Green makeover could turn RBS into GIB

29 July 2010
Royal Bank of Scotland (RBS) could be transformed into the Green Investment Bank (GIB) “to kick start a green economy” and help the UK meet its climate change targets, according to an NGO report.


The report, A bank for the future: maximising public investment in a low-carbon economy, was written by former PricewaterhouseCoopers consultant James Leaton and economist Howard Reed, and commissioned by activist organisation Platform and anti-poverty group World Development Movement.

Taking the opportunity for both banking reform and sustainability action, the report authors set out how RBS could be reinvented as the GIB, boosting green jobs and reducing the UK’s carbon emissions.

RBS was bailed out by the UK government in 2008, at the height of the credit crunch, and is now 80% publicly owned. Since then, environmental activists have been campaigning for the government to impose tougher environmental and social criteria to investments made by the state-controlled bank.

By focusing on financing renewables and energy efficiency projects, the report said a revamped RBS could help to create 50,000 green jobs a year, increase energy security, stabilise energy costs and improve the UK’s international competitiveness.

The report said by taking “a more activist, imaginative approach” RBS could reinvent itself in a way that would advance both the green agenda and responsible banking.

The suc­cess of such a bank would depend on whether it was perceived by the private sector as credible, the report said, adding the involvement of state-controlled banks would send a “power­ful signal” of the government’s intent to foster green gro wth.

"The government needs to bring together its banking reform and green agendas to set an example with RBS of how expertise in project finance, renewables and small to medium size enterprises can contribute green jobs and infrastructure for the UK and beyond," said lead report author, James Leaton, who estimates at least £200 billion ($313 billion) is needed for investment in UK energy infrastructure over the next 10–15 years.

The report said the transformation of the RBS into a GIB would form part of a wider bank restructuring strategy designed to reduce the risk of future financial crises.

Proposals to establish a GIB in the UK were laid out last month. However, the government has said it will not respond until after its spending review in October.

Charlotte Dudley