How Green Banks can create multiple types of value in the transition to net zero emissions

Abstract

AbstractCurrent levels of investment are insufficient to meet the goals of the Paris Agreement, and private sector funding shortfalls are acute. Despite this, little research has been undertaken into Green Banks, a new form of institution which mixes public and private institutional logics to mobilise additional private investment in the net zero transition. This paper examines how hybridity manifests in Green Banks and the ways these institutions create value through their investments. We adopt a mixed method, case study approach, combining primary document study with interviews, to elicit information on different forms of hybrid governance and value creation in four Green Banks (located in Australia, New Zealand, and the United States). We find some commonalities in how hybridity manifests between cases (e.g. combining public knowledge sharing logics with private investment logics), but also significant differences (e.g. in investment focus), as policymakers adapt organisational governance to suit jurisdictional circumstances. Green Banks are perceived to create value beyond their core financial roles, including knowledge spillovers, social equity benefits, and enhanced energy security. Current evaluation approaches focus on financial metrics and often exclude these broader areas of value creation. Development of additional value capture metrics could make Green Bank contributions more visible.Points for practitioners Green Banks are hybrid organisations that seek to accelerate investments in low carbon infrastructure. Green Banks aim to mobilise additional private finance to investments which would otherwise not occur, due to economic, social, or political barriers. Green Banks demonstrate different forms of organisational hybridity and value creation at national, state, and local levels. At present, the value created by Green Banks, particularly investments in disadvantaged communities, is not fully captured through investment evaluation processes. The net zero transition is an opportunity to develop new forms of investment governance and evaluation which moves beyond capturing financial value to capture the value of investments more effectively.