What does the Act do exactly?

The Act requires the establishment of the SNIB, which will be established as a public limited company.  It sets out, amongst other things, what the articles of association must state, including the SNIB's objects, vision and its general powers, as well as more practical aspects of the SNIB set up regarding the appointment and tenure of directors.   

The SNIB's objects include investing to promote social wellbeing, promoting the 'just transition' principles and advancing equality and non-discrimination, while its vision is to "provide finance and act to catalyse private investment to achieve a step change in growth for the Scottish economy by powering innovation and accelerating the move to a net zero emissions, high-tech, connected, globally-competitive and inclusive economy".

The Act then goes into the detail of the SNIB's set up, such as setting the SNIB's missions, how the SNIB is kept accountable through reporting obligations, reviews of performance and equal pay, for example.  Finally, the Act, rather importantly, sets out the Scottish Ministers' (who will own the SNIB) power to capitalise the SNIB, "in such manner, and to such extent, as they consider appropriate".

How much investment are we talking about here?

The Scottish Government has committed to capitalise the SNIB with £2 billion over 10 years, with the aim of re-cycling returned capital from initial investments and leveraging co-investment from the private market, "increasing its capacity to stimulate the economy beyond this proposed £2 billion".

What are the SNIB's missions?

Well the short answer is we don't know as yet.  That said, the Scottish Government has recently published a proposal document setting out proposed missions (SG/2020/152 - August 2020).   This document was published on 28 August 2020, and has been laid in the Scottish Parliament for the purposes of consultation for 40 days (the "Proposal").  It proposes an initial set of three (3) missions, each of which responding to what is referred to as "grand challenges" facing Scotland, as follows:

This mission-oriented approach is all very much in support of the SNIB's overall vision as set out above.

What areas will the SNIB invest in?

Setting out missions is the first step, but what will the SNIB be likely to invest in I hear you ask?  Now while the SNIB will be operating independently in terms of the investment decisions it makes, the Proposal does provide some illustrations of the areas the SNIB is expected to invest in.  For example, in relation to the Net Zero Mission, it is anticipated the SNIB may invest in low emission transport, carbon neutral industry and agriculture, and domestic and commercial energy-efficiency initiatives, amongst other things.  In relation to the Place Mission, the SNIB may invest in areas such as housing or regeneration. Finally, in relation to the demographic mission, the SNIB may invest in areas such as assisted living, life sciences, digital capabilities, infrastructure and automation while supporting changing skill needs.

When will we start to see an impact?

Patience is the key here.  The grand challenges set out above are, by their very nature, long-term challenges and as such, the "return-on-investment" will not be seen, and should not be expected, immediately. By way of illustration, the Place Mission and Demographic Mission have been set a target date of 2040 while the Net Zero Mission has been set a target date of 2045.  This will take time.

How does the SNIB fit in with supporting the economic recovery from COVID-19?

COVID-19 is definitely a topic we would all rather not talk about, but it is unavoidable at the moment and the Proposal on the SNIB's missions recognises this.  While the Proposal acknowledges that the shock to the economy due to COVID-19 is expected to be of a shorter term in nature compared to the SNIB's longer-term mission-oriented investment objectives, it also recognises the SNIB is expected to play a key role in supporting Scotland's economic recovery, and will support that recovery by "delivering patient and sustained investment in Scotland's businesses and communities".

The Advisory Group on Economic Recovery was set up by the Scottish Government recently to provide expert and independent advice to the Government on Scotland's economic recovery from COVID-19.  The Group highlights the SNIB as key in terms of the economic recovery, going so far as to say that "[this] crisis accelerates the need for an investment institution at the heart of the Scottish economic landscape" and that it is imperative that the SNIB opens in 2020.  Watch this space!