Savers could receive significant tax breaks for investing their money in environmentally conscious companies under plans unveiled by the Conservative Party.
The Tories are proposing the launch of green individual savings accounts (GISA) that would offer “generous” tax-free allowances for savers who invest in environmentally responsible companies.
Shadow chancellor George Osborne said GISAs would offer people to save more money tax-free than they currently are allowed, provided their money is invested in environmentally friendly companies only.
He added: “This is a way for people to engage positively in the fight against climate change and it provides a strong incentive for companies to play their part too, without the heavy hand of government regulation. It’s about creating a can-do culture on the environment, not a can’t do lecture. People will literally be able to ‘save for the planet’.”
It is not yet clear what the criteria would be for companies to qualify for investment under the GISA. The Conservative Party has set up a working party, headed by Patrick Snowball, the former chief executive of insurer Norwich Union, to investigate and develop a green kitemark for the product.
Emma Howard Boyd, head of socially responsible investment at Jupiter, has welcomed the proposals.
She said: "While people already have the opportunity to invest in green funds via an ISA it will clearly raise the profile of this area of investing and also provide an opportunity to benefit from the enormous growth we are expecting in this market. It has taken a while for the momentum to build, but now that so much energy is focused on encouraging change, we believe we are only just beginning to see the potential in this area of the market.”
Steve Waygood, head of engagement for the socially responsible investment team at Norwich Union, said: "Tax breaks on green ISAs will behave like a quasi-subsidy for green businesses. Such fiscal measures are an efficient way of achieving a more sustainable economy.
"If this measure were to ever come into force, then it should help reduce the cost of capital for green companies, and make it easier for green business to do business.”
However, the government has questioned how the Conservative Party will pay for the tax breaks.
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