Government faces calls to clean up RBS' carbon record

The government is facing fresh calls to force the banks it now has a stake in to disclose the carbon impact of their investments.

The Liberal Democrats last week tabled an Early Day Motion (EDM) urging the government to introduce new regulations requiring banks to address environmental risks in their investment decisions and exploit its majority stake in Royal Bank of Scotland to force the beleaguered bank to address its climate change record.

The EDM from Marton Horwood MP argues that there is "an urgent need for the Government's new banking regulations to include environmental concerns as well as financial concerns".

It also urges Ministers to use the government's 70 per cent stake in the bank to intervene and force it to "calculate, publish and cap embedded emissions resulting from its lending to fossil fuel projects, and to set annual targets for reducing these emissions", as well as "promote RBS investments in renewable energy, new green jobs and the infrastructure needed to decarbonise the economy ".

According to a report last year from lobby group Platform, RBS has lent more to the coal industry than any other major UK bank, while figures show that in the last six months at the same time as receiving £33bn in government bailouts the bank has provided almost £10bn in loans to carbon intensive industries.

The calls come as chair of the Financial Services Authority and the Climate Change Committee, Lord Adair Turner, puts the finishing touches to new city guidelines that are due to be published later this month.

The EDM comes as the Lib Dems also highlighted that RBS' backing of energy giant E.ON creates a potential conflict of interest as ministers consider both the company's application for a new coal fired power plant at Kingsnorth and its bid for a government-backed £1bn carbon capture and storage (CCS) project at t he site.

Lib Dem climate change spokesman Simon Hughes told The Guardian that the bidding process for the CCS demonstration project "should be put on hold until independent scrutiny can make sure there is not a conflict of interest or vested interest". He added that the decision on Kingsnorth "will be controversial enough without this added and dubious complication".

The Treasury dismissed the suggestion of a conflict of interest as unfounded, arguing that the government's involvement in the part nationalised bank was on an "arm's length basis".