It’s been an interesting week as far as testing the teeth of the Companies Act 2006, who’s pulling the strings of both Gordon Brown and the judiciary in this country and if the government’s rhetoric around CSR, carbon reduction and climate change is anything more than just that – rhetoric.

As things stand today, the answer seems to be that the Companies Act 2006 is toothless, the Treasury controls Gordon Brown (in an ironic twist!) and the government has no intention of delivering on any of its commitments around carbon reduction and CSR.

All this was achieved in a single High Court action last week, when a coalition of environmental groups attempted to sue the Treasury for allowing the taxpayer-controlled RBS (LON:RBS) to continue to invest in carbon-intensive firms.

In a nutshell, since it was bailed out by the government last year, RBS has been involved in loans to coal, oil and gas companies worth an estimated £10bn, including a £6bn deal with energy giant E.ON and a £1.4bn loan to Irish firm Tullow Oil, which is involved in the exploration and extraction of oil on the war-torn border between Uganda and the Democratic Republic of Congo. RBS and its subsidiary, ABN Amro also provided letters of credit to Sterlite, a company majority owned by the mining firm Vedanta, which itself is at the centre of a major row over plans to build an opencast bauxite mine near the holy mountain of Niyamgiri in the Indian state of Orissa.

So, we have taxpayer-funded lending to finance dirty energy and increased carbon emissions and to desecrate a culturally sensitive area of India. The Treasury brought in a top QC and, amid cries from RBS that it is following the rules (much as the MPs did over the expenses row), the judge blocked the request from lobby groups World Development Movement, PLATFORM and People & Planet for a Judicial Review to be launched over the Treasury’s alleged refusal to adequately consider the environmental and human rights impacts of RBS investments, upholding the Treasury’s argument that it had undertaken an assessment of whether it should influence the bank’s lending policies and ruled that the company should be managed in a “commercial” manner.

… in complete contradiction of S.172(1)(d), which states “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to [..] the impact of the company’s operations on the community and the environment”.

Deborah Doane, director of WDM, confirmed that the group would be seeking an appeal, saying “essentially, the judgement means that RBS’ profits come before the climate and human rights of people”.

Now, while this should not surprise any of us, it has knocked back any expectation from many in the corporate sector that it can expect real support from government in achieving the high targets it has set for UK carbon reduction leading up to 2050 and further damages the expectations that many had of seeing real change come out of the Copenhagen Climate Change Summit in December.

It has also, regrettably, re-instated that old adage that ‘the law is an ass’ and, in the words of Mr. Bumble from the same novel “the worst I wish the law is that his eye may be opened by experience”.

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