It’s still short of the most competitive three-year bond on the market with the best rates currently jostling below 3.5%.

This issue of green bonds will be fixed for three years, with a minimum investment of £100 and a maximum of £100,000.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the higher rate “gives the green light to new savers” who want to tie their money up for three years and prioritise green credentials above the rate.

“Those who locked in last October for a miserable 0.65% will be feeling green around the gills though,” she said. “And anyone eyeing up the new rate needs to consider whether they’ll feel the same in a year’s time.”

Is three years too long?

Coles urged savers to think carefully before locking in for three years, particularly when inflation is running at over 10% and the Bank of England has indicated it will hike interest rates again at least twice more this year.

“Three years may not be the most rewarding period to fix for,” she warned. “Right now you’re not getting paid an enormous premium for fixing for longer – because the swaps market influences the rates on offer, and the swaps market thinks that rates will rise in the short term and fall back later.

“As a result, the best accounts over two and three years are both paying just under 3.5%, while the best over a year is paying more than 3.2%. You need to think very carefully whether it’s really worth fixing for longer in return for a lower rate. With so much uncertainty hanging over us all, you might value the opportunity to fix for a shorter period, then take stock and decide the best thing to do with your cash at that point.”