Treasury faces legal challenge over RBS and ethical investment policy

The Commissioners for HM Treasury face a court battle in October for failing to impose minimum environmental and human rights standards on investments made by the largely state-owned Royal Bank of Scotland (RBS).

Mr Justice Hickinbottom ruled on 19 August 2009 that three campaign groups, World Development Movement, PLATFORM and People & Planet, which have taken this unprecedented legal action should have their claim heard by a judge. He will decide whether the case should continue to a full hearing and is of such public interest that the campaign groups should be provided with cost-protection in the litigation.

Since the injection of public money into RBS, the bank has allegedly invested in “energy companies and projects linked to climate change and human rights violations”. The hearing has been listed for 20th October.

The campaign groups say the legal challenge has already resulted in a "significant victory" in getting the Treasury to undertake an assessment of whether it should  consider applying environmental and human rights standards to RBS.
The outcome of the Treasury’s assessment was that it should not, when it comes to considerations such as climate change and human rights, go beyond what is narrowly in the ‘commercial’ interest of RBS. The campaign groups believe this decision was ‘unlawful’ and ‘flies in the face’ of the government’s wider approach on corporate social responsibility which it encourages others to follow.

A positive ruling by the court would overturn this conclusion and force the Treasury to reconsider RBS’ investment mandate.

Ian Leggett, director of People & Planet, told Philanthropy UK that the groups had no problem with the Treasury’s decision to provide support for RBS but added, "It cannot be in our interests as a country to continue to invest in highly polluting energy projects - such as coal fired power stations, tar sands or the destruction of valuable forests. The government should take this opportunity to help RBS to become a global leader in low carbon financing, not perpetuate our dependence on fossil fuels."

Julian Oram, from the World Development Movement, said, “The taxpayers’ interest would be vastly better served by RBS investing in a low carbon future than in undemocratic regimes and environmentally devastating projects around the world.”

The Treasury did not reply to requests for comment.