4. How the Bank Will Adopt Missions
64. The Bank will respond to the missions set by the Scottish Government through the development of its Investment Strategy, and wider engagement with Scottish Government and stakeholders. The Bank will also report to Scottish Ministers on how it intends to work towards the missions within 3 months of them being set, as required by the Act.
65. The Scottish Government has committed to capitalise the Bank with £2 billion over 10 years. The Bank will re-cycle returned capital from initial investments and leverage co-investment from the private market, increasing its capacity to stimulate the economy beyond this proposed £2 billion. The Bank is also expected to, in time, cover its operating costs and not be reliant on the taxpayer. The Bank will be a public body but it will operate commercially, and be operationally and administratively independent from the Government. This provides the Bank with the scope and freedom to decide what its Investment Strategy offers and how it invests to deliver the missions.
66. It will take time for impact to be evidenced against the Bank's activities. The long-term nature of the grand challenges means that social, economic and environmental returns should not be expected shortly after the Bank has been vested. The Bank will be expected to deliver these impacts in the medium- to long-term.
67. The missions set for the Bank will provide a direction for its Investment Strategy but will not constrain its activity. Ultimately, the Bank will be required to invest in opportunities in line with its vision, objects, missions, and ethical standards. Therefore, the missions should be viewed as part of a wider picture of the Bank's governance, rather than in isolation. Concepts such as inclusive growth or fair work should be supported throughout all of the Bank's activity, rather than trying to set specific missions to support these particular aims.
68. As set out in the Act, the Bank's main object is investing in commercial activities for the purpose of promoting or sustaining economic development or employment in Scotland. The Bank's ancillary objects concern:
- Investing in inclusive and sustainable economic growth;
- Investing to promote social wellbeing;
- Investing to promote environmental wellbeing, and in particular:
- Support the transitions required to meet the net zero emissions target;
- Support proposals and policies regarding circular economy initiatives;
- Promote biodiversity;
- Promoting Just Transition principles;
- Promoting and developing the activities of enterprises, where lack of financial investment is holding back economically viable commercial activity;
- Promoting and developing the activities of small and medium-sized enterprises;
- Promoting and developing the activities of enterprises which promote fair work and pay their employees a living wage;
- Creating and shaping markets through the provision of patient capital;
- Contributing to the achievement of the Scottish Government's economic, social and environmental policy objectives; and,
- Advancing equality and non-discrimination.
69. The Bank will seek to be considerate of overarching policy developments and priorities. For example:
- The Bank will seek to align its investment activity to support the Scottish Government's update to the Infrastructure Investment Plan. This Plan will set out the Scottish Government's approach to future infrastructure investments in Scotland and will build on recommendations made by the Infrastructure Commission for Scotland and focus on three long-term outcomes of inclusive economic growth, tackling the climate emergency, and building sustainable places. When working towards these outcomes, consideration will also be given to projected forecasts regarding changes to Scotland's demography, technological trends and adaption to climate change.
- The Bank will seek to tailor its investment activity following the expected publication of Scotland's fourth National Planning Framework, which will provide a long-term spatial plan supporting sustainable and inclusive growth in Scotland and its development between now and 2050.
70. It should also be noted that officials are developing and engaging with the European Commission on State Aid approval required for the capitalisation of the Bank. Approval is expected to be in place in the second half of 2020. The scope of State Aid approval granted will inform the Bank's response to the missions and influence how it will deliver against them.
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