In the run up to the autumn spending review, prime minister Boris Johnson proclaimed a vision of a “green industrial revolution”. His ten point-plan indicated that funding was to be raised through a range of new “blended finance” initiatives in line with last year’s Green Finance Strategy published by the Department for Business, Energy and Industrial Strategy (BEIS). This approach sees the role of the state to be to ‘crowd-in’ and act as guarantor to private financial investors, and pension funds.
In line with expectations, the spending review announced a new ‘national infrastructure bank’ – despite the previous Green Investment Bank being sold off to private equity group Macquarie only three years ago. It can be assumed the new bank will run on lines similar to the British Business Bank: a state-owned but privately managed institution. The government’s plans align with a broader coalition of calls for greater involvement of private financial institutions in contributing to the financing of sustainable development. The Bank of England, for example, is seeking ways to promote “productive finance” i.e. investment that expands productive capacity, furthers sustainable growth and can make an important contribution to the real economy.
While we await full details, the government’s approach seemingly depends on the financial sector having the appetite and capacity to go green. The appetite is taken as given, with the consequence that there are no signs of coercive policy on the horizon. In November, the government voted down a Labour amendment to the Pension Schemes Bill which would have mandated occupational schemes to adopt investment strategies aligned with net-zero greenhouse gas emissions “at the pace the science demands”.
