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The Scottish National Investment Bank is at risk of missing its target of investing £2bn by the end of the decade by a fifth, after the government scaled back funding for the lender this year.
The state bank could fall short of its 2030 goal in three key areas — net zero, communities and innovation — by as much as £400mn, according to previously unreported figures from its annual report.
Established in 2020 the bank has a mandate to fund projects that cut carbon emissions, reduce inequality and promote innovation. The institution has a target to lend £2bn to businesses over 10 years.
The bank has previously come under scrutiny for getting off to a slow start in its early phases and for previously failing to meet its annual spending targets.
The lender’s performance improved in the 2023-24 financial year, with it investing in green infrastructure and housing projects. The figure was £227mn up from £151.9mn the previous year, while its income exceeded operating costs for the first time.
The bank said it was a “long-term impact investor”, with 39 businesses and projects now in its portfolio.
“To date we have committed £696mn to business and projects that deliver against at least one of our three missions of net zero, innovation and community, crowding in over £1.4bn of additional investment alongside us,” it said.
In its annual report published in August, the bank’s projected spending by 2030 was between £800mn and £1bn on net zero projects, and £400mn-£500mn each on both communities and innovation projects.
At the lower end of the range, this suggests a potential shortfall of £400mn against the £2bn total target.
In its most recent business plan the lender said it was “aiming at the top end of each range and, where we can, exceeding it”. But it warned the targets were also “subject to real-world volatilities . . . and external or market factors beyond our control”.
SNIB chief executive Al Denholm said in its latest business plan: “Over the longer-term, significant investment from private sector capital is needed if we are to meet our missions.
“The bank cannot deliver its missions alone. So, in the years ahead we seek to manage private sector capital alongside the public funds entrusted to us.”
The Edinburgh-based bank was established in 2020 with a mandate to create long-term economic growth under then first minister Nicola Sturgeon.
The bank received just £174mn for the 2024-25 financial year, well shy of the expected £250mn, which it said was “clearly in the context of challenging public sector finances”.
A person close to the bank said the lender may not be able to invest the full £174mn allocation with just over two months left in the financial year. The funding allocated by the government varies from year to year, and is now set at about £200mn per year.
The person noted the bank was only in its fifth year, and that establishing a pipeline and a portfolio of investments took time.
Deputy first minister Kate Forbes said the bank’s performance showed it has an “increasingly promising future” following the publication of its annual report in August.
The bank has invested in ventures ranging from green infrastructure projects and rental home and venture capital funds, to a nanomaterial producer, a laser manufacturer and the company that turned an unused quarry into Europe’s largest inland surf resort.
Ross Brown, a professor of entrepreneurship at the University of St Andrews, said that meeting the £2bn goal is “mission impossible”, while accusing the bank of a “chronic underspend and lack of focus in [its] lending portfolio”.
