Business groups set five key tests for Green Investment Bank suitors

Sustainable business coalition Aldersgate Group, environmental law firm ClientEarth, climate think-tanks E3G and Green Alliance, and NGO Greenpeace have today (18 March) called on potential GIB suitors to commit to five tests that will ensure the Bank continues to act and invest in the public interest.

The GIB ‘Public Interest Prospectus’, launched today, sets out what is required of the new owners in order to maintain support. Specifically, prospective buyers of the GIB should commit to: –

– Maintaining the integrity of the GIB as a single, functioning institution with an ambitious, fully funded business plan aimed at accelerating the UK’s transition to a low carbon economy in line with the UK’s legally binding budgets.
– Deploying at least £4bn of new GIB capital in the UK’s low carbon economy over three years, and leveraging at least a further £12bn of additional capital.
Material scale-up of citizen finance, democratising the gains from investment; Commitment to at least 10% and a goal of 20% of investment capital to be sourced from citizen finance by 2018.
– Keeping the GIB at the forefront of the green infrastructure market, with a focus on innovation, developing financing mechanisms for projects new to market and reporting on progress made.
– Ensuring best-in-class standards of governance and transparency; Commit to implementation of GIB’s social and environmental standards across GIB’s ownership base.

Aldersgate Group executive director Nick Molho believes it is in the interest of both the future owners of the GIB and UK public for the bank to retain its market strength in the recommended areas.

Molho said: “What has made the GIB unique to date hasn’t just been its focus on green infrastructure but the fact that it has been a step ahead of the market, by supporting projects that weren’t attracting sufficient levels of private sector investment.

‘Real difference’

Green Alliance economist Angela Francis added: “If the GIB can continue to provide first of a kind finance to green projects it will remain a powerful institution, but if this sale leads to the bank losing its distinctive leadership role in market, it will be written up as an experiment that failed”

“This focus on supporting novel projects, such as complex NHS energy efficiency schemes and offshore wind projects using cutting-edge technology, has allowed the Bank to make a real difference by supporting innovation, accelerating cost reductions and delivering supply chain benefits to the UK.”

The launch of the Public Interest Prospectus follows the initiation of the GIB privatisation process – the Government confirmed this month that it had put the Bank up for sale, which could potentially see it wholly transferred to private ownership.

GIB chief executive Shaun Kingsbury has called the sale “an exciting investment opportunity”, claiming it would provide investors with predictable returns and significant growth opportunities.

Hydropower funding

The Prospectus also comes in the same week that the GIB has provided power generation company Albion Community Power with a £5m investment to develop two new Highlands hydropower projects.

The two run-of-river schemes – Liatre Burn, on the Glen Cannich estate, and Abhainn Bruachaig, near Kinlochewe – will generate approximately 2.8GWh of renewable electricity per year, equivalent to the electricity consumption of around 700 homes.

Speaking about the development of the schemes, GIB head of investment banking Edward Northam said: “Community-scale projects improve the efficiency of the network by generating electricity close to where customers need it.

“We believe that decentralised schemes like Liatre Burn and Bruachaig are an important part of the energy mix and have a significant role to play in increasing security of supply, reducing costs and cutting greenhouse gas emissions.”

George Ogleby