June 29, 2009 11:30 pm

Green groups to sue over RBS investments

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Environmental groups on Monday night launched what could be a landmark lawsuit against the Treasury to force it to ensure that taxpayers’ money invested in the Royal Bank of Scotland supports only projects that satisfy minimum green and human rights standards.

The move is the latest sign of how the government’s stakes in some of Britain’s biggest commercial banks could affect the companies’ operations.

Three groups of environmentalists – the World Development Movement, Platform and People & Planet – are behind the case, which has been lodged at the High Court.

They claim the Treasury has breached its own policy to tackle climate change and reduce carbon emissions by using public funds to bail out RBS, which once marketed itself as “the oil and gas bank” and has long been one of the top lenders to the energy industry.

The three groups are now seeking to force the government to assess RBS’s lending portfolio to ensure that the embattled bank is investing only in projects that promote “a sustainable and ethical future”.

The groups bringing the challenge claim that RBS, in contrast to rivals such as Barclays and HSBC, has failed to make a binding commitment to basic low-carbon principles.

So-called “judicial review” inquiries into the legality of government actions and policies are costly and notoriously difficult to win. The case against the Treasury is without precedent in the UK, legal experts said. However, the three campaign groups backing the review hope to follow in the footsteps of past cases that, seemingly against the odds, have triggered explosive and ultimately conduct-changing revelations.

Last year’s judicial review into the Serious Fraud Office’s decision to scrap a corruption probe into BAE Systems, for example, led one top judge to conclude that the administration of Tony Blair, the former prime minister, had put the criminal justice system under threat.

Leigh Day & Co, the law firm bringing the environmentalists’ case, has an established record of challenging the government on issues ranging from torture to asbestos poisoning.

RBS is 70 per cent owned by the government after being brought to the brink of collapse last October following a series of rash acquisitions.

The groups say they have no issue with the government’s decision to provide financial support to the bank. But they contend that the Treasury’s failure to impose green standards on RBS, or to undertake some type of minimum assessment of the environmental impact of its lending decisions, violated its own guidelines.

Rosa Curling, a lawyer at Leigh Day, said: “The government has the power and control to ensure public money provided to UK banks is not invested or lent to projects that harm the climate or individual human rights”.

Ian Leggett, People & Planet’s director, said: “The government now controls RBS and has an exceptional opportunity to drive investments in low carbon jobs and infrastructure, not to repeat the recklessness of the past.

“If we are to stand a chance of stopping climate change, the first priority is to make a clear and irreversible commitment to stop investing in high-carbon companies and projects.”

The Treasury declined to comment on the case.

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