RBS to cut lending to new coal and Arctic oil projects in new energy policy
The bank said its new policies would cover the mining, power and oil and gas sectors.
Royal Bank of Scotland will no longer fund Arctic oil projects and has pledged to cut lending to firms profiting from coal as part of an updated energy policy meant to take a harder line on climate change.
The changes – which cover the mining, power and oil and gas sectors – mean the bank will not provide “project-specific finance” to new coal-fired power stations, new thermal coal mines, oil sands or Arctic oil projects, or those involved in “unsustainable” vegetation or peatland clearing.
It will also tighten restrictions on general lending to mining firms that source more than 40% of their revenues from thermal coal, and power companies that generate over 40% of their electricity from coal.
That marks a reduction from the former threshold of 65%.
Its efforts have been commended by responsible investment group ShareAction, which has been pushing a number of firms to ramp up their environmental sustainability policies.
ShareAction project manager Sonia Hierzig said: “The strengthened energy financing policies of RBS implement many of ShareAction’s recommendations for more robust management of climate-related risks.
“They also make RBS the bank with the strongest energy sector policies out of the top five UK banks.”
She added that it was an “encouraging step forward in a relatively short space of time, and will hopefully inspire other banks to achieve similar progress”.
Members of ShareAction hit out at HSBC at the bank’s annual general meeting in April, saying it was disappointed that the lender’s energy policy made targeted exceptions for new coal-powered plants in Bangladesh, Indonesia and Vietnam for five more years.
However, it was commended by environmental groups including Greenpeace for its broader plans to phase out lending to new coal-fired power plants in “high-income countries” and reduce commitments to oil sands “over time”.
We want to help build a cleaner, more sustainable economy for the future, and these policy changes form part of our broader approach to this major issue Kirsty Britz
RBS’s new lending restrictions may spare it from the kind of protests that disrupted the Barclays AGM earlier this month, as climate change activists called on the bank to stop financing firms involved in fossil fuels.
Seven students from People & Planet stormed the stage where Barclays executives were seated, and were forcibly removed by security.
Barclays chairman John McFarlane said his bank is in the process of preparing a formal review of the fossil fuel sector that it hopes to publish later this year.
RBS director of sustainable banking Kirsty Britz said: “If we’re going to support our customers in the long run, then it means addressing the challenge of climate change and the risks and opportunities it presents.
“We want to help build a cleaner, more sustainable economy for the future, and these policy changes form part of our broader approach to this major issue.”
RBS is set to hold its AGM in Edinburgh on Wednesday when executives are expected to face a barrage of questions from shareholders over dividends, branch closures and reprivatisation of the Government’s 72% stake.