The chorus of criticism towards the UK government’s commitment to green finance, most recently articulated by former US Vice President Al Gore, has escalated this week as the country’s Secretary of State for Business pushes forward plans to privatize its Green Investment Bank.
The Green Investment Bank (GIB) was set up in 2012 as a state-owned but independent bank to help bring new investors and capital into the UK’s green economy.
It has so far invested £2bn in 50 projects, leveraging £6bn in private capital. In June Business Secretary Sajid Javid announced that the government would sell off a majority stake of the bank, arguing that full access to the capital markets will increase its lending power.
Most recently, Gore has slammed these plans, as has Green Party MP Caroline Lucas and other green commentators.
This week, Javid has pushed the plans forward announcing that he will repeal legislation that gives ministers control over the bank, and a veto over any move to change its governing principles that require it fulfill a green remit.
Think tank E3G, which originally developed the idea of the UK Green Investment Bank, has today (October 16) warned that repealing this legislation “threatened to destroy the green credentials of the world’s first green public bank”. It also warned that privatizing the bank would destroy its ability to crowd-in private investment into the UK law carbon economy.Nick Mabey, chief executive of E3G, said: “Removing legal protection over the GIB’s green purposes is another blow to its green credentials. There would be no guarantee that it will remain green however they dress it up. It sets the GIB on to a path of being just another bog-standard asset manager, destroying its ability to leverage in private investment. It is an economic own-goal.”
Javid has strived to play down criticism, announcing the news, he said: “I wish to make clear that the Government also wants and expects a privately owned GIB to continue this clear focus on green sectors – mobilising more private capital and further accelerating the transition to a green economy.”
“It is clear from preliminary feedback that potential investors are interested in acquiring a stake in GIB precisely because of its unique green specialism and its green focused business plan.
“As part of any sale process, we would expect potential investors to confirm their commitment to GIB’s green values and to set out how they propose to ensure these are protected.”
RI reported last month that a coalition of 13 investors, including Legal and General Investment Management, CCLA and the Church Commissioners, had written to the UK’s Chancellor of the Exchequer to express concerns over future renewables investment being put under risk by unsupportive government policy.