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Kate Blagojevic -World Development Movement: 0207 820 4900 / 07711
Mel Evans -PLATFORM: 01865 245678/ 07880 652207
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Today, an unprecedented legal battle will take place in the High Court over the Treasury's failure to stop the publicly owned Royal Bank of Scotland (RBS) investing in what campaigners describe as 'some of the most environmentally damaging and socially irresponsible projects and companies around.
The case is being brought by three small climate and social justice campaigning groups: PLATFORM, People & Planet and the World Development Movement, which has led some commentators to bill it as a 'ground breaking, David and Goliath case'.
Today's oral hearing will determine whether their claim can proceed to a full substantive hearing, likely to take place early next year. The Treasury has hired one of its top barristers, James Eadie QC, to handle the case but the campaigners are optimistic that they will be successful: Deborah Doane, director of the World Development Movement said:
"This is a classic David and Goliath battle. But we believe we have a strong case. The Treasury's decision to allow RBS to continue to invest in companies that exacerbate climate change and are linked to human rights abuses is unlawful, immoral and undemocratic. Hopefully, this case will be a pivotal point in ending RBS' destructive lending habits that go against the interests of UK taxpayers, the climate and people whose human rights are being violated.
The campaigners are represented by the leading human rights law firm Leigh Day & Co and the solicitor working on the case, Rosa Curling said:
"The legal challenge has already resulted in a significant victory for the campaign groups. The Treasury, having strenuously resisted any suggestion that it should consider applying environmental and human rights standards to RBS, has now conceded that it does have to, and has undertaken an assessment on whether such standards should be imposed. The Treasury has decided it should not. When it comes to climate change and human rights, it has decided it should not go beyond what is narrowly in the interest of RBS. However, this conclusion is unlawful. It is based on a misunderstanding of the law and flies in the face of the government's wider policies on corporate social responsibility and climate change.
The hearing coincides with the release of an independent report that finds the financial value of RBS to taxpayers is best served by requiring the bank to phase out investment in fossil fuels. The report, '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. This is consistent with best practice and legislation which has been developed over a number of years by institutional investors and the government.
Mel Evans, finance and climate campaigner from PLATFORM said:
"The court case today is clearly showing the legal reasons why the Treasury under the Company Law Act must take action to stop RBS from investing in companies that trash the climate. But there's also a business case which is demonstrated in this new report. In an increasingly carbon-constrained world, investors, and in this case, the public as owners of RBS, are exposing themselves to more and more risk in continuing to pump billions into new fossil fuel projects."
The campaigners have calculated that the carbon emissions traced back to RBS'investments in fossil fuel projects are equivalent to the annual emissions of Scotland, or Bangladesh a country of over 150 million people, who are facing huge devastation from climate change.
An example of the company and projects that RBS helps to finance is the controversial London-based mining company, Vedanta Resources. After RBS was bailed out, its subsidiary ABN-Amro acted as the lead financial advisor for Vedanta's Indian subsidiary, Sterlite in its takeover bid of Asarco in March 2009. Recently, it has been reported that over 100 people were killed in a Vedanta mine in India due to alleged lack of concern over health and safety for the workers, and the UK government last week criticised the company over the human rights of indigenous people when planning to construct a new open cast mine. The campaigners point to this as an example of the chasm between government rhetoric and action.
Ian Leggett, director of People & Planet said: "Taxpayers have already had to pick up the tab for bailing out RBS for its irresponsible lending. Yet if the government allows it to carry on investing in projects and companies in the certain knowledge that such investments will accelerate climate change, we will have to pick up an even bigger tab in the future. Investing in high carbon projects is not in shareholders' and taxpayers' interests and the sooner RBS stops supporting climate damaging projects the better."
Notes to editors:
The court hearing will take place at the High Court of Justice, The Strand. The time of the hearing is not made public until Monday 19 October.
The report 'Towards a Royal Bank of Sustainability: protecting taxpayers'interests; cutting carbon risk' has been commissioned and contributed to by Friends of the Earth Scotland, PLATFORM, BankTrack, People & Planet, Investor watch, Landman Economics and the World Development Movement. It has been written by Nick Silver, an independent consulting actuary. He is an honorary senior visiting fellow at CASS Business School and chairman of the actuarial profession´s Resource and Environment Group. The foreword has been written by Dr. Craig Mackenzie, Director of the Centre for Business and Climate Change, University of Edinburgh Business School.
The report can be found here
In March 2009, RBS was the lead financial advisor to Sterlite (60% owned by Vedanta)in the company´s bid to take over Asarco; the proposed acquisition is backed by two letters of credit from RBS/ABN-Amro to the tune of US$ 100 million, RBS participated in a loan to Vedanta plc which apart from being the worst of the large London-based mining companies in terms of human rights violations, poor corporate governance and violation of laws, is also constructing a thermal coal power station to power one of its Indian bauxite operations; and a chimney collapse at the construction site recently killed up to 100 workers because of the alleged appalling lack of attention to safety. See the London Mining Network press release at http://londonminingnetwork.org/2009/09/korba%E2%80%99s-killing-field
Vedanta has also come under fire from the British government in an unprecedented attack on a FTSE 100 company, the government ruled that Vedanta "did not respect the rights" of the area's indigenous people; "did not consider the impact of the construction of the mine on the rights"; and "failed to put in place an adequate and timely consultation mechanism". The report concluded that a change in the company's behaviour' was "essential". http://www.guardian.co.uk/business/2009/oct/12/government-criticises-mining-company-vedanta
PLATFORM has calculated that the embedded emissions from project finance attributable to RBS was 44 million tonnes of CO2 in 2006. This is just over Scotland's total emissions of 43 million tonnes in 2007 - Greenhouse Gas Inventories for England, Scotland, Wales and Northern Ireland: 1990 €2007, AEA Technology report for Department of Energy and Climate Change, The Scottish Government, The Welsh Assembly Government, The Northern Ireland Department of Environment. http://www.airquality.co.uk/reports/
RBS' 44 million tonnes of CO2 is also equivalent to Bangladesh which emitted 39 million tonnes in 2006 according to the Energy Information Agency.
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Since its bail out, RBS has taken part in an estimated £10 billion in loans to coal, oil and gas companies including: £6 billion to controversial energy giant E.ON
In January 2009, RBS helped raise £400 million for the Irish company Tullow Oil, and in March 2009 RBS was part of a consortium of 14 banks that lent £1.4 billion to Tullow Oil. Tullow Oil is involved in the exploration and extraction of oil on the border between Uganda and the Democratic Republic of Congo (DRC). This area has seen some of the fiercest fighting in an extractive resource-driven civil war as rival armies and militias have struggled for control of the land, leading to thousands of civilian deaths and refugees.
RBS has helped to raise £116 million for Cairn Energy, a Scottish oil company, to be used for 'accelerated drilling' in arctic Greenland.
The World Development Movement (WDM) tackles the underlying causes of poverty. We lobby decision makers to change the policies that keep people poor. We research and promote positive alternatives. We work alongside people in the developing world who are standing up to injustice. http://www.wdm.org.uk/
For over 20 years, PLATFORM has been bringing together environmentalists, artists, human rights campaigners, educationalists and community activists to create innovative projects driven by the need for social and environmental justice. http://www.platform.org/
People & Planet is the largest UK student campaigning organisation, with more than a hundred groups in universities, colleges and schools taking action on world poverty, human rights and the environment. For more info, see http://peopleandplanet.org/