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 had 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 the heavily polluting tar sands projects.
RBS told the Guardian it was 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.
Related: World's biggest wealth fund excludes 52 coal-related groups
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 amid a steep slump for the oil and coal sectors, 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, amid warnings from the Bank of England, the World Bank and others 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, 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 – 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 backed by RBS included the largest floating solar project in Europe. RBS 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, 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 are 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 the RBS policy changes. “If RBS wants to be taken seriously as an environmental bank it must divest completely from fossil fuels,” he said.
Investors controlling over $3.4tn have already pledged to move their funds out of fossil fuels.
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