Back to Green Loan Principles

Green Finance Framework

A framework for councils borrowing money through Abundance, to ensure compliance with the Green Loan Principles

Version 1.0 | 10 July 2025

Introduction

This Green Finance Framework (“GFF”, “Framework”) has been created by Abundance Investment in partnership with the councils raising funding through Abundance.

It covers council green investments issued by Councils through the Abundance platform, in the form of bonds and P2P Loan Agreements, to fund Eligible Green Projects. These investments are referred to as council investments or Community Municipal Investments (“CMI”).The Framework provides the overarching criteria, guidelines and processes in place to ensure the investments are in compliance with the Green Loan Principles (“GLP”). The Principles referenced within this Framework are voluntary process guidelines, and are globally accepted as the standard guidelines for issuing and managing green investments of this type. They also follow the principles underpinning the UK Government‘s Green Gilt and green N&SI saving bond products.

Abundance has developed the framework in line with the following market standards:

  • International Capital Market Association (ICMA) 2021 Green Bond Principles (GBP1) and;
  • Loan Market Association (LMA) 2020 Green Loan Principles (GLP2), or as these principles may be subsequently amended.

To be compliant with the Green Loan Principles, the investment must be issued under a framework that covers the four components of the Principles:

  • Use of Funds: Only use the money raised for Eligible Green Projects.
  • Process of evaluation and selection: Have a process for selecting the projects the money will go towards and making sure they meet the criteria of an Eligible Green Project
  • Management of proceeds: Account for how the money has been spent and allocated to each project.
  • Reporting: Transparently report to investors and the wider public how the money has been spent.

This framework may be updated from time to time to ensure continued alignment with market best practices and emerging standards.

Responsibilities

This framework has been prepared by Abundance with the support of industry experts.

Abundance asks all councils that issue investments on Abundance to do so under this framework, such that the investments are in compliance with the Green Loan Principles.

The Council’s Section 151 Officer (also known as the Chief Finance Officer (CFO) or statutory chief officer) is responsible for ensuring the council's financial affairs are properly administered) and, with assistance from other relevant Directors, will hold responsibility and accountability for compliance with the framework throughout the life of each investment, using the processes outlined below.

Abundance Investment will provide assurance that the Council is adhering to the Framework and that each investment is in compliance with the Green Loan Principles. This includes verifying that the funds raised are used for projects that meet the criteria of Eligible Green Projects, using the processes outlined below.

It is the Council’s responsibility to maintain a record of all borrowing and how the funds are allocated to Eligible Green Projects. Abundance supports the Council through its online platform to provide that information to investors.

Use of Funds

The Use of Funds for each CMI is defined in the legal documentation and must go towards either the funding or refinancing of Eligible Green Projects. The council can deduct the costs of raising money through a CMI from the amount that must be allocated to Eligible Green Projects.

The money raised can be used to fund a new Eligible Green Project, or used to refinance existing debt that was used to support an existing Eligible Green Project. If the Use of Funds is for refinance, it can only be for Eligible Green Projects delivered in the financial year the money from the CMI is drawn down.

Where eligible projects and assets are jointly funded between the Council and another party (e.g. Central Government), funding will be applied only to the Council’s share of the eligible project.

Eligible Green Projects

Under this Framework there are six categories of Eligible Green Projects. The Eligible Green Projects are derived from the categories laid out in the ICMA Green Bond Principles, but for consistency follow the framework established by the UK Government for the country's Green Gilt and Green N&SI savings product scheme.

Renewable Energy

Types of eligible projects
  • Schemes generating energy from renewable sources such as wind, solar, geothermal, hydropower (provided environmental and social impact assessments are undertaken and no significant controversies are identified) and bioenergy with lifecycle emissions of less than 100g CO2e/kWh, declining to 0g CO2e/kWh by 2050 and only second generation biofuels are used.
  • Energy storage facilities.
  • Schemes for renewable heat such as district heating and heat pumps where energy is derived from renewable sources.

Energy Efficiency

Types of eligible projects
  • Schemes that reduce the energy use (heat and electricity) and therefore the carbon intensity of buildings used by the Council or buildings owned by the Council but rented out for social housing or commercial purposes.
  • Schemes that support or provide services to the private residential or commercial market to encourage or implement energy efficiency measures.
  • Schemes that utilise energy more effectively to generate heat or utilise waste heat.

Clean Transportation

Types of eligible projects
  • Schemes that support low and zero emission mobility, including EV charging infrastructure, EV fleet conversion, cycle way improvement, car reduction schemes and other schemes that encourage cleaner transportation.

Pollution Prevention and Control

Types of eligible projects
  • Schemes that support waste prevention, waste reduction, waste recycling and energy/emission-efficient waste to energy.
  • Reduction of air and water emissions and greenhouse gas control.
  • Schemes that support the circular economy.

Climate Change Adaptation

Types of eligible projects
  • Schemes that deliver flood protection, resilience and other risk mitigation programmes.
  • Schemes that deliver heat protection, resilience and other risk mitigation programmes.
  • Engineering activities and technical consultancy dedicated to adaptation to climate change.

Living and Natural Resources

Types of eligible projects
  • Schemes that protect and enhance terrestrial and marine biodiversity, ecosystems and natural capital.
  • Schemes that support sustainable land use and protection, including environmentally sustainable agriculture.
  • Schemes that support environmentally sustainable clean water, water storage and wastewater management initiatives.
  • Funding for environmental activities of third sector partners.

Process for evaluation and selection

For new and existing Community Municipal Investments, the Council will manage the selection process for Eligible Green Projects by applying professional judgement, discretion, sustainability knowledge and by considering the following objectives, features and benefits:

  • Conformance with the relevant principles
  • Conformance with the eligible criteria set
  • Alignment with relevant council strategies
  • Delivery of Just Transition (see below)
  • Broader environmental and/or social risks associated with the project

The resultant list of eligible assets and their budgets will be reported by the Council to Abundance as the funds from the CMI are deployed on those projects.

Abundance will validate that the Use of Funds for each CMI only includes Eligible Green Projects. In cases where Abundance and the Council do not agree on the classification of a project as green, a third party opinion may be sought.

Just Transition

A Just Transition seeks to ensure that the substantial benefits of a green economy transition are shared widely, while also supporting those who stand to lose economically – be they, industries, communities, workers or consumers.

A rapid increase in the speed and scale of actions required to reduce the risks of climate change will create new economic opportunities, but at the same time it may move economic activity away from damaging industries and can carry costs for consumers.

Councils issuing CMIs through Abundance will aim to identify where the challenges will occur and plan the transition, so it minimises the costs to more vulnerable sections of the community. Councils will communicate mitigants that they have put in place, where applicable, when delivering Eligible Green Projects to support a just transition.

Management of proceeds

Tracking use of funds

The Council tracks the receipt and use of funds via its internal reporting systems, ensuring Eligible Green Projects (re)financed are appropriately identified.

In addition, to ensure appropriate earmarking for the purpose of internal monitoring and external reporting of proceeds, the Council will establish a register that contains details (including value) of all Eligible Green Projects (re)financed by CMIs.

The Council will service its debt obligations under CMIs out of general cashflows and not specifically from revenues generated by eligible projects alone.

Unallocated funds

Once the funds raised through a CMI are drawn down by the Council, the money may initially be unallocated if the Eligible Green Project(s) expected to be funded has not yet commenced.

In this circumstance, the unallocated funds shall be:

  • held in temporary investment instruments that are cash, or cash equivalent instruments, within a treasury function; or
  • held in temporary investment instruments that do not include greenhouse gas intensive projects which are inconsistent with the delivery of a low carbon and climate resilient economy; or
  • applied to temporarily reduce indebtedness of a revolving nature before being redrawn for investments or disbursements to eligible assets.

The Council commits to using the funds towards Eligible Green Projects within 24 months of the issuance of the CMI. During this 24 months, the Council will disclose the unallocated amount of funds and no contractual right of review or repayment will arise, and no loss of green classification will occur.

If the unallocated funds have not been allocated to an Eligible Green Project after 24 months, the council will make a statement to investors setting out their plans for the money, which may include an early repayment.

Sale of asset

If an asset related to an Eligible Green Project that was funded by a CMI is sold by the Council, the Council must allocate the proceeds of the sale within 24 months to a new Eligible Green Project and disclose this in its reporting. If the council is unable to allocate the proceeds to another Eligible Green Project within 24 months, the council will make a statement to investors setting out their plans for the money, which may include an early repayment.

Reporting

For each CMI, a Council will publish information on the Use of Funds, including details of the Eligible Green Projects (re)financed by the CMI and amount of money spent on each project. The information will be published as follows:

  • The Council will provide the information to Abundance and Abundance will provide the information through its platform. The information will be made available to investors in the CMI and the general public.
  • Optionally, the Council may publish the same information on the Council’s own website, or a link provided to the Abundance website on the Council’s website.

Assurance

Abundance is committed to pursuing the highest standards of integrity relating our council green investments.

By providing an independent and third party check, Abundance provides assurance that Community Municipal Investments are being delivered in line with this Framework and the Green Loan Principles, and the money is going towards Eligible Green Projects.

Abundance conducts the following reviews as part of its assurance programme:

  • When a Council reports the Use of Funds for a CMI, Abundance reviews the projects selected by the Council to ensure they meet the criteria of Eligible Green Projects. Where the green credentials of a project are not clear, Abundance may recommend the recruitment of a technical expert to provide an expert opinion on the qualification of a project.
  • Abundance confirms that the proceeds of a CMI are fully deployed on Eligible Green Projects and there are no unallocated funds remaining within 24 months of the issuance of a CMI.
  • Abundance carries out a spot check from time to time to ensure the information provided by the Council on the Use of Funds is accurate and confirm that the Council has the internal systems and controls in place to ensure ongoing compliance with the Framework.