• Europe is the frontrunner in green bonds, with over $1 trillion issued in 2024.
• Sustainability-linked bonds are issued to finance environmental and social projects.
• The market has strong potential for future growth.

One of the largest Local Government Pension Scheme pools in the UK, Border to Coast, is about to launch a new sustainability-linked bond fund in 2026.

The fund will allow its partner pension funds—11 local government pension schemes—to invest in green, social, and sustainability-focused bonds, which pool capital for sustainable projects such as renewable energy, affordable housing, and other environmental and social endeavours.

Read More: Tideway: First UK Firm to Issue Blue Bonds in Sterling

Before launching the fund, Border to Coast is in the process of hiring a responsible investment manager to oversee the investments and ensure that the money will be used for genuinely sustainable purposes. The manager will be responsible for developing a system to report on the environmental and social impacts of the bonds.

There is no information regarding who will manage the new funds. Still, it is expected that either the organisation will do it or will work with other investment companies or third-party managers. The new manager will also supervise third-party providers who check the veracity of the bond issuers' sustainability claims.

Border to Coast already manages three fixed income (bond) funds investing in UK government-linked bonds, high-quality corporate bonds, and multi-asset credit. But they are not directly aimed at sustainability or green activities.

Also Read: EUR 1.0bn: Slovenia Issues Its First Sustainability-Linked Bond

When it comes to green and sustainability-linked bonds, Europe is leading the market with promising growth. According to the World Bank, although the number of bond issues dropped in 2021, 2024 logged over $1 trillion worth of bond issues, indicating that the market is primed for future expansion.

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Source: Net Zero Investor