|April 25, 2016|
RBS pulls back fossil fuel investments as green deals grow
|Royal Bank of Scotland has reduced its global lending to oil and gas companies and doubled its green energy loans in the UK to £1bn a year, according to new figures released to the Guardian.|
The move may indicate a change of direction for the bailed-out bank, which was until recently one of the world's biggest financiers of fossil fuels and has been repeatedly targeted by climate change campaigners.
The shift results largely from its withdrawal from North American and Asian markets as part of a retrenchment to the UK. The bank remains 73% state-owned after a £45bn taxpayer bailout in 2008 and 2009. From the start of April, it ended all business in Canada, where it was a significant funder of heavily polluting tar sands projects.
RBS said it was also guided by environmental risks and would not finance any new tar sands projects. In December the bank ended its lending to mining companies whose sole focus is coal.
TheRBS figures show its global exposure to oil and gas in 2015 fell 70% compared with 2014, down from £22bn to £6.6bn. The exposure to mining and metals, which includes coal, also fell, from £4.7bn to £2.1bn.
The reduction comes following a steep slump in the oil and coal sectors in 2105, and declining investment by most financial institutions. The true test of the bank's green lending credentials would come if those markets recovered.
Financial institutions are shifting away from fossil fuel investments as the Bank of England, the World Bank and others warn that action to cut carbon emissions could leave coal, oil and gas assets stranded. On Friday, the world's biggest sovereign wealth fund, held by Norway, dumped 52 coal companies including the UK firm Drax.
Luke Sussams, a senior analyst at the finance thinktank Carbon Tracker, said: "It is encouraging that financial institutions are beginning to understand the risks posed to fossil fuels by the low-carbon transition. The true litmus test, however, will be if RBS holds to this lending trend if the oil price rebounds in the short term."
The proportion of the bank's global structured financing, which is used to fund major projects, also changed, with renewable energy projects accounting for more than 90% in 2015, up from 67% in 2014.
In the UK, 100% of the structured financing went to green energy projects. Overall sustainable energy lending doubled in 2015 to £1bn, which according to data from InfraDeals made RBS the largest lender to the UK renewable energy sector.
Projects the bank backed included the largest floating solar project in Europe. It has also increased a programme of energy audits, which help businesses find ways to cut energy consumption and provides funding for installation costs.
On fossil fuel funding, RBS said in a statement: "We are supporting customers in carbon-intensive industries to diversify and move away from the most high-impact activities. We will work with them to try and achieve this, but where the impacts are too high, we have proven we are prepared to withdraw our support."
Fionn Travers-Smith, the campaign manager of Move Your Money, which has organised boycotts of RBS in the past, said: "While this new direction of travel is welcome, it should be greeted with a degree of scepticism from the bank formerly promoted as 'the oil and gas bank'."
He said most of the biggest coal producers were highly diversified and that Anglo American, BHP Billiton and Glencore, which have received more than $3bn in corporate loans from RBS since 2004, were not affected by its policy changes.
"If RBS wants to be taken seriously as an environmental bank it must divest completely from fossil fuels," he said.
Investors controlling more than $3.4tn have already pledged to move their funds out of fossil fuels.