristol company PyTerra has announced the launch of its PyTerra Xchange concept, a green finance platform to bridge the gap between corporates and communities, channelling investment into local climate change projects. This builds more resilient communities while also giving corporates a tangible way to offset their environmental impact over time and support their local neighbourhoods.
The Xchange has an innovative finance vehicle called ‘sponsored finance’. This works to bridge the corporate-community gap by creating an ESG investment fund, enhanced with sponsorship benefits, on behalf of corporates. The fund is distributed to the ESG market using digital vouchers, which essentially deliver lower costs to end users.
Will corporates engage with this new concept? Research and consultation has shown how institutional investors and stakeholders increasingly want their corporate clients to show that they are making meaningful climate-related impacts. Corporations have CSR policies with targets and commitments which can be satisfied by making a local impact, but they don’t have the local connections or resources to identify where, and how, they should offer support.
This pressure needs to be seen in the context of the national climate change agenda. A recent PwC report ‘Unlocking capital for Net Zero infrastructure’ commented that if a traditional approach to infrastructure investment continues to be taken, over 50% of the £41bn annual investment needed in the UK to create sufficient Net Zero infrastructure will not be delivered.
One of the first organisations anticipated to participate in this scheme is Bristol Energy Cooperative which is actively seeking corporate sector engagement in low carbon energy schemes such as new housing microgrids, grid servicing batteries and solar PV.
As a city, Bristol has a strong focus on sustainable activity and there is a rich ecosystem of innovation and emerging projects which need vital investment to become a reality. It also has a strong corporate community with historic support for community endeavour. This initiative should therefore find a receptive audience as it reaches out to Bristol stakeholders.
More information about the PyTerra Xchange can be found at https://www.pyterra.co.uk and an introductory video is located at https://youtu.be/Fkyvko82LQ4.
Acknowledgements
‘Bristol skyline’ credit Andrew Gustar (https://www.flickr.com/photos/andrewgustar/43113866870), Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)
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