Hammersmith and Fulham Council is aiming to raise £5 million from its residents to improve local parks, encourage more cycling and invest in "green projects" across the borough.
The council hopes to raise the money through a series of "low risk" investment phases.
In the first phase, launched on Wednesday, local residents were encouraged to put money into the green investment fund over a five-year period to raise £1 million with a fixed interest rate of 4.85 per cent for investors.
There's a minimum outlay of £5 and investors are promised a fixed cash return every six months.
Anyone can contribute to the fund, including people outside the borough, businesses and community groups.
The first £1 million raised will go towards maintaining green parks and open spaces, new bike hangers and cycle lanes to encourage cycling and sustainable drainage to help mitigate the risk of flooding.
Money will also help solar panels and heat pumps to be retrofitted to local buildings and homes.
Councillor Rowan Ree said the Labour-led local authority is "at the forefront of the green finance revolution".
"Investors know that their money is being invested in projects that will make a positive impact on our communities and people’s lives.
"It also means that the council can deliver climate and ecological projects cost-effectively, which will help save taxpayer money. It’s a rare win-win."
The council claims it is the biggest local authority investment scheme of its kind and can help it become net zero by 2030.
The investment scheme will help the council to borrow at a lower rate than would be available through the Public Works Loan Board, reducing interest costs on green projects, which helps to save taxpayers money, the council said.
In recent years, amid funding cuts, councils have looked for fresh ways to bring in extra income.
Some have caused financial problems through excessive borrowing or property investment including Croydon, Woking and Slough.
In October the Standard reported that cash-strapped Croydon Council planned to chase benefit claimants for unpaid council tax as it claws its way out of bankruptcy.
London Councils, which represents the capital's 32 boroughs, said collectively they were heading for an overspend of £600m this year.
Councils are hoping for an above-inflation grant increase and adjustments to housing benefit when the chancellor delivers his Autumn Statement next week, the BBC reported.
