European banks urged to stop funding oil trade in Amazon
Indigenous people living at the headwaters of the Amazon have called on European banks to stop financing oil development in the region, as it poses a threat to them and damages a fragile ecosystem, after a new report found $10bn in previously undisclosed funding for oil in the region.
The headwaters of the Amazon in Ecuador and Peru are home to more than 500,000 indigenous people, including some who choose to live in voluntary isolation. The area, covering about 30m hectares (74m acres), hosts a diverse rainforest ecosystem, but it is threatened by the expansion of oil drilling.
Many banks have pledged to halt or limit the finance they provide to fossil fuel projects, particularly in delicate ecosystems, but the new report focuses on a grey area of bank lending: instead of project finance, the authors looked at trade finance. Project finance is used to start and develop oil wells, fossil fuel extraction, refineries and pipelines, but trade finance is used to move the oil and gas from production to refineries.
Banks make loans to companies seeking trade finance, sometimes through intermediaries, but these loans often do not fall under their standard sustainability goals. In a new report, Stand.earth Research Group and Amazon Watch traced $10bn (£7.6bn) of trade finance since 2009 from 19 European banks covering oil in the headwaters of the Amazon.
Marlon Vargas, the president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon, said: “I wonder if the executives of banks in Europe know the real cost of their financing. 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 is 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.”
An oil spill in April in Ecuador contaminated hundreds of miles of two major rivers and affected 35,000 people in river communities, and there have been ongoing oil spills in Peru. Previous oil exploration in the region resulted in about 17m gallons of crude oil being spilled. About 40% of the oil is exported to refineries in California.
Tyson Miller, the forest programmes director at Stand.earth, told the Guardian: “The Amazon sacred headwaters region is a cultural and ecological gem. It is considered to be the most biodiverse terrestrial ecosystem on the planet, maintaining the hydrological cycle for all of the Americas, and helping to regulate Earth’s climate.
“New and ongoing oil extraction in the region is a gateway to deforestation and increased agricultural and industrial activity, which is why indigenous leaders in the region have repeatedly voiced their opposition to the expansion of the oil industry, and other industrial activities in their territories.”
Several of the banks named in the report have confirmed that trade finance – unlike project finance for fossil fuels – did not fall under their standard pledges on sustainable lending, but said they were engaged in reducing their environmental impact.
Credit Suisse said: “The report refers to our oil and gas policy and mentions requirements that apply to project-related transactions with respect to indigenous peoples and areas of high conservation value. However, these policy requirements do not relate to trade finance services.”
The company added: “We are committed to a responsible approach to business, and conduct due diligence on our clients’ activities. Environmental and social risks are assessed in a bank-wide risk review process, guided by our sector-specific policies. These are regularly reviewed and updated to take account of developments, including indigenous peoples’ rights or climate change.”
ING said: “We do not recognise the calculations of aggregate exposure in the report. This might be explained due to the extended time horizon and the change in client relationship over time. For instance, two traders mentioned in the report are no longer clients of ING.”
The company added: “ING takes a strong stance against deforestation and integrates assessments of biodiversity and nature impacts in our transaction due diligence. We encourage commodity clients to obtain certifications with chain-of-custody requirements. While certification schemes for soft commodities are more widely available, comparable certifications don’t yet exist for oil and gas. This makes the traceability of oil and gas trade challenging, particularly in the trade of commodities of mixed and diverse origin.”
UBS said: “We apply an in-depth environmental and social risk policy framework to all of our transactions, products, services and activities, including commodity trade finance, in order to identify and assess environmental and social risks. As such we have declined transactions where the origin of oil is verifiably associated with breaches of our standards, such as indigenous people’s land rights or Unesco world heritage sites. We maintain ongoing dialogues with relevant stakeholders such as non-governmental organisations to inform UBS’s approach to, and understanding of, societal issues and concerns.”
BNP Paribas said: “The lack of explanations on the methodology and the aggregation of data whose provenance cannot be verified, make any analysis impossible and render us unable to comment on this report.”
Rabobank said: “Due to client confidentiality, we can’t elaborate on individual practices. What we can tell you however, is that because of our policies and client engagement strategy, Rabobank is no longer involved in trade flows extracted from the Amazon Sacred Headwaters region.”