RBS should be made to invest in low carbon transition, campaigners say
Peta Hodge
1st December 2009
Forty public figures, including MEP Caroline Lucas, Body Shop co-founder Gordon Roddick, writer Iain Banks and environmental campaigner Tony Juniper, have written to Alistair Darling, demanding that the banks bailed out by the British taxpayer over the past year be made to help pay for the country's transition to a low carbon economy.
The letter coincides with the publication of a report – commissioned by Friends of the Earth (FoE) Scotland, the World Development Movement (WDM), People & Planet and PLATFORM – which puts the case for the publicly-owned Royal Bank of Scotland (RBS) being turned into ‘Royal Bank of Sustainability’, redirecting its investments to support renewables and decarbonisation.
The author of the report, independent consulting actuary Nick Silver, also happens to be one of the signatories to the strongly-worded letter to the Chancellor.
The letter expresses deep misgivings about the Government’s lack of stewardship of the bank since its recapitalisation a year ago, saying: “The Government has effectively written a blank cheque with taxpayers’ money to the banks to finance anything from destructive fossil fuel companies driving climate change, to hostile takeovers that threaten UK jobs.”
The letter – whose signatories include academics, environmental and anti poverty campaigners, faith groups, trade unions and MPs – continues: “By disregarding the harmful consequences of some recapitalised bank investments, the Treasury risks being charged with gross negligence in its duty to protect the interests of taxpayers.”
This critical view of RBS's investment policies post-recapitalisation is supported by those behind the ‘Royal Bank of Sustainability’ report – who cite a number of examples around the world where, they claim, RBS investments are having a damaging effect on the environment.
In the UK they highlight RBS’s £115 million loan to coal operator Hargreaves Services, which plans to extract seven million tonnes of coal by developing one of the largest opencast coal mines in the country at Tower Colliery in South Wales.
They describe this type of mining as a “financial hit-and-run”, saying it will create a few jobs for a couple of years, whilst potentially leaving widespread asthma and other public health and environmental effects in the community for years to come.
The report – whose full title is ‘Towards A Royal Bank of Sustainability: Protecting Taxpayers' Interests; Cutting Carbon Risk' – argues that UKFI, the company set up to manage the Government's shares in the bailed-out banks, should take an 'active ownership' approach to its investments with respect to environmental and social issues.
Duncan McLaren, chief executive of FoE Scotland said: "The business case for weaning RBS off its 'dirty habits' is strong and sound. By funding climate wrecking projects such as coal mines it is storing up economic woes for the future.
“But by acting as responsible owners, UKFI can begin turning the bank into a powerhouse for renewables and decarbonisation. This would be great for Scotland's economy, as well as for the climate."
Ian Leggett, director of People & Planet added: "RBS could be a global leader in low carbon financing. But to build that business two things need to happen. First, social and environmental criteria have to be a key part of RBS's investment decisions. Second, RBS needs to stop funding unconventional and controversial fossil projects immediately."
Last week Shadow Chancellor George Osborne set out how a Conservative Treasury would make a ‘green investment bank’ the centerpiece of its efforts to tackle the twin threats of climate change and energy insecurity.
Similar to those already in existence in Germany, Australia, France and Spain, he said the green investment bank would get new technologies out of the lab and on to the UK shop floor, helping Britain to decarbonise its economy, compete for business around the world and create new jobs.