Out-Law News 2 min. read

Independent 'special shareholder' will guarantee values of part-privatised Green Investment Bank, says government


Measures designed to ensure that the Green Investment Bank (GIB) will continue to invest only in those projects that meet one of five 'green purposes' even after its part-privatisation have been announced by the UK government.

It intends for a 'special share' to be created in the GIB as part of the sale, which would be held by a separate company independent of both the government and the GIB. This 'special shareholder' would be required to give its consent before the GIB was able to make changes to its green mission, as set out in its articles of association, the government said.

The announcement forms part of the government's response to a report by MPs on the Environmental Audit Committee, which warned that privatisation could put the GIB's unique remit at risk. The government rejected the committee's recommendation of a special share to be held by the government, but will instead take forward the commercial alternative as part of the sale process.

"It is very clear that any specific government control over GIB that was enshrined in legislation, including special shares, would represent continued state control over GIB and will prevent GIB from being re-classified to the private sector," the government said in its response.

"The government has, however, explored with [the Office for National Statistics] whether a special share arrangement that provided the desired protection of GIB's green values could be put in place on a non-legislative basis without this amounting to continued state control over GIB and preventing the company's re-classification to the private sector. We are doing this in response to concerns expressed in parliament, not because we think such an arrangement is necessary or preferable," it said.

The GIB was set up by the government in October 2012 to provide finance to private sector projects which would contribute to the 'green economy', and is currently funded through a mixture of government and private sector funding. Its investments must meet one of five 'green purposes', which include the reduction of greenhouse gas emissions and the promotion of environmental sustainability.

The government announced its intention to sell its shares in the GIB in June 2015.

"Moving the GIB into private ownership makes sense," said Sajid Javid, the government's business secretary. "If you want it to have access to more capital, to make bigger investments and have a bigger impact in green sectors it is the best course of action."

Further details of the special share arrangement would be published by the government "as part of our reporting on the sale process at the appropriate time", according to its response. However, Infra News has suggested that the share will be held by three individuals appointed by three separate bodies that are themselves independent of the GIB and the government, such as the cross-party Climate Change Committee.

The government said that although it intended to put these arrangements in place, it did not feel that they were necessary "because investors in GIB will have sound commercial reasons to maintain the company's clear focus on green investment and its robust green values and principles". It intended to ask potential investors to confirm their commitment to the GIB's green values and investment principles "as a key part of any sale discussions", it said in its response.

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