CSR: Why the Green Investment Bank presents a world-class opportunity for the UK

Last night saw the Summit of the recently announced UK Green Investment Bank. It brought together thought leaders in environment and finance to discuss the financial barriers in moving to a low carbon economy.

From a CSR perspective, the Green Investment Bank is the next big thing for the UK. It aims to provide the right infrastructure to promote necessary investment for a low carbon economy. Attendees at last night's summit were from a whole host of organisations, ranging from Blue Chip companies such as Merrill Lynch (which hosted), trade bodies such as the Association of British Insurers, and small renewable energy companies.

They also represented a vast range of job roles, although many were Heads of CSR or CSR consultants, indicating the importance of the Bank to organisations' Corporate Responsibility ambitions.

The Green Investment Bank, if set up in the right way, could give the UK economy a real edge as it aims to cut the cost of raising capital for investment in low carbon technologies.

Martin Donnelly, Permanent Secretary at the Department for Business, Innovation, and Skills (BIS), outlined how the Bank would fit in with the range of 'green' measures the Government was planning. He said that it would have a mandate to tackle risk that the market could not currently finance, but also to provide a return on investment. Money made by the Bank would then be reinvested back into green infrastructure financing. The Bank should also be effective in leveraging private finance. The number of people in the room was indicative of private sector appetite for this, both for CSR reasons and for commercial opportunity.

The UK Government plans to invest £1bn of BIS funding in 2013/14 but hopes to get the Bank off the ground earlier by financing it through the sale of Government assets. The timeline is for the Bank's design and structure to be agreed and signed off by May next year, with staff taken on and the Bank launched by December.

Abyd Karmali, the Global Head of Carbon Markets at Merrill Lynch, was one of several speakers, both from the panel and from the floor, who stressed the need for speed in setting up the Bank. He said that the global economy faced a huge challenge in shifting finance from high to low carbon assets. One route for this was through Green Bonds which could act as a potential source of capital - he estimated up to £4bn a year. Many other speakers and attendees also stressed the potential value of Green Bonds as a financial product.
For the Bank to be judged a success, said James Wardlaw from Goldman Sachs, it needs to bring in private money. A useful guide is a 10:1 ratio - for every £1 of public money invested, £10 is attracted. He also stressed the importance of having a way of evaluating value across all technologies so investment could be prioritised.

Jon Kimber, the MD of British Gas New Energy, said the parent company, Centrica, would become an energy services company, rather than an energy supplier within the next two years. He highlighted energy efficiency as a key area to tackle as the UK had the least energy efficient housing stock in Europe.

CSR and the Green Investment Bank should and hopefully will go hand in hand. We no longer have a choice about whether or not to finance the green economy - the question is how to do it in the fastest and most effective manner. If the Green Investment Bank is set up in the right way then it could mean that the UK is ahead on both counts.

Photo credit: Alan Cleaver