“I hope they’re listening,” says Juan Mancias, chair of the Carrizo Comecrudo Tribe of Texas, referring to Citi’s annual shareholders’ meeting on April 30. It is there he will present a proposal calling on the bank to report on its “policies, practices and performance” in respecting internationally recognised human rights standards for indigenous peoples.
Mancias says the oil and gas companies that banks like Citi finance are destroying what paradise used to be. He is referring to the fossil fuel industry in Texas, which he says has destroyed the land and created a place with almost no suitable water. A new liquefied natural gas pipeline is also planned near his tribe’s ancestral lands which span the delta region where the 1900-mile Rio Grande river meets the Gulf of Mexico.
“We used to live on this land. They’ve taken the sacredness out of it,” he says. “Why was our science not working when they [the white settlers] first arrived here 500 years ago. We had clean air, land and water.” Mancias’s tribe claim descent from the Comecrudo people who lived along the South Texas Rio Grande delta for hundreds of years.
“It is not activism,” Mancias continues, “but protection of who we are. We are trying to maintain a connection to a way of life”.
It is the third shareholder resolution Citi has faced regarding the impact of its fossil fuel financing on indigenous communities. Two other US banks, Wells Fargo and JPMorgan, face similar resolutions at their respective AGMs in the coming weeks. Wells Fargo faced a similar resolution in 2022, but it is the first for JPMorgan. All three banks have advised investors to reject the proposals.
The resolutions, filed by different faith-based investors, claim the three banks consistently fail to meet “international standards” regarding the free, prior, and informed consent of indigenous people, or FPIC, which is a specific right granted to indigenous people under the UN Declaration on the Rights of Indigenous Peoples. Violations of these rights could “adversely affect shareholder value, including reputational damage, project disruptions, and civil and criminal liability”, investor groups warn.
Citi and JPMorgan’s human rights and risk management policies “do not clearly define FPIC”, the resolutions claim, nor do they include guidance on how the bank addresses companies with track records of violating indigenous rights. The Wells Fargo resolution says the bank’s Indigenous Peoples Statement is “misaligned with FPIC” and is limited to project financing.
According to the shareholder proposals, the three banks adhere to the Equator Principles, which banks use to assess the environmental and social risks of projects they finance. A 2020 update to the principles provided additional guidance on FPIC. But indigenous experts say the principles are “critically weak”, and not aligned with international human rights standards. Citi, JPMorgan and Wells Fargo left the Equator Principles earlier this year, which has raised concerns with investors.
“They took away one level of accountability that gave shareholders some confidence,” says Sister Susan Francois, assistant congregation leader and treasurer at the Sisters of St. Joseph of Peace in New Jersey, a group of Catholic nuns who have filed a resolution on indigenous rights for the last two years at Citi’s annual meeting. Both resolutions, says Francois, gained more than 30 per cent investor support.
Explaining the rationale for filing a third proposal, Francois says the sisters are persistent and will stay at the table for as long as it takes. “Standards are not being met,” she says, adding that the climate crisis cannot be solved without involving those most impacted — indigenous people.
Banks deny direct funding
The shareholder proposals claim billions in financing from the three banks enabled controversial fossil fuel projects such as the 2016 Dakota Access pipeline, and Canadian pipeline operator Enbridge’s Line 3 and Line 5 tar sands pipeline reroutes.
Line 3, which transports millions of additional barrels of tar sands oil per day from Alberta, Canada across northern Minnesota to Enbridge’s terminal in Superior, Wisconsin, “violates numerous indigenous rights, including FPIC, health, culture, religion, security, and assembly”, the shareholder proposals claim. However, Enbridge says the Line 3 replacement programme was built with extensive input from indigenous communities in Canada, as well as Native American tribes.
Indigenous leaders from Great Lakes tribes say the current Line 5 and the proposed Line 5 expansion threaten to irreversibly damage their “drinking water, ecosystems, and manoomin [wild rice used for cultural, spiritual and agricultural purposes]”. In 2022, a US district court ruling found in favour of the Bad River Band of the Lake Superior Tribe of Chippewa Indians and ordered Enbridge to shut down parts of the current Line 5 pipeline and pay $5.2mn for trespassing on the tribe’s land after easement rights expired.
Enbridge and the Bad River Band are appealing the lower court’s ruling. Enbridge says “tribal monitors” will oversee construction of the Line 5 relocation project to ensure important cultural resources are protected.
The more than 1000-mile-long Dakota Access pipeline, which indigenous leaders said endangered sacred sites and water supplies, resulted in some banks editing the Equator Principles to make them stronger, says Jillianne Lyon, who leads shareholder advocacy for Investor Advocates for Social Justice.
“They adopted more language on their websites around their human rights policy, but then a few years later, we see the same banks financing Enbridge Line 3, and then a few years later, Line 5.”
However, the banks dispute their direct financing of projects such as Line 3 and the amounts the shareholder proposals say they provided in financing to companies like Enbridge. In its 2023 proxy statement, Citi says it provided “no project-related financing” to Line 3 and that the “claimed amount” ($5bn) in last year’s resolution was inaccurate as it represented nearly 75 per cent of the capital the bank had committed to its entire portfolio of oil and gas storage and transportation sub-sector at 2021 year-end.
Follow the money
In its 2024 proxy statement, JPMorgan says its financing activities are “inaccurately described” and that the proposal cites a number of allegations against companies and projects, “with references to subjective determinations by sources that are not necessarily aligned with or knowledgeable of shareholders’ long-term financial interests”.
According to the Rainforest Action Network, which published the 2020 report Who’s Banking Line 3, Enbridge did not seek any direct project financing for Line 3 or Line 5. But from 2016 through to September 30 2020, it received “billions of dollars in loans” provided by dozens of big banks that it can use for its “general corporate purposes”, the report says. These credit facilities, RAN says, provide Enbridge with “crucial liquidity”, including funds regulators require pipeline companies to have on hand in the event of an oil spill.
According to RAN, a “big chunk” of Enbridge’s financing is a revolving credit facility provided by a number of banks — which started off at $781mn in 2016 and increased to $1.8bn in 2020. The facility has been renewed every year since 2016, says RAN. Enbridge did not comment on how it uses the general corporate purposes financing it receives from banks.
The Sisters of St. Joseph of Peace claim if Enbridge lost access to its credit facilities or other financial services from major banks, the company would face “severe financial constraints” and may be forced to abandon projects such as Line 3.
Despite explicitly referencing concerns about Citi’s relationship with Enbridge in previous shareholder resolutions, the Sisters say SEC filings show “billions of additional dollars in loans” from Citi to Enbridge. Now, they are concerned some of this money could be used to fund new Enbridge projects such as the Rio Bravo pipeline, which will transport fracked natural gas to NextDecade’s Rio Grande LNG export facility at the Port of Brownsville in southern Texas.
The Sisters say the Rio Bravo pipeline presents a new risk for Citi shareholders as it passes close to the Garcia Pasture in the Rio Grande Valley, the burial site of the Carrizo Comecrudo tribe’s ancestors. The pipeline also threatens land owned by members of the tribe, they claim, which can be seized without their consent. “They [Citi] have the power,” says Francois. “We’re asking them to use their influence because we’re at crisis point. We’re not addressing the climate crisis. We’re harming human dignity and people.”
‘Fossil fuels make the law’
Enbridge says the Rio Bravo pipeline project route does not cross tribal reservations and that affected tribes were included in the Federal Energy Regulatory Commission review process. However, Mancias, who is fighting the pipeline, says when it comes to environmental impact statements, government bodies are dependent on the word of fossil fuel companies.
“People are not looking at the other side. Only the corporates are correct. The rest of us, our science doesn’t exist,” he says. “Fossil fuels are making the law. They continue extracting as long as they are getting the money.”
Banks’ continued financing of Enbridge raises questions about how they are talking to their clients, says Investor Advocates for Social Justice’s Lyon. “When you have a client that is a repeat offender of indigenous rights, what do you do? We have not received a satisfactory answer.”
Enbridge says its indigenous peoples policy aligns with the UN Declaration on the Rights of Indigenous Peoples and that it is committed to working with indigenous communities in a manner that “recognises and respects” their rights. It says it seeks “the input and knowledge of indigenous peoples” and engages “early and sincerely” through processes that aim to achieve the support and agreement of indigenous nations and governments for projects and operations that may occur on traditional lands.
While Enbridge may assure the banks they have good human rights policies, for banks, Lyon claims it is a “tick-box” exercise with “no additional due diligence”.
“The problem is that banks are so far removed from what is happening on the ground, they just take the word of clients,” says Ricardo Perez of non-profit Amazon Watch, which represents indigenous communities challenging US banks’ financing of state-owned oil and gas company, Petroperú. “It is just [a few] people in New York checking documents being sent by clients,” continues Perez. “Resolutions are important, but the main challenge is to make [banks] have a more direct connection with real information.”
According to a 2023 report by non-profit Stand.earth, JPMorgan, Itaú Unibanco, Citi, HSBC, Banco Santander, Bank of America, Banco Bradesco and Goldman Sachs are responsible for 55 per cent of the estimated $20bn that can be traced directly to Amazon oil and gas activities.
Citi, JPMorgan and Wells Fargo declined to comment on the issues raised in the shareholder proposals. In their proxy statements, the banks say they are guided by various UN principles on human rights and the IFC’s environmental and social standards, which include the principle of FPIC. They say they maintain firm-wide policies for identifying, escalating and managing transactions and activities that present increased environmental and social or potential risks to indigenous communities.
In its proxy statement, JPMorgan says the shareholder proposal “fails to provide any credible evidence of the ineffectiveness of this approach”, and that the requested report would incur “unnecessary expense” and not provide shareholders with “meaningful additional information”.
Ahead of its annual meeting on April 30, Citi published a report, Respecting the Rights of Indigenous People, which revealed details of its due diligence process, and some of its findings. In 2023, the report says Citi’s environmental and social risk management team flagged 37 new transactions with potential risks to indigenous peoples that required enhanced due diligence.
Only seven of the 37 transactions were “project-related transactions”. Of the 37 flagged, seven were declined due to risks about indigenous peoples’ rights. Six are still pending, says the report, and are at an early stage of review, and 16 were approved “following satisfactory due diligence reviews and/or client engagement”. Three were approved “subject to ongoing monitoring” while five did not proceed for other reasons.
Val Smith, chief sustainability officer at Citi, says the report provides an “additional level of transparency” about how it works to respect the rights of indigenous peoples in its financing and due diligence. “Our policies are aligned with international standards and the report demonstrates how we implement them and engage with our clients on this issue,” she says.
JPMorgan and Wells Fargo declined to comment on their due diligence practices.
But Mancias says it is easy for banks to say they are respectful of indigenous people. “You can say that all day and not act upon it, and it takes another 10 years to decide how that policy is going to be effective,” he says. “Their policy should go into action immediately, which means to pull out of the fossil fuel industry because of the damage it is doing to indigenous sacred [sites].”
The Indigenous Peoples of the Peruvian Amazon say the standards outlined in Citi’s report do not align with international FPIC standards based on the principle of “self-determination”, which gives indigenous people the right to determine their own political status, economic, social and cultural development without external interference, including decisions regarding their territory, resources, culture and way of life.
Despite Citi’s approach to FPIC, they say Petroperú’s attempt to operate Block 64 in the northern Peruvian Amazon fails to meet any standard. Block 64 is home to “dozens of indigenous people” and has 40mn barrels of oil in “proven and probable reserves”. Amazon indigenous communities say they have called on Citi not to finance Block 64. They claim that Petroperú is looking to open new oil wells in their territories to pay back banks that lent it money to upgrade its Talara oil refinery.
According to Reuters, the refinery upgrade was paid for by a $2bn bond issuance, more than $1bn in debt, and $1.3bn in loans, as well as some of the company’s own money. Petroperú did not respond to a request for comment.
Amazon Watch and a delegation of indigenous leaders from Peru travelled to the US this week to meet with banks (Citi, JPMorgan, Goldman Sachs) to share the findings of a report on the potential risks and impacts of Petroperú in the Amazon. The leaders were scheduled to meet JPMorgan in Washington DC, to discuss the report’s findings, but they say the bank cancelled the meeting just three days before. JPMorgan investor, United Church Funds, who filed the resolution on indigenous rights ahead of the bank’s annual meeting on May 21, accused the bank of “ignoring indigenous voices”.
“Unfortunately, this is an all-too-common experience for indigenous communities,” Matthew Illian, director of responsible investing at United Church Funds, said in a statement. “This is why we filed a shareholder resolution to raise awareness about JPMorgan’s respect for indigenous rights — or lack thereof.”
In a statement, Olivia Bisa, president of the autonomous territorial government of the Chapra Nation in the Peruvian Amazon, says she is disappointed at JPMorgan’s decision to cancel the meeting. She claims the bank is funding oil spills and “indigenous rights violations” in the Peruvian Amazon and that she is being “personally targeted” for representing her community in opposing this. “The bank does not even have the respect to listen to us,” she says.
A JPMorgan Chase spokesperson told The Banker it had met with Amazon Watch in the past and remains willing to have dialogue. “We couldn’t agree on the terms for this meeting and we don’t comment on clients. We support fundamental principles of human rights, including indigenous people’s rights, across all our lines of business and in each region of the world in which we operate.”
The spokesperson says they will review the Amazon Watch report on Petroperú that was recently released. In its proxy statement, the bank says it assesses the substance of allegations, to make informed decisions based on facts as it strives to meet its responsibilities to clients and shareholders.
Perez of Amazon Watch says Petroperú continues to receive financing from banks despite decades of oil spills, and that the situation in the Peruvian Amazon is more urgent than ever. “We only have 10 to 15 years to change [things]. That is why we are scaling up our demands.”
Source: thebanker.com
