The much-anticipated Green Investment Bank (GIB) inched closer to its fully-fledged form last week when two directors were appointed to the top positions within the public company—UK Green Investment Bank plc.
Coming to the table with a strong financial services background, Lord Smith of Kelvin will be the new chair. Currently chair of SSE and The Weir Group, he also chaired a 2003 group set up by the Financial Reporting Council to clarify the role of audit committees.
Deputy chair goes to Sir Adrian Montague who will also serve as a senior independent director. As chair of the GIB Advisory Group, Sir Adrian has been very much involved with the bank’s development up to its current point.
Lord Smith said, “It is a pleasure to be asked by the business secretary to chair this groundbreaking institution. I look forward to working with Sir Adrian Montague and can’t wait to get started.”
B> has been closely following the GIB with great interest over the last six months—its formation represents the most concrete green gesture yet and, if successful, will provide a desirable boost to achieving a cleaner, greener UK economy.
Capitalised with £3 billion, the GIB will be pivotal in helping green infrastructure projects ride out wider market failures with the aim of attracting increased private investment.
However, as Mike Scott wrote for B> recently: “The Government says that £200 billion of investment is needed in the energy system alone by 2020 but the GIB will not be able to borrow money from the capital markets until the government has met its deficit reduction targets.
“While £3 billion is a lot of money, it is paltry compared to the investment that is needed and also to the amount that the GIB could put to work if it was able to leverage its assets and its government backing by borrowing.”
Despite the potential inadequacies, business secretary Vince Cable said, “The UK GIB is a major new innovation vital to securing investment in what is one of the great challenges of our age, the decarbonisation of our energy supply.
“It has found two candidates of outstanding calibre well suited to leading the bank through its important early phase.”
Meanwhile, Nick Clegg, deputy prime minister, added his support: “Lord Smith and Sir Adrian bring significant expertise and strong track records of delivery.
“Britain is already a powerhouse in green industries, but we are still not tapping all of our potential.
“I am determined that the Government will do everything it can to support this burgeoning sector and set the UK firmly on course towards a green and growing economy. The UK GIB will play a key part in this.”
Welcome words, but given the Government’s reticence on green initiatives in the budget statement and a disappointing performance by the PM at the Clean Energy Ministerial last month, we’re left with the echoing phrase, “Words are cheap”.
The GIB will be based in Edinburgh and London, and Scottish secretary Michael Moore added, “This is a UK institution headquartered in Edinburgh supported by a strong team in London and the news that Lord Smith and Sir Adrian Montague have been appointed is another step towards the bank opening for business.”
The new board will recruit additional directors and the senior executive team in the very near future, after which the Advisory Group chaired by Sir Adrian Montague will be disbanded.
Under the Enterprise and Regulatory Reform Bill, legislation has been introduced to formalise rationale, embed independence and set aside funding provision for the UK GIB, which should be fully operational by autumn.
While the GIB is a positive governmental step towards greening the economy, it also highlights a shortfall that needs to be met by those in the City and private investors. Read our Guide to Sustainable Investment to find out how you can play your part.