Everyone, even outside the UK, hailed the creation of the Green Investment Bank. Now the Conservative government will change the bank’s mission so that it will no longer be required by law to invest in green schemes. Adam Vaughan discusses the plans in The Guardian.
Green investment bank ‘no longer required by law to invest in green projects’
The bank set up by the government to fund green infrastructure and cited frequently by David Cameron as evidence of the UK’s leadership on climate change will no longer be required by law to invest in green schemes, under moves put forward by ministers.
Campaigners said that changes proposed on Tuesday by small business minister Anna Soubry effectively delete the clause enshrined in legislation that gives the green investment bank its green purpose.
But ministers insist the bank’s green mission will still be protected through a ‘special share’.
The £3.8bn bank was established in 2012 to “accelerate the UK’s transition to a greener, stronger economy” by investing in renewable energy and other “green” schemes.
It is frequently highlighted by government ministers, including the prime minister and the chancellor, as a key plank of the government’s green credentials. Cameron cited it at UN climate meetings as a “world first”.
But the government announced last June that it would be privatised to raise more private money and cut government borrowing.
That prompted MPs on the environmental audit committee, to warn that the sell-off would strip it of its legal requirement to invest in green projects.
At the bank’s beginning, the government argued that the clause guaranteeing its green mission was legislated for because “legislation provides that the bank will always have a green purpose clause”. Soubry’s proposed amendment to the enterprise bill drops the clause from law.
The Green party leader, Natalie Bennett said: “There’s always been a big question mark over exactly how green the green investment bank actually is and should the government remove the green purpose from the bank, then it’ll be yet another example of greenwashing from this government.
“I don’t want the bank to be privatised at all, but at very least, its environmental credentials should be protected and then enhanced so that it can be a reliable source of ethical investment.”
Sepi Golzari-Munro, head of the UK programme at environmental thinktank E3G, which has criticised the sell-off, said: “We need investment in essential infrastructure, everyone accepts that. After Paris [the international climate deal agreed in December] we know that we’re heading towards a net zero [emissions] future.”
“Even the Institute for Fiscal Studies says the government’s flagship attempts to encourage private investment have been disappointing. But in contrast the green investment bank has been one of government’s most successful vehicles for getting investment in infrastructure.”
But ministers and government officials argue that the bank’s commitment to green sectors will be protected by a special share held by an independent company.
“To ensure the bank’s green credentials are maintained it plans to put a special share structure in place that protects its green mission and keeps it focused on what it does best,” said the business secretary, Sajid Javid, announcing the share earlier this month, after the government’s initial plan to remove the ‘green lock’ was defeated in the Lords last year.
Officials said the clause has to be removed from legislation in order for the bank to be removed from government books and sold off.
A Department for Business Innovation and Skills spokesman said: “Investors recognise that the green investment bank’s unique green specialism is its core strength and where its value lies, and in addition the independent special shareholder will be focused solely on advancing environmental protection.
“By putting in place a special share, we can protect GIB’s green mission while attracting much more capital, which all parties are agreed is a positive step.”
Sources close to the privatisation process also said the bank’s green purpose would be guaranteed until the special share is in place. Neither the government or bank will be able to influence the appointment of the three trustees for the special shareholder, they said.
Golzari-Munro said that the special share would be a much weaker form of protection than legislation, as it could be more easily unpicked.
“The green vision is not safe. It can be changed in the future according to company law, they won’t need to come in front of parliament and have public scrutiny. Who knows, there was even talk of it investing in fracking in the past,” she told the Guardian.
The green investment bank declined to comment.