During the 2010 National Ethical Investment Week calls were made for the government to introduce a Green ISA, but what would a green version of the popular savings accounts offer?
As Shadow Chancellor, George Osborne said the Conservative Party would look at introducing a Green ISA, which he described at the time as a way to ‘engage the public in a new way in the issues around climate change – and show them very clearly the economic benefits of green investment.’
That was in 2008, and other priorities have clearly overtaken sustainable ISAs on the economic agenda as the government seeks to cut the public deficit.
An independent commission convened to make recommendations on the proposed Green Investment Bank said in June 2010 that the Bank should sell green ISAs as a way for retail investors to make a contribution to funding green infrastructure.
The government is still drawing up plans for how a Green Investment Bank would operate, but reports have suggested ministers are moving away from the idea of a wide ranging institution that could offer ISAs.
However, appearing before the Liaison Committee in the House of Commons on 18 November, Prime Minister David Cameron said yes when asked whether the Green Investment Bank would be a 'real' bank.
Support for a Green ISA
The renewed call came for a Green ISA came from the UK Sustainable Investment Forum (UKSIF) at a parliamentary reception during 2010 National Ethical Investment Week.
The UKSIF is calling for a Green ISA allowance to be announced in the March 2011 Budget, and revealed the results of a YouGov poll showing 27 per cent of adults in the UK would be likely to invest in a Green ISA during the next 12 months, while over half of existing investors would consider investing in renewable energy to help the sector receive greater funding.
Penny Shepherd, UKSIF chief executive, said: “ISAs have proved extremely popular among consumers. We urge the Government to turn its words on Green ISAs into action and introduce a new allowance at the next Budget. We should build on the growing desire among consumers to make money and make a difference with their savings and investments.
“We face an energy investment gap of between £370bn and £400bn over the next 15 years. We must do more to tap into consumer interest in green energy and help fill this gap. A Green ISA would engage the public in the climate change challenge and demonstrate the economic benefits of green investment.”
This type of ISA could create an additional annual allowance on top of the existing tax-free allowance of £10,200 currently available for investment in standard ISAs.
The current limit allows full investment in stocks and shares ISAs or half £5,100 to be invested in a cash ISA and the remainder of the allowance in stocks and shares.
They would not necessarily need to be offered by a government-backed Green Investment Bank and could be available as long as investments were made in eligible companies. As the aim would be to engage investors with environmental issues and provide a source of funding it is likely that any Green ISA allowance would only be for stocks and shares ISA investments.
Details of the Green Investment Bank are expected in spring 2011, and retail investors will probably have to wait until then to see if tax incentives are on offer for investing in the green economy.
© Fair Investment Company Ltd