Maximising our green impact

02 Dec 2013



This article by Shaun Kingsbury, Chief Executive of the UK Green Investment Bank, first appeared in BusinessGreen on 22 November 2013

Financial accounting and reporting has been with us since 3300BC with Mesopotamians using a clay tablet to keep track of workers' beer rations. A practical and useful purpose if ever there was one.   Since then we have had five millennia of experience, challenge and incremental improvement.

Green accounting and reporting for mainstream banks and investors is, on the other hand, no more than two decades old.  It is an emerging practice that improves in leaps and bounds each year, but is still in its infancy.

As the world's first dedicated green bank, we at the UK Green Investment Bank (GIB), carry a special responsibility in this area.  Our mission is to mobilise investment into the UK green economy. We will do that by building a bank that is green and profitable; not green or profitable.  This is our double bottom line and we must demonstrate both with equal robustness.

We have made a good start, directly committing more than £700m and mobilising a further £2bn through our backing of 21 projects.  That includes investments in offshore wind, energy efficiency, waste recycling and waste to energy projects. Our business model is working.

In all of these investments, we are every bit as disciplined and strong in our approach to green issues as we are with the financials.

We have now strengthened that commitment by publishing a full suite of new green policies. These are a beginning, not an end.  They can almost certainly be improved upon and we are committed to doing just that through continuous improvement.  In sharing them today, we hope to receive feedback from interested parties that will help us shape them in the months and years to come.  We will be spending the next two months seeking the feedback of our stakeholders.

These are not policies designed to sit on the shelf. They set out the tests that every investment must pass and provide everyone in the company with a framework against which we determine, assess, monitor and report on our green impact. They are policies designed to work in an investment bank; practical rather than theoretical.

We use these policies every day. To determine whether a project is green enough and will make a sufficient contribution to our five Green Purposes. To ensure our due diligence process reaches all aspects of green impact and performance, from the supply chain to operations. To attach covenants that requires a level of green performance, as we would for financial performance. To monitor each investment's green performance through annual audits and to enforce action and penalties for under-performance where necessary. And, to report the impact of these investments with market leading depth and transparency. 

We have applied these policies throughout our first full year of operations and our experience has taught us three lessons.

Firstly, you can invest profitably and achieve green impact. We don't have to trade one against the other.

Secondly, through expertise, active engagement and a commitment to working pragmatically in partnership with developers, you can improve a project's environmental impact and performance. We can always make incremental gains.

And thirdly, you can take others with you on the journey, in our case our 55 co-investors so far, all of whom have been party to the practical application of our policies. This can have the effect of moving on industry practice as others gain direct experience.

It might have been over 5,000 years ago, and it might have been a modest start, but the Mesopotamians' clay tablet reminds us of a simple truth - all organisations owe those with an interest in them an account of what they have done and how they have done it. That is especially true when you are a steward of public money, as we are.

You can find all our green policies and our green impact reporting on our website, I would encourage you to take a look and share your thoughts with us.