A report by environmental organisations Stand.earth and Amazon Watch details how the banks are financing the trade of 'controversial oil' from the Amazon Sacred Headwaters region in Ecuador to international destinations in the US
Tyson Miller, Stand.earth’s forest program director, said: 'It’s time for European banks to play a responsible and constructive role in advancing life over profits' (Credit: Flickr/Julien Gomba)
Representatives for Indigenous groups have called for European banks to end the trade of Amazon oil.
This comes as a new report released today (12 August) by North America-based environmental organisations Stand.earth and Amazon Watch details how the banks are financing the trade of “controversial oil” from the Amazon Sacred Headwaters region in Ecuador to international destinations in the US.
The analysis claims the banks are “actively complicit in the impacts of the oil industry on the Amazon rainforest” – including oil spills, harm to Indigenous peoples, and climate destruction – “despite making previous climate and human rights commitments”.
The report comes just a week after the Indigenous Federation of United Communities of the Ecuadorian Amazon (FCUNAE), which represents communities affected by a major oil spill in April, presented a series of lawsuits requesting precautionary measures to protect groups in danger of another possible oil spill due to the erosion of the Coca River and to guarantee rights protected by the constitution.
Impact of European bank financing for Amazon oil trade
Tyson Miller, Stand.earth’s forest program director, said the financing from the banks “perpetuates human rights abuses, worsens the climate crisis, and further tethers Ecuador’s economy to the boom-and-bust cycles of natural resource extraction”.
“Given the recent oil spill and calls from Indigenous federations in Ecuador for a moratorium on oil extraction, any bank committed to protecting Indigenous rights and the climate should end financing the oil trade from the Amazon Sacred Headwaters until new safeguards and commitments for no expansion are put in place,” he added.
“It’s time for European banks to play a responsible and constructive role in advancing life over profits.”
What are the Amazon Sacred Headwaters?
The Amazon Sacred Headwaters is one of the most biodiverse ecosystems on the planet and helps “regulate essential planetary ecosystem services such as the hydrologic and carbon cycles”, according to the report.
The region is home to more than 500,000 Indigenous peoples from over 20 nationalities, including peoples living in voluntary isolation on their ancestral lands.
The analysis notes that new and ongoing oil extraction in the region is a “gateway to deforestation and contributes to violations of Indigenous peoples’ rights”.
In recent years, Indigenous leaders in the region have voiced their opposition to the expansion of the oil industry and other industrial activities in their territories.
European banks providing financing for Amazon oil trade
The top banks listed in the report that provide finance for oil trading in the region are ING Belgium, Credit Suisse, UBS, BNP Paribas, Natixis, and Rabobank – with 19 organisations assessed overall.
Since 2009, it claims these banks and other private financial institutions have provided trade financing for about 155 million barrels of oil from Ecuador to refineries in the US, for a total of $10bn.
More than 40% of those exports go to refineries in California alone, according to the report.
The environmental groups calculated that the transported oil contained about 66 million metric tonnes of CO2, which is the equivalent to the annual emissions from 17 coal-fired power plants.
The analysis notes that almost all of the banks have sustainability pledges or commitments to uphold Indigenous rights, as signatories of either the Equator Principles and/or the UN’s Principle for Responsible Banking initiative.
It added that several of the organisations have policies specific to the Arctic, including Credit Suisse’s new sustainability initiative designed to “enhance consideration of biodiversity”.
But the report claims the financing of the Amazon oil trade “violates the spirit of those commitments”.
Steps for investment banks to take
The report outlines the following steps investment banks must take to assure consistency with the environmental and social commitments they have made:
- Promote transparency of any trade financing and physical trade of commodities;
- Ensure respect for Indigenous rights and compliance with free, prior and informed consent (FPIC) related to any project or trade financing as enshrined in the UN’s Declaration on the Rights of Indigenous Peoples and International Labor Organization Convention 169;
- Stop financing Amazon oil-related activities, including trade, unless adequate remediation of contamination occurs, rights to health of local communities is guaranteed, safeguards are in place to prevent future spills, and governments in the region commit to no new expansion of oil development and a wind-down of existing wells in line with global climate goals and collective Indigenous visions for the region;
- Focus investments on opportunities in Ecuador and other countries in the Amazon and world that truly meet responsible banking commitments and respect Indigenous rights; and
- As debt for nature and climate funds develop, expand policies to exclude all Amazon-derived oil from project and trade financing until all Amazon basin countries commit to no new expansion of oil development and a wind-down of existing wells in line with collective Indigenous visions for the region and global climate goals.
The analysis claims companies and investors are “becoming increasingly concerned” about the “significant financial risks stemming from biodiversity loss and the destruction of natural ecosystems”.
European banks respond to the report
In responding to the report, Netherlands-based Rabobank said in a statement it had stopped financing Ecuadorian crude cargoes earlier this year and the concerns raised were in line with its “policy commitments” and part of the due diligence in its “trade finance operations”.
Fellow Dutch bank ING and France’s Natixis pledged to look into issues raised in the analysis, while Swiss company UBS claims to have already declined some crude oil transactions in the region due to concerns about indigenous land rights.
Although Zurich-headquartered Credit Suisse acknowledged the importance of the findings, it believes the issues raised do not represent any breach of any of its oil and gas lending policies, Reuters reported.
Elsewhere, French bank BNP Paribas said the methodology of the report was “opaque” and questioned how the authors had arrived at estimates of banks’ financial exposures, while Germany-based Deutsche Bank declined to comment.