Weak banking regulations leave two-thirds of the Amazon vulnerable to oil and gas impacts

There are hundreds of oil and gas operations taking place in the Amazon Forest. And while critics go after them for recklessly destroying the environment, these companies don’t act alone, either. They need support from big banks, which provide direct financing in the form of loans and bonds, which themselves require regulation, critics say.

In recent years, increasing pressure on banks has led to the introduction of new environmental policies aimed at minimizing the financing of projects related to deforestation, pollution and human rights violations. Banks tend to praise their policies as ambitious and effective. However, many environmental groups argue that they are actually far from sufficient and even come down to environmental friendliness.

A joint investigation by several environmental groups examined more than 560 financial transactions involving more than 280 banks and 80 oil and gas companies operating in the Amazon and concluded that what banks claim they are doing for the environment is far from ” the real impact of their policies.”

In fact, some of the largest investors in the oil and gas sector (Citibank, JPMorgan Chase, Itaú Unibanco, Santander and Bank of America) only apply their policies to about one-third of the rainforest, leaving the rest exposed to potential environmental destruction. The report found that the areas where these rules apply are still not fully protected.

“Through their deceptive policies and empty promises, these banks are trying to green-light oil and gas extraction in the Amazon and hide the destructive impacts of their ecosystem-damaging investments,” said report co-author Angeline Robertson, a senior researcher at Stand. earth. “They claim to care about climate change, biodiversity and indigenous peoples, but these commitments mean nothing until banks stop adding fuel to the fire by pumping billions into the brutal expansion of oil and gas in the region.”

The report was published jointly by Stand.earth and the Peruvian Coordinator of the Organization of Indigenous Peoples of the Amazon Basin (COICA), with the support of several other indigenous support and conservation groups in the region.

Its investigation looked at banks’ Environmental and Social Risk Management (ESRM) policies, which, in short, are a set of criteria used to decide whether a company should receive financing. In some cases, the location of the operation may be a criterion – is it in a protected area? Is it near indigenous territory? — or the history of the company that implements them.

Most banks have some version of an “exclusion” policy that prohibits financing in certain parts of the Amazon, such as UNESCO World Heritage Sites, Ramsar sites, and official protected areas. However, much of the rainforest does not fit into these categories. Only HSBC banned financing across the Amazon, while JPMorgan Chase and Citibank only banned financing in 2% of the region. Santander banned only 16%, or about 1.33 million square kilometers (513,000 square miles).

In a statement, a JPMorgan Chase spokesman said it supports fundamental human rights principles, including the rights of indigenous peoples. Santander said it understands the importance of protecting the Amazon and supporting sustainable development in the region.

“We are also actively engaged in several industry initiatives to protect the region and are actively working with customers, as well as other banks, governments, regulators and other institutions, to help improve practices, recognizing that this is a very complex challenge that requires a multi-faceted, multi-pronged approach – a side reaction,” a Santander spokesman said in an email.

Bank of America declined to comment for this article. Other banks did not respond to requests for comment but told the report’s authors that they were concerned about the climate crisis and indigenous rights.

Other control and due diligence measures relate to the type of technology the company would use to extract and process oil and gas, as well as the company’s internal standards for avoiding environmental risks. However, many of these measures only apply in certain parts of the Amazon and only for certain types of financial transactions.

Only about 40% of Amazon is “controlled” by Citibank and Bank of America, while Santander only screens 24%. Itaú Unibanco does not have any exclusion or screening policies.

Only HSBC has a 100% Amazon oil and gas exclusion policy.

“Without the constraints of a well-designed banking policy, the Amazon will continue to be devastated by an influx of money to companies whose activities not only violate the rights of indigenous peoples and cause deforestation, pollution and biodiversity loss, but also accelerate the climate crisis and contribute to government corruption and institutions of the region,” the report stated.

The report argued that poor policy has real-world consequences. In Ecuador, oil and gas concessions in the Amazon overlap 45,000 km2 (17,400 mi2) of indigenous land, affecting well over half of all indigenous people, causing thousands of spills and other forms of contamination.

Peru has approximately 380,000 km2 (146,700 mi2) of oil and gas concessions, of which 104,000 km2 (40,200 mi2) is covered with primary forest.

The report indicates that banks must end their relationships with all oil and gas companies in the Amazon if countries in the region are to protect 80% of the rainforest by 2025. This would mean not accepting new oil and gas customers and ending contracts with existing ones, as well as suspending trade financing oil and gas. The report also calls on banks to adapt their portfolios to prioritize tackling biodiversity loss and the climate crisis.

“Banks are trying to wash their hands of blame through unclear policies, but they must be held accountable for the damage their money is causing to the indigenous peoples of the Amazon and the biodiversity of the rainforest,” said Fany Kuiru, general coordinator of COICA. “With the consent of the indigenous people, not a single drop of Amazonian oil has been extracted. We demand that Citibank, JPMorgan Chase, Itaú Unibanco, Santander and Bank of America stop financing oil and gas.”

Banner image: Oil pump. Photo: CRI.

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Ten years on from the anti-deforestation pledge, the corporate world is still not doing enough

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