RBS tell us that they’ve improved on coal. Are they right?
Date: 7 August 2014
The UK’s biggest coal bank, the Royal Bank of Scotland Group has responded to WDM’s campaign for them to kick their addiction to financing companies engaged in coal mining and coal-fired power.
The response comes after over 2,700 WDM supporters emailed RBS chief executive Ross McEwan demanding that RBS pull out of coal.
In the letter, RBS’s chief sustainability officer, Andrew Cave, claims that “lending to the Oil & Gas and Power sectors combined continues to decline and is now less than half of what it was in 2008”. He also says that RBS Group, which also owns NatWest, is “the leading UK lender to renewable energy projects in the UK”. All of this sounds very good on paper but alas, much of it does not stand up to scrutiny.
Lending to oil, gas and power may have receded since before the financial crisis hit in 2008, but lending also receded across the board during this period as a result of the credit crunch. Unfortunately, lending to fossil fuel companies makes up almost as big a proportion of RBS’s lending as it did in 2008 so this figure does not signify a policy shift away from supporting fossil fuels. Also, these figures do not include lending to coal mining companies.
As for lending to renewables projects in the UK, again this is misleading. Lending to projects (project finance or structured lending) as opposed to lending to companies accounts for a tiny proportion of most banks’ lending activities (typically around 1 per cent). So while RBS may indeed be the biggest player in the tiny market for renewables project finance, these figures do not cover the vast majority of RBS’s lending portfolio in which fossil fuel lending dwarfs lending to renewables.
Unfortunately the truth behind these figures is that RBS’s investment in the coal industry continues unabated. Analysis by Banktrack has consistently shown that RBS is the top funder of the coal industry amongst UK banks and among the top 10 in the world.
However, that is not to say that no progress has been made at all. Earlier this year, RBS pulled out of mountaintop removal coal mining, a particularly devastating method which is causing cancer and destroying the lives of local people in Appalachia in the USA. This is a significant victory for campaigners and indicates that when pressure is applied, banks can and do change their policies for the better.
RBS have also announced that they are seeking to concentrate on lending to the domestic UK market and move away from foreign investments. This is also a huge opportunity for RBS to stop funding overseas coal and redirect their investments towards sectors that are of social worth here in the UK.