June 15 – For decades, indigenous nations in Ecuador have used every conceivable tactic to resist the advance of the oil industry, from lawsuits and protest marches, to blocking airstrips on remote concessions marooned in roadless tracts of rainforest. In May, community leaders announced they had successfully employed a new strategy: convincing French bank BNP Paribas to rule out financing new oil and gas projects anywhere in the Amazon.
BNP Paribas unveiled the pledge on May 3 in a report on its short-term decarbonisation targets in the oil and gas, power and automotive sectors. The decision followed lobbying by Exit Amazon Oil and Gas, a coalition of indigenous representatives and U.S.-based advocacy groups. The new campaign wants global banks to implement “Amazon exclusion policies” modelled on Arctic exclusions adopted by many European and U.S. lenders in response to similar pressure to stop financing exploration in sensitive habitats.
Marlon Vargas, president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon, hailed BNP Paribas’s embrace of the concept as a “major milestone”, and urged other global banks to follow suit. But with President Guillermo Lasso pledging to double Ecuador’s production to one million barrels of oil a day by 2025 to infuse into the country’s debt-laden economy, the oil industry is gearing up for a spending spree.
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Ecuador plans to start auctioning oil concessions covering some 3 million hectares of largely untouched rainforest, which is inhabited by seven indigenous nationalities, in the south of the country later this year, according to an analysis of oil ministry documents by Exit Amazon Oil and Gas.
“Now that the global trend is to abandon fossil fuels, the time has come to extract every last drop of benefit from our oil, so that it can serve the poorest, while respecting the environment,” Lasso said in a speech last month.
With surging food and fuel prices aggravating long-standing economic grievances, indigenous groups began a fresh wave of protests in the capital Quito on June 13 to demand wide-ranging economic reforms – including a halt to expansion of the oil industry. With clashes breaking out between demonstrators and security forces, Lasso has expanded special measures used to tackle civil disorder to six of Ecuador’s 24 provinces from a previous three. Unrest in oil-producing areas has cost some 78,000 barrels of oil production since the protests started, the energy ministry says.
The climate stakes are high. Rampant deforestation for farming in Brazil, home to about 60% of the Amazon, has prompted warnings from scientists that the rainforest is nearing a tipping point where it will flip from being a net sink for planet-warming carbon dioxide to becoming a major emitter of the gas. Indigenous leaders argue that protecting the comparatively intact “Sacred Headwaters” region in Ecuador and Peru from further drilling supports the health of the entire biome.
Even before BNP Paribas made its pledge, it and other European banks had shown they are susceptible to community pressure. Over the past 18 months, French, Dutch and Swiss lenders, including BNP Paribas, Natixis, ING and Credit Suisse, have made various commitments to stop financing the international trade in cargoes of Ecuadorian crude, which make up 90% of the oil exported from the Amazon.
Those pledges came in response to a 2020 report by Stand.earth and Amazon Watch, founding members of Exit Amazon Oil and Gas, that revealed that trade finance from big European banks had enabled the sale of $10 billion worth of oil from Ecuador to U.S. refineries over the previous decade. Indigenous leaders seized on the findings to accuse the banks of double standards for trumpeting net-zero targets while backing an industry associated with deforestation, pollution and violation of land rights in a key bulwark against climate change.
BNP Paribas’s latest pledge goes a step further by ruling out financing for new oil and gas exploration projects in the Amazon altogether, building on restrictions it introduced last year to fight deforestation by the soybean and beef industries in Brazil.
“As always when we take on an additional commitment, we are currently reviewing our portfolio to assess companies that are producing out of oil and gas reserves in the Amazon, as well as in the ones developing related infrastructure,” Nathalie Jaubert, co-head of corporate social responsibility at BNP Paribas, told climate news service DeSmog when asked to respond to the criticism. “If engagement with those companies does not lead to a change in their strategy, we are ready to exit the relationship. The effectiveness of our Amazon exclusion policy will of course be linked to the number of banks joining us.”
Exit Amazon Oil and Gas says the Paris-based bank has played a significant role in putting together loans and bond issues for the oil industry in the region. In 2018, for example, BNP Paribas joined other big European and U.S. lenders in financing a $1.3 billion syndicated loan to state oil company Petroperu, Stand.earth research found. The company has long planned to push into the north Peruvian Amazon homelands of the Achuar and Wampis people, staunch opponents of drilling.
With its new pledge, campaigners hope BNP Paribas has set a precedent for others to follow. Top of their wish list is New York-based Citigroup, one of the world’s biggest financiers of fossil fuels and a major lender to Ecuador’s oil industry. The bank has led on almost all bond-underwriting deals to state oil companies Petroamazonas and Petroecuador, including to finance drilling in the country’s Yasuní National Park, a UNESCO World Heritage site, Stand.earth says.
Citigroup responded to a request for comment by saying it was committed to working with fossil fuel clients to responsibly drive the transition to a net-zero economy.
Even if Citigroup and other banks might eventually follow BNP Paribas’s lead and adopt Amazon exclusions, loopholes in Arctic equivalents suggests such policies will need to be carefully crafted.
In a report published in September, Reclaim Finance, a Paris-based advocacy group, found that some big banks have increased financing to companies expanding oil and gas projects in the Arctic, despite implementing exclusions. This apparent contradiction can occur because the policies tend to restrict banks from lending to specific projects but do not prevent them providing corporate finance to companies majors active in the Arctic, the report said.
As the climate crisis intensifies, some shareholder activists are taking a more sweeping approach by urging banks to cease support for new oil and gas projects altogether. In May last year, the influential International Energy Agency (IEA) found that there can be no new fossil fuel developments to have even an outside chance of limiting global warming to 1.5 degrees Celsius. Citigroup, JPMorgan Chase, Goldman Sachs, Bank of America and other big U.S. banks have all faced resolutions at annual general meetings in recent weeks urging them to respect the IEA’s net-zero pathway by ceasing to finance all new oil and gas exploration.
While none of these largely symbolic proposals gained majority backing, they reflect a growing desire among campaigners to hold finance accountable for its climate impact. The voices from the Amazon may be inconvenient for bankers. They may also prove increasingly difficult to ignore.
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