‘Greening’ the Royal Bank of Scotland

Environmental and anti-poverty campaigners had hoped that the taxpayer’s majority shareholding in the Royal Bank of Scotland (RBS) would mean the bank, which has styled itself until recently as the ‘Oil and Gas Bank’, would now have to cut unethical investments linked to climate change and human rights abuses. However, during a recent preliminary hearing to take the Treasury to a judicial review over the matter, government lawyers viewed such environmental and social considerations as a “burden” to the financial sector.

The hearing, at which I was present, sought to challenge the Treasury for not keeping to the regulations stated in their spending criteria procedures, under a so-called ‘Green Book’ assessment. These procedures state that all investments of public money must take into account ‘environmental impacts’ and social issues ’so as best to promote the public interest’.

The three campaigning groups – World Development Movement (WDM), People and Planet and PLATFORM – therefore argued if the government holds the majority stakehold of a company abusing these criteria, it has a duty to intervene. A recent report commissioned by the groups has exposed how RBS’s investments have fallen seriously short of fulfilling these ethical criteria, and warrant government intervention.

Entitled ‘Royal Bank of Sustainability’, the report states that since 2006 RBS has been a dedicated investor in Arch Coal, the second largest coal producer in the US, who conduct mountain-top mining operations in the Appalachian mountains, Canada. It reveals how these operations have led to the disappearance of 300,800 acres of biologically diverse forest and contaminated rivers, poisoning the fish that serve as one of the local indigenous communities main food supplies. Furthermore, George Monbiot has revealed RBS  recently lent £8 billion to other companies in Canada who are mining the tar sands, an operation he has critiqued as the “biggest single industrial cause of carbon emissions”.

Another example of misplaced, damaging investments is the Irish company Tullow Oil, who earlier this year used RBS capital to embark on an oil exploration mission in a region of Africa that’s being subjected to a resource-driven civil war: the conflict over natural resources on the border of the Democratic Republic of the Congo and Uganda has led to the displacement of over 30,000 people, adding to the existing 1.4 million displaced people in the area.

In my view, these questionable investments, which are facilitated by public money, provide a compelling case for the Treasury to intervene.

However, compared to many environmental organisations, who offer strong critiques but rarely provide viable solutions, WDM, People and Planet and PLATFORM are working within the constraints of a market economy; the recommendations we have put forward, which propose mandatory environmental assessments on all RBS investments, are based on the realities that we are approaching peak-oil and that governments will very soon have to commit to more serious emission cuts.

We propose that RBS could use these changes to market their green investments and improve their reputation, thus attracting new customers, and contributing to a more environmentally stable planet. Our report offers evidence that renewable energy investment can be economically beneficial, using more sustainable banks such as the Co-operative Bank and Troidos Bank as examples.

Unfortunately, despite the evidence laid out in the report, Judge Philip Sales did not decide in our favour. He stated that the complaints over the unfulfilled ‘Green Book’ regulations were erroneous, since the criteria is open to interpretation. Furthermore, in reaction to our demand for the compulsory environmental assessment of investments he said such activities would “handicap” the sector.

We believe, however, that our case for RBS to change from the ‘Oil and Gas’ Bank to the ‘Royal Bank of Sustainability’ could be just and beneficial for all involved and we have therefore decided to appeal this decision. An appeal date is not yet set but is likely to take place within the next two months.

Saoirse Fitzpatrick works in the Campaigns and Networks department of WDM. You can keep up to date with the case at www.wdm.org.uk.

Posted by Saoirse Fitzpatrick in Green Rush | December 9, 2009 3:14PM |