This article first appeared in the Guardian Comment is Free on the 20th October 2009.

Today we are taking the government to court – Her Majesty’s Treasury to the high courts of justice on the Strand to be precise.

The application – made by Platform, World Development Movement and People & Planet – for a judicial review of the Treasury’s lack of adequate environmental and human rights considerations in the investment mandate set out for the Royal Bank of Scotland (RBS), will be considered by a judge. From here we could set a precedent that would ensure climate change criteria is adhered to when spending public money; we could also make an industry-wide push towards low-carbon financing within the finance sector that currently drives fossil fuel expansion.

After months of fiercely attempted rebuffs from the Treasury, Judge Hickinbottom called for an oral hearing that was due to last at least half a day – ordinarily oral hearings are given 20 minutes of court time. Despite the Treasury’s protestations that we the claimants “have no case”, they have assigned one of their top barristers, James Eadie, the “Treasury Devil”, to handle the case.

In the year since the initial bailout of RBS, we have seen taxpayers’ money spent on financing deals with various oil companies including: Cairn Energy, who are currently exploring the Arctic, ConocoPhillips and Tullow Oil. RBS subsidiary ABN Amro has made several loans to Vedanta, the controversial mining company that the government itself last week slammed for mistreatment of tribal peoples in Orissa, India. Most recently, a decision has been made to finance Hargreaves Services, the coal operator. Hargreaves has plans to extract 7m tonnes of coal by developing one of the largest opencast coal mines in the country at Tower Colliery, near the coal-mine-cum-protest-site Ffos-y-fran in Merthyr Tydfil, south Wales. This type of mining has been likened to a financial hit-and-run, bringing a few jobs for a couple of years and potentially leaving widespread asthma and other public health and environmental effects in the community for years to come.

The Treasury’s defence has thus far argued that UK Financial Investments (the separate company it set up to manage the shares in bailed-out banks purchased with taxpayers’ money) will not impose environmental or human rights standards on RBS. It argues that this is in order to “protect and create value for the taxpayer as shareholder”. In other words, according to the Treasury, protecting the environment and human rights would not be valued by the British taxpayers. We beg to differ. We believe the British public would not like their money to be used to fund ecological destruction, climate chaos, or human rights abuses – thousands have already signed an online petition pulling Alistair Darling up on this issue.

Hypocritically, the government urges companies and institutional investors to raise standards on environmental, social and governance issues. It has even said “environmental and human rights measures should be taken on an industry-wide basis” – essentially, “somebody ought to regulate this”, which is funny, because that’s a point we’ve made several times ourselves. Yet its first attempt to do this, the Climate Change Act, trumpeted by the government on release as the first national legal framework to curb emissions, it feebly calls a “target duty only”.

We have also released an independent report commissioned by Platform and others, entitled Towards a Royal Bank of Sustainability: Protecting Taxpayers’ Interests, Cutting Carbon Risk. Written by institutional investment expert Nick Silver, it lays out the business case for UK Financial Investments to act as a responsible investor with the shares it manages, influencing company policy in ways recommended by the UN Environment Programme Finance Initiative, the UN’s Principles for Responsible Investment and the government itself. It points out that not only will the consumption of fossil fuels financed by RBS and the UK taxpayer push us over carbon emission reduction targets but that upcoming regulatory frameworks will drastically affect the value of the so-called “safe” investments in RBS’s portfolio. Effective carbon-cutting policies and their parallel support for clean technologies should lessen demand for fossil fuels and invert the value of these investments, making RBS’s decision to press on with funding polluting industries a poor investment decision for the UK taxpayer.

This moment of financial turmoil gives rise to an opportunity to minimise the worst impacts of the climate crisis. The Treasury is legally responsible for ensuring that public money supports the transition to a low-carbon economy, instead of financing climate catastrophe, and UK Financial Instruments has to recognise that there is a clear business case for why exposing the taxpayer to increasing levels of carbon risk doesn’t make financial sense.