Social Enterprise: Have you heard about the UK's Green Investment Bank?

One of the things we in the UK have to look forward to in 2012 (apart from the Olympics) is the operation of the government's social enterprise initiative, the Green Investment Bank (GIB). It is one of the major policies that has come out of the coalition government and will begin operating in April.  Some of this bank's early targets would be offshore wind, waste and non-domestic energy efficiency. It would also have legislation that would ensure its independence from the government as an institution. The European commission needs to approve the bank's public funding before it can become operational.

The UK will be the first country in the world to create a bank dedicated to the greening of its economy. High-quality social enterprise and economic infrastructure is vital for any competitive, growing economy. It seems the UK Government is committed to achieving the transition to a green economy while delivering long-term sustainable growth at the same time. However, this transition will need exceptional investment over the coming decades. Vince Cable, UK's Secretary of State for Business, Innovation and Skills and President of the Board of Trade says, "This is an opportunity for the UK to lead the way in the transition to a low carbon economy with the world's first dedicated Green Investment Bank. The GIB will become a key component of this transition which needs significant investment over the coming decades."

This new banking institution will start to build the necessary expertise in the financial markets and social enterprise green investments in order to mobilise additional private sector capital to gain market credibility. It will also be part of the process to cut energy waste from homes, as well as help to tackle fuel poverty and climate-changing emissions.  The GIB will play a vital role in addressing market failures, unlocking significant new private investment into green infrastructure projects.

The development of well-designed, long term and stable policies is vital to achieving a successful transition to a green economy. They are needed to provide the social enterprise incentives for businesses to invest in new, green infrastructure, which, by its very nature, repays the investment only over many years.

There's hope that this GIB will help meet environmental objectives and promote economic growth. However, currently, there is growing concern about the indebted UK government's willingness to guarantee any bonds or loans, which private investors say will make it much harder for this bank to offer the low-cost finance needed by industries, social enterprise schemes and new technologies. This leaves a big question mark over the bank before it has even started.

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