- A new report by Amazon Watch and Stand.Earth finds that most banks have failed to implement policies that would prevent the worst impacts of the oil industry in the Amazon.
- Of 14 banks assigned a score in the report, 11 were listed as being at “high” or “very high” risk of contributing to deforestation, corruption, pollution, and the violation of Indigenous rights.
- The report’s authors say a blanket exclusion for any oil-related activities in the Amazon is the only way to ensure its protection.
U.S. and European banks are invested in oil extraction that threatens the Amazon biome, and their environmental and social risk (ESR) policies aren’t strong enough to prevent its worst impacts, says a new report by Amazon Watch and Stand.Earth. The report assigned scores to 14 banks that were based on an analysis of their ESR policies and their current portfolio of investments. Eleven were listed as being at “high” or “very high” risk of contributing to deforestation, corruption, pollution, and the violation of Indigenous rights.
“A lot of banks have deforestation commitments related to their forest and agricultural policies, but they didn’t extend these to the oil sector policies they drafted,” said Angeline Robertson, a senior researcher with Stand.Earth and co-author of the report.
The worst offenders, called “laggards” in the report, were JPMorgan Chase, HSBC, and Deutsche Bank. They received low marks due to the relative weakness of their ESR policies along with their high exposure to investments in the Amazon oil trade. Deutsche Bank, for example, was cited as having particularly weak biodiversity protection policies to go along with its large investments in state oil companies like Brazil’s Petrobras, Ecuador’s PetroAmazonas, and Colombia’s Ecopetrol.
Conversely, Dutch banks Rabobank, ABN AMRO, and ING were listed as having a combination of relatively strong risk management policies and low exposure to the Amazon oil trade. Still, no bank among the 14 earned higher than a “B” in the report’s scorecard.
Where some of the banks did have exclusion policies preventing them from financing oil exploration or extraction in parts of the Amazon where biodiversity could be threatened, those carve-outs were typically applied only to protected areas. For the most part, they did not include exclusions for Indigenous territories, despite the fact that 45% of the Amazon’s wilderness lies inside them.
In recent years, Amazon oil exploration by companies like PetroAmazonas has penetrated Indigenous territories, dividing communities and causing environmental impacts as new roads are built deeper into the jungle.
“Once you have the roads, you have roadside colonization, informal industry, deforestation, slash-and-burn agriculture, and you start to see that pattern in satellite imagery of the road with those feathery deforestation patches coming off of it, and over time it just grows and grows,” Robertson said.
In March, the U.N.’s Food and Agriculture Organization (FAO) released a report saying that deforestation rates are “significantly lower” in areas where Indigenous territories were formally recognized than in those under other forms of management. The Amazon Watch and Stand.Earth report said that while banks’ ESR policies did often include requirements that the oil projects they finance carry out negotiations with Indigenous communities, they often listed “consultation” or “compensation” as being on par with the stricter prerequisite of “consent.”
“[T]hey are complicit in the imposition of extractive activities and violence in our territories,” said Gregorio Mirabel, executive coordinator of Coordinadora de las Organizaciones Indígenas de la Cuenca Amazónica (COICA).
“Latin America is the region with the highest number of murders of indigenous leaders and environmentalists. We are also subject to persecution and criminalization when we defend our territories,” he added in an email to Mongabay.
The report also said that most banks didn’t have policies that prevented them from financing companies with a track record of polluting or engaging in corruption. UBS, Société Générale, Credit Suisse, Natixis, Goldman Sachs, Citigroup, and Crédit Agricole were all tied to revolving credit facilities (RCFs) granted to the Cyprus-based Gunvor Group, for example, which was recently found to have participated in a massive bribery scheme aimed at obtaining oil contracts in the Ecuadoran Amazon.
Because RCFs are pooled lines of credit for commodity traders that multiple banks participate in, they are often exempt from the environmental, social and governance (ESG) policies of the individual banks that nonetheless profit from them, Robertson said.
The report’s authors said the risks of deforestation and Indigenous dispossession in the Amazon are ultimately too high for banks to finance the oil industry there no matter how strong their ESR policies are. Citing the International Energy Agency’s (IEA) finding earlier this year that “net-zero” emissions by 2050 will be impossible if any new oil and gas fields come online, they called for a blanket exclusion policy to be applied to the Amazon biome as a whole that would prevent any financing for oil exploration or extraction there.
“There are so many international organizations calling for the curtailment of oil and gas and fossil fuels,” Robertson said. “And you have an ecosystem like the Amazon biome that is so vulnerable to climate change and so biodiverse, the argument is there to just not be involved in oil and gas extraction in the region at all.”
HSBC, Credit Suisse, and JPMorgan Chase did not respond to Mongabay’s inquiries about the report or declined to provide comment.
Banner image: An oil spill in the Indigenous Peruvian community of Cuninico in 2014. Image by Barbara Fraser.