GB Energy will bring opportunities and risks for Scottish financial institutions - Chris McLauchlan

With the buzz around GB Energy’s decision to set up its headquarters in Aberdeen, we took the opportunity to ask Scottish business leaders what they really think about the move. A massive 81 per cent predict a positive economic impact; an optimism which highlights Scotland’s potential to build on its reputation as a powerhouse in renewable energy to drive future economic growth.

However, let’s look more closely into what this means for Scottish financial institutions. After all, banks, building societies, and lenders have a crucial role to play in the anticipated economic boost following GB Energy's launch.

While the overall sentiment is upbeat, the details reveal a more nuanced picture. Our research points to funding challenges, generational divides, and a delicate balance of risks and opportunities that will unfold in the coming months.

​Chris McLauchlan, Partner at Womble Bond Dickinson

A divided optimism

While most Scottish business leaders see GB Energy’s presence as a big step forward, the enthusiasm isn’t equally held across generations. Younger business leaders are notably more upbeat about the potential benefits, while scepticism and caution is seen among those aged 55-64. A tale of ‘Been there, got the T-shirt’? Only time will tell.

This generational divide is a critical consideration for financial institutions. Generally speaking, given the greater emphasis placed on sustainability by younger generations, we should be ready for a drive in demand for innovative products like green loans or ESG-aligned investment options.

This will shape how Scotland’s banks and building societies seize the new opportunities brought about by GB Energy’s presence. Aligning governance, regulation, and processes to meet these needs is key. Plus, with the constantly evolving rules around ‘greenwashing’ and ESG, staying up to date is essential for financial institutions to remain competitive and steer clear of legal pitfalls.

​Scotland has potential to be a renewables powerhouse (Picture: John Devlin)

The funding question

While there's a lot of optimism, 37 per cent of respondents flagged funding concerns as a significant issue. This presents both a challenge and an opportunity for financial institutions.

On one hand, they'll face increased pressure to finance renewable energy projects, an area many Scottish lenders are already involved in with products like green bonds and sustainability-linked loans. On the other hand, funding large-scale initiatives like GB Energy’s operations could strain capital allocation or expose lenders to higher credit risks if energy market volatility continues.

Scottish financial institutions need to actively consider innovative and risk-adjusted financing strategies. By tapping into the expertise of sector specialists, banks and lenders can mitigate risks while supporting the renewable energy sector, which stands to gain the most from GB Energy’s presence.

A note of caution

Despite the clear opportunities, a quarter of Scottish business leaders remain sceptical about GB Energy’s move impacting financial institutions. This caution likely stems from doubts about the scale of change the new headquarters can achieve alone.

Additionally, some business leaders worry about resilience to energy market fluctuations and the lack of immediate benefits in areas like mergers and acquisitions. These concerns highlight the need for GB Energy’s presence to not only drive short-term growth but also strengthen Scotland’s financial ecosystem against external shocks. Building strategic partnerships between financial institutions and the renewable energy sector will be crucial to achieve the progress on renewable energy needed to meet net zero targets.

A call to action for financial institutions

It’s safe to say the renewable energy sector offers a once-in-a-generation opportunity to redefine Scotland’s economy, but it requires the support of a robust and forward-thinking financial sector to adapt, innovate, and invest wisely in a sustainable future.

As the backbone of our economy, financial institutions must be on top of the ever-changing landscape of rules and regulations. This means scrutinising the structure and details of each transaction to mitigate risks, while supporting renewable energy projects and the broader goals of economic growth, sustainability, and energy resilience. By doing so, they can not only support GB Energy’s success but also secure their own future in a rapidly changing landscape.

Chris McLauchlan, Partner at Womble Bond Dickinson