Pressure grows on world banks to end financing for oil production in Ecuadorian Amazon

Aug 12, 2020

International banks who claim to be committed to backing action on climate change face allegations of double standards from indigenous groups in Ecuador after a report named them as major players in the trade in oil from the Amazon rainforest.

An oil field in Ecuador’s Amazon region.

Stand.earth and Amazon Watch said ING, Credit Suisse, Natixis, BNP Paribas, UBS and Rabobank were the largest backers in the shipment of about $10 billion of dollars of Ecuadorian crude to U.S. refineries over the last decade.

Each of the banks identified, having reviewed the report referred to environmental commitments they had made, such as to back the 2015 Paris climate accord, protect forests and support United Nations sustainable development goals.

But indigenous communities resisting oil industry plans to push deeper into their territories said any bank backing the trade from the Amazon was complicit in growing threats to the world’s largest rainforest.

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“The banks are engaging in double standards,” Marlon Vargas, president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon, told Reuters. “To devastate the Amazon is to devastate life itself.”

Spanning nine countries in South America, the Amazon rainforest faces worsening wildfires and clearing for agriculture and mining. About 15-17% of the original forest has been destroyed, mostly since the 1970s, scientists say.

The rainforest plays a vital role in regulating the Earth’s climate by absorbing carbon dioxide, which is one of the main greenhouse gases responsible for global warming. Scientists warn further damage could push the Amazon past a tipping point where it becomes a major emitter of the gas.

Rabobank, of the Netherlands, said in a statement it had stopped financing Ecuadorian crude cargoes earlier this year, adding that the concerns raised were “in line with our policy commitments and part of the due diligence in our trade finance operations”.

Both France’s Natixis and Dutch bank ING pledged to look into the concerns raised in the report. Swiss bank UBS said it already had declined some crude oil transactions from the region due to concerns about indigenous land rights.

Credit Suisse said the issues raised did not represent any breach of any of its oil and gas lending policies and it regularly reviewed its policies on environmental and social risks.

French bank BNP Paribas said the report’s methodology was “opaque” and questioned how the authors had arrived at estimates of banks’ financial exposures.

The report also said Deutsche Bank had played a smaller role, including financing a cargo of crude from Ecuador in April. The bank, which last month said it was tightening its policies for fossil fuel lending, declined to comment.

As climate change intensifies, European banks have increasingly restricted backing for some heavily-polluting projects, such as extracting oil from Canadian tar sands or the Arctic, and coal-fired power plants.

But providing the specialist financing that enables a global trade in cargoes of oil, natural gas and coal – known as trade finance – is coming under greater scrutiny.

“As banks commit to align their financial services to the Paris goals, this opens up a new frontier of reputational risk,” said Bruce Duguid, head of stewardship at British asset manager Federated Hermes, which advises clients with more than $1 trillion in assets.

Much of the trade in Amazon oil passes through banks or their subsidiaries based in Switzerland, which is a major hub for the global oil trade, the report said.

In Ecuador, which depends on oil exports pumped mostly by state-owned Petroamazonas for a third of its public sector revenues, indigenous groups say that concessions have often been awarded without their consent.

An Ecuadorian court ruled last year that the Waorani people had not been properly consulted and banned drilling on half a million acres of their territory.

Last week, Amnesty International published an appeal for the protection of women in the Ecuadorian Amazon who say they have faced death threats for resisting oil extraction, mining and logging. It is unclear who is behind those threats.

“Banks need to respect indigenous rights, ” Tyson Miller, who heads the forest programme at Stand.earth, said. “They are violating the spirit of their own environmental policies.”

Fears over the impact of oil extraction in the Amazon were heightened in April when a pipeline ruptured, depriving 27,000 indigenous people of their main water source.

And plans to drill hundreds of additional oil wells in Ecuador’s Yasuni National Park, which sits atop a major concession, have caused alarm. Home to jaguars, howler monkeys, pink dolphins, macaws and toucans, the UNESCO World Heritage Site is one of the most species-rich habitats on the planet.

“May these banks contribute to the conservation and protection of Mother Earth,” Sandra Tukup, of the Amazon’s Shuar community, said.

The energy ministry and Petroamazonas did not respond to requests for comment.

“Our priority is to take care of the environment and maintain a harmonious relationship with the communities in our operational areas,” General Manager Carlos Bermeo wrote in a Petroamazonas magazine last month.

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