Green bonds plan to boost innovative projects
Ivan McKee: ethical finance
The Scottish Government is investigating new financial products, including green bonds, which enable investors to support sustainable products and initiatives.
It is also looking at a Series A fund which would channel private capital into innovative companies wishing to expand.
They are among plans to increase the value of private investment flowing into Scotland and make the country a global centre of ethical finance.
It will also ease pressures on the taxpayer by introducing more private capital to back a range of projects.
The Global Capital Investment Plan contains 30 measures to increase the availability of private capital to businesses and projects while improving links with financial centres.
Priority will be given to building markets in sectors where Scotland is already strong and which are attractive to global investors. These include low carbon transition, digital, health and life sciences and high value manufacturing.
The government has also linked up with the Global Ethical Finance Institute to stage a series of events showcasing Scotland’s investment opportunities in the run up to November’s COP26 UN climate change conference in Glasgow.
Announcing the strategy to parliament, Trade and Innovation Minister Ivan McKee said: “Private capital investment does not replace the crucial role of public investment or ownership, but we need to recognise that public sector investment alone will not be enough to respond to the challenges of the 21st century.
“This strategy is needed to drive our economic recovery and deliver on our wider ambitions, particularly net zero.
“The time is right for us to become a global hub for ethical investment. Scotland-based investment funds already manage 11% of the UK’s responsible investing market, compared to a 7% share of the conventional market, and I am determined we should build on that by proactively engaging with ethical investors and with sources of capital new to Scotland.
“We are launching this plan while economic uncertainty around Covid-19 still remains. But now is not the time to sit back. We must be bold and support our businesses and projects with an investment-led recovery.”
Global investment firm Baillie Gifford was part of an expert Ministerial Reference Group which advised on the plan. Its Head of Governance and Sustainability Andrew Cave said: “Baillie Gifford has been pleased to support the development of Scotland’s ambitious new Global Capital Investment Plan.
“It is particularly encouraging to see the overt focus on sustainable and responsible investment, given the potential for very rapid growth of this exciting area of financial services in Scotland in the countdown to COP26 and beyond.”
It is estimated that increasing private sector business investment to the overall level among OECD countries (as a percentage of GDP) could permanently increase Scotland’s GDP by around 1.9% by 2030 (about £3.1 billion a year in 2019 prices).
This could then increase average earnings in Scotland by 4.9%, around an additional £1,400 a year to the average Scottish employee in today’s prices.
Omar Shaikh, co-founder and director of the Global Ethical Finance Initiative in Scotland, said: “We welcome this publication, which sets out a pipeline of opportunities to match ambition for a just transition with the global finance industry’s search for investable and sustainable projects.
“There is an opportunity not only to attract global capital to Scotland, but also to make the country a centre of expertise in environmental and sustainable banking and investment.
“Scotland already punches above its weight, however it has the opportunity to do more – and with COP26 coming to Glasgow this year we can showcase our commitment to ethical finance to the world.”
Investing with purpose: Scotland’s Global Capital Investment Plan is available online.
Trade and Innovation Minister Ivan McKee’s statement to parliament.