RBS: where the public money has gone
1st December, 2009
Treasury accused of writing a ‘blank cheque’ with taxpayers’ money for bank to make environmentally-damaging investments
The full extent of unsustainable investments made by the Royal Bank of Scotland (RBS) were revealed this week in a report published by a coalition of organisations.
Since being bailed out by the taxpayer in October 2008, RBS has financed a host of environmentally-damaging projects, including open cast mining in Bangladesh, tar sands exploration in Canada and a heavily criticised mining company in India.
The coalition of groups, including Platform and the World Development Movement said the investments paid for by the taxpayer put the UK to ‘shame’.
‘We’re paying for some of the most damaging mining and fossil fuel projects around the world,’ said Julian Oram, head of policy at the World Development Movement.
The report, ‘Royal Bank of Sustainability‘, has called on the body set up to manage the public investments in RBS, UK Financial Investments (UKFI), to re-focus the bank towards sustainable investments both within the UK and the rest of the world.
RBS should also sign up to the Carbon Disclosure Project (CDP), says the report, enabling UKFI to assess the climate risk of every investment the bank makes.
‘RBS could be a global leader in low carbon financing,’ said People & Planet director Ian Leggett.
‘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,’ he said.
An RBS spokesperson said they fully supported the transition towards a low carbon economy but continued to lend to all sectors of business.
‘Over recent years we have been a leading arranger of finance to the renewable energy sector and take our responsibility to play our part in this seriously.
‘As a leading corporate and commercial bank, RBS has customers in almost all sectors of business. We only provide finance to projects which meet the environmental and social standards specified by the Equator Principles.’
Unsustainable investments made by RBS in the past year include:
- Bangladesh – open cast coal mine
RBS subsidiary, ABN Amro Bank NV has a 4.75% share of GCM Resources, the UK company pushing for an open cast mine in Bangladesh. There has been fervent local opposition as it would displace approximately 40, 000 people and impact on access to clean water for approximately 100, 000 people.
- Wales – open cast coal mine
RBS has taken part in loaning £115m to Hargreaves Services, the coal operator. Hargreaves has plans to extract 7m tonnes of coal by developing one of the largest open cast coal mines in the country at Tower Colliery, near the coal-mine-cum-protest-site Ffos-y-fran in Merthyr Tydfil, south Wales.
This type of mining has been likened to a financial hit-and-run, bringing a few jobs for a couple of years and potentially leaving widespread asthma and other public health and environmental effects in the community for years to come.
RBS was the lead financial adviser to Sterlite, which is 60% owned by Vedanta, in a recent takeover bid. The bank and its ABN Amro subsidiary gave letters of credit worth $100m (£60m) to Sterlite, which is India’s biggest copper producer.[i] Vedanta is very controversial and has an appalling record on human rights.
Research from the Rainforest Action Network indicates that since Oct. 13, 2008 – when HM Treasury announced its recapitalisation of the Royal Bank of Scotland Group – RBS has extended at least $2.7 billion in debt/equity issuance underwritings to companies that own and/or are actively building tar sands extraction infrastructure and/or tar sands oil pipelines in Alberta, Canada.
- Uganda/ Democratic Republic of Congo – oil exploration
In March 2009, RBS was part of a consortium of 14 banks that lent $1,890 million to the Irish company Tullow Oil – providing in the region of $100 million itself. The bank had already helped raise £402 million by placing shares for Tullow in January 2009.
In early 2009, the company announced a major discovery of 400-1000 million barrels by Lake Albert in Uganda, just on the border with the Democratic Republic of Congo (DRC).
Tullow also holds oil exploration rights across the border in North Kivu in the DRC, which continues to be torn by strife after more than a decade of resource-driven civil war.
The border area has seen some of the fiercest fighting take place as rival armies and militias have struggled for control. An additional 30,000 refugees were displaced in North Kivu during two weeks of fighting in March, adding to the existing 1.4 million internally displaced people in the region.