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Sun 25 October 2020
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Monica Piccinini reveals the double standards of the financial institutions that are enabling the destruction of the Amazon rainforest

“Here is $20 billion. Stop destroying the forest and, if you don’t, then you will face significant economic consequences.”

These were the words of Democratic presidential candidate Joe Biden in a US election debate at the end of September. He also committed to the US re-joining the Paris Agreement on climate change, which Donald Trump has extracted the country from.

On the surface, it seems like Biden is making a strong commitment to protecting our global environment – but it is unlikely that his ambition will be delivered by simply throwing money at the problem.


Profit Is All

Stripping the Amazon of its natural resources has become a rich vein of profit and return for many large global corporates, the lion’s share of them being American.

Deforestation is driven by many factors, but one of the largest is oil exploration and extraction. The western Amazon contains gas and oil deposits sitting below indigenous territories and it is estimated that oil reserves in this region contain 5.5 billion barrels of crude, nearly an entire year’s worth of US oil consumption. But decades of oil extraction in this region has shown evidence of the total destruction of local ecosystems.

A recent example of a catastrophe in the region was a landslide that ruptured three pipelines along the Coca River in Ecuador, spilling 15,800 barrels of crude oil in April. Common toxic elements found in the water near oil operations include lead, barite, chromate, nickel, potassium chloride, polycyclic aromatic hydrocarbons and copper.


Double Standards

According to a report by Amazon Watch, the five main institutions funding fossil fuel exploration in the western Amazon are Citigroup, JP Morgan Chase, Goldman Sachs, HSBC and BlackRock.

These prestigious organisations have together financed more than $3 billion of oil and gas operations in this region between 2017-2019 and hold about the same amount in stocks in the oil companies involved.

This is despite many of them professing a commitment to sustainability and green investing. For instance, JP Morgan Chase claims to be committed to using 100% renewables in its direct operations by the end of 2020 and to providing $200 billion in “clean financing” until 2025.

On the issue of climate change, Goldman Sachs’ CEO, David Solomon, recently wrote about his firm’s decision to place a greater strategic emphasis on “sustainable investment” as “there is not only an urgent need to act, but also a powerful business and investing case to do so”.

While HSBC, on its website, pledges to minimise its impact on the environment and to “help the global transition to a low-carbon economy”, BlackRock announced in January its decision to join Climate Action 100+, the world’s largest group of investors by assets, pressuring companies to act on climate change. Such posturing makes the actions of these financial organisations appear all the more cynical.

How can it be acceptable for these institutions to claim environmental credentials and yet be financing the very companies that are impacting the environment so dramatically?

“Even during the COVID-19 pandemic, oil companies continue to seek expansion, putting indigenous peoples at even greater risk,” says director of Climate and Finance at Amazon Watch, Moira Birss. “These banks cannot keep their promises about climate and human rights while continuing to finance the Amazon oil trade.”

The oil exploration companies exploiting the oil reserves in this sensitive ecosystem would not be operating in the western Amazon unless they were financed by banks and asset managers. Wall Street money is partly responsible for financing these operations.

Britain has been involved through Amerisur, a British petroleum exploration and production company with operations in Paraguay and Colombia. It has partnerships with Occidental Petroleum and Oil and Natural Gas Corporation. In 2019, it accepted an acquisition bid by GeoPark, financed by Citigroup.


Not Just American Institutions

But the story doesn’t stop with American corporations.

European institutions also carry responsibility for supporting oil exploration in the region, with almost half of the banks financing the flow of Amazon oil based, or with branches, in Switzerland. Banks and midstream traders in oil from the Amazon region facilitate trade in Amazon oil via Geneva and other European banking centres. 

BANKTOTAL BARRELS OF AMAZON OILUS REFINING CLIENTS
ING BELGIUM, GENEVA29,078,546Chevron, Valero, ExxonMobil, Marathon, PBF Energy, Phillips 66
CREDIT SUISSE AG GENEVA26,610,368Chevron, Valero, ExxonMobil, Marathon, PBF Energy, Phillips 66, CITGO, Total SA
NATIXIS PARIS26,570,204Chevron, Valero, Marathon, PBF Energy, Phillips 66, CITGO
BNP PARIBAS (SUISSE) S.A. GENEVA/PARIS24,122,686Chevron, Valero, ExxonMobil, Marathon, PBF Energy, Phillips 66
UBS SWITZERLAND AG GENEVA14,910,624Chevron, Valero, Marathon, PBF Energy, Phillips 66
RABOBANK U.A. UTRECHT10,882,915Chevron, Valero, Marathon, PBF Energy, Phillips 66, CITGO
Amazon Watch: Amount of Amazon Oil financed by European Banks

Interestingly, nearly all these banks have signatories to the Equator Principles and all are signatories to the United Nations Environment Programme Finance Initiative’s Principles of Responsible Banking. They also have some form of environmental, social and governance risk assessment. Yet, they persist in boosting the Amazon oil trade.

“I wonder if the executives of banks in Europe know the real cost of their financing,” says Marlon Vargas, the president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon. “How can they possibly sleep peacefully knowing their money leaves thousands of indigenous peoples and communities without water, without food, and in devastating health conditions due to the pollution of the Coca and Napo rivers?

“It’s time for the banks, companies, and consumers of the oil extracted in the Ecuadorian Amazon to acknowledge how their businesses affect our territories and way of life.”

The players that contribute to the devastation of the western Amazon through oil exploration are many, but this unsustainable practice needs to cease and institutions must take accountability for their modus operandi. The stakes are high, not only in terms of these institutions’ legal, political and reputational risks, but also in terms of the negative ecological and human impact it is causing to the planet.

These companies may have signed treaties and made countless promises, but unless this is accompanied by a cessation of dirty financing and investment, a hefty price tag will be attached to their irresponsible actions.


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