The government should intervene in RBS’ business strategy to ensure it does not continue its commitment to expanding fossil fuel projects, it has been claimed.

Liberal Democrat MP Martin Horwood told politics.co.uk he in the principle of “shareholders advancing their own interests” meant the UK government should break its stated policy of “arm’s length” management of RBS.

With Britain committed to cutting its carbon emissions by 80 per cent by 2050, Mr Horwood argued, it would be worth forcing RBS to change its business strategy to suit the government’s environmental agenda.

“It is about setting an example,” he said.

“Surely we should bring our majority shares in RBS to steer change in the bank’s lending schemes.”

Mr Horwood has tabled an early day motion stating his argument. He notes that RBS’ 2006 project finance contained carbon dioxide emissions calculated to be greater than those of Scotland and states the banks’ role has been “wholly unaddressed in government policy”.

The EDM, signed by 12 MPs, calls on the government to “use its majority share in RBS to prioritise climate change as a principal concern in RBS’ lending decisions”.

It cites research by campaign groups People and Planet and Platform RBS is the bank most heavily involved in financing the expansion of fuel projects around the world.

Mr Horwood suggested RBS’ performance on environmental issues might be linked to its wider record of requiring a government takeover.

“It may not be coincidental we have a bank not following best corporate practice which needs assistance,” he added.