European lenders quit Amazon oil business after campaigners’ scrutiny
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ZURICH / LONDON, January 25 (Reuters) – Credit Suisse (CSGN.S), Dutch lender ING (INGA.AS) and BNP Paribas in France (BNPP.PA) have decided to stop funding the trade in crude oil from Ecuador, banks said Monday, after pressure from activists to protect the Amazon rainforest.
The role of European lenders in supporting trade came under scrutiny in August, when a report by advocacy groups Stand.earth and Amazon Watch named six European banks as the main financiers of Ecuadorian oil exports. to American refineries.
Indigenous leaders fighting to prevent further oil exploration in their land said the role of banks had made them complicit in oil spills, violations of land rights and destruction of the rainforest by the oil industry Ecuadorian.
“The involvement of the banks is an important step,” Marlon Vargas, president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon, told Reuters. “Banks should finance other forms of economic development, but not oil extraction.
The August report named the three banks alongside the French Natixis (CNAT.PA), Swiss UBS (UBSG.S) and the Dutch bank Rabobank as the main backers of shipping approximately $ 10 billion worth of Ecuadorian oil to the United States over the past decade.
Activists had accused the banks of using double standards to make climate change commitments while supporting the oil trade from Ecuador, where the industry plans to drill hundreds of wells in the national park. Yasuni, a UNESCO World Heritage Site.
The Amazon plays an essential role in regulating the Earth’s climate by absorbing carbon dioxide, one of the main greenhouse gases responsible for global warming.
ING said it shares many of the report’s concerns about protecting the Amazon and has decided to review its exposure to Ecuador’s oil and gas exports.
“COMMITMENT IN PROGRESS”
“Our research and the resulting commitments are ongoing,” the bank said. “In the meantime, we have decided not to enter into new contracts for the financing of the trade flows of oil and gas from the Ecuadorian Amazon.”
Credit Suisse said it had decided to phase out funding for oil exports from the Ecuadorian and Peruvian Amazon after fulfilling existing commitments.
“Credit Suisse regularly reviews and updates its sector policies,” the bank said.
BNP Paribas announced that it had decided in December to exclude oil exports from the Ecuadorian region of Esmeraldas, which houses Ecuador’s export terminal for oil from its Amazon region.
“BNP Paribas is committed to continually improving its sustainable development strategy,” said the bank.
Rabobank said in August that it had stopped funding shipments of Ecuadorian crude earlier in 2020.
UBS, for now, has refrained from committing to end its funding of Ecuadorian crude oil shipments. The bank said it is maintaining dialogue with advocacy groups and is committed to the highest environmental and social standards.
“As such, we have refused transactions where the origin of the oil is verifiably associated with violations of our standards, such as the land rights of indigenous peoples or UNESCO World Heritage sites,” said declared the bank.
Natixis, for its part, financed shipments of 5.5 million barrels of oil from the Ecuadorian Amazon from July to December, more than double the volume it supported in the first half, according to an analysis of the data. US customs by Stand.earth and Amazon. To concern.
Natixis said it continued to “proactively” screen transactions for potential environmental or social risks and understood that financing Ecuador’s oil exports could encourage industry projects to expand into the world. Yasuni National Park.
“In view of this situation, Natixis has refused to finance new clients involved in Ecuador’s oil exports since mid-2020 and has reduced the number of existing clients it works with in this area,” said a Natixis spokesperson.
“CULTURE EXAMINATION”
The Ecuadorian oil industry says taking care of the environment and maintaining a harmonious relationship with the people living in its areas of operation is a priority. State-owned oil company Petroecuador did not respond to a request for comment.
With oil production of around 0.5 million barrels per day, or 0.5% of global volumes, according to BP’s statistical review, Ecuador ranks among mid-sized producers. Much of its oil is used to pay off the country’s debts to China.
The banks’ move could make it harder to export oil from Ecuador, as the trading companies that used their services will have to find other banks to support their transactions. Swiss trading house Gunvor, identified in the report as one of the companies trading Ecuadorian crude, declined to comment.
“All banks involved in this trade will be increasingly scrutinized unless the Ecuadorian government imposes a moratorium on new drilling and tackles environmental damage and rights violations caused by existing production,” said Tzeporah Berman, director of international programs at Stand.earth.
“Ecuador is going to need help getting out of crushing debt, but further drilling in primary forests without the consent of indigenous peoples is not the solution.”
As asset managers are under pressure to rebalance their portfolios to slow climate change, tropical deforestation and biodiversity loss, the position of emerging market governments on these issues is increasingly under scrutiny.
“We need to position ourselves as investors with countries that take an active approach to government and environmental concerns, and it is obvious that some countries are better placed than others to do so,” said Carlos de Sousa, manager emerging market debt portfolio at Vontobel Asset Management. , which is exposed to sovereign bonds of Ecuador.
Reporting by Matthew Green and Simon Jessop in LONDON and Brenna Hughes Neghaiwi in ZURICH; additional reporting by Alexandra Valencia in QUITO and Dmitry Zhdannikov in LONDON Editing by Rachel Armstrong and David Gregorio
Our standards: Thomson Reuters Trust Principles.
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