News

New bank must not prioritise social returns over environmental, says BTCV

Finance | Tania Mason | 21 Jul 2009

BTCV, one of the UK’s largest volunteering charities, has taken umbrage at the Office of the Third Sector’s suggestion that the new Social Investment Wholesale Bank should focus on social returns rather than environmental.

The ministerial foreword at the start of the consultation document about the bank, attributed to charities minister Angela Smith and financial secretary to the Treasury Stephen Timms, suggests that while the new bank would generate both social and environmental returns, social returns would get priority.

“It is worth noting that environmental projects already attract billions of pounds of investment globally, so we may find that as the bank worked to meet gaps in the market, it would focus mainly on social rather than environmental outcomes,” they wrote.

BTCV chief executive Tom Flood (pictured) said his charity would be making a submission outlining its objections to this. “We believe that social and environmental outcomes are inextricably linked,” he said.

“For example, every £1 invested in BTCV’s People’s Places programme, which supported small-scale community environmental projects, generated a social return on investment of £4 in terms of reduced crime, improved leisure opportunities and increased employment.” 

Flood added that the Third Sector Declaration on Climate Change calls for third sector organisations to put their own house in order with regards to reducing their environmental impact and inspiring others to take action.  “It would therefore be good to think that even primarily ‘social’ charities would have a strong interest in accessing funds for ‘environmental’ issues.” 

He said BTCV would be putting forward the view that the name of the social investment bank should include a reference to sustainable development.

Trewin Restorick, CEO of Global Action Plan, echoed Flood's sentiments.

"Social and environmental issues are inextricably linked," he said. "The worst effects of climate change will have the biggest impact upon the most vulnerable sections of society as they will be the least able to cope with extreme weather conditions and will be the most hit by rising energy and insurance bills. 

"Given this, we think that it is extremely short-sighted and nonsensical for the OTS report to suggest environmental projects should be given a lower priority.  The claim that environmental projects are well funded is also palpable rubbish as anybody working within the environmental sector would know."

Competition ‘crucial to bank’s success’

Rodney Schwartz, chief executive of ClearlySo and writer of the Social Business Blog, has questioned whether it is sensible for so much cash to be delivered through a single organisation. “Concentration in financial services has hardly been given a good name of late – why replicate this with a new monolith in social finance? What if ‘the chosen one’ is not well run – will that not do irreparable harm to the sector?

“Is it not obvious that competing social finance firms offer the best chance of creating a vigorous and self-sustaining sector?”

Meanwhile, Futurebuilders chair Stephen Bubb has said the consultation is pointless unless the sector is told how much money will be put into the bank.  “If we are only going to get small change then it changes the role it will have,” he said.  Futurebuilders has already signalled its desire to run the bank once it is established.

Tweet

Directory: BTCV
Who's Who: Tania Mason