Banks v Planet Earth

On average, 71% of the Amazon is not effectively protected by banks’ risk management policies for climate change, biodiversity, forest cover, and Indigenous peoples’ rights. Photo: Bram Ebus

Five of the world’s biggest banks are “greenwashing” their role in the destruction of the Amazon, according to a report that indicates that their environmental and social guidelines fail to cover more than 70% of the rainforest. The institutions are alleged to have provided billions of dollars of finance to oil and gas companies involved in projects that are impacting the Amazon, destabilising the climate or impinging on the land and livelihoods of Indigenous peoples.

The banks say they follow ethical policies that help to protect intact forests, biodiversity hotspots, indigenous territories and nature reserves. However, the investigation says it has found geographical and technical limitations on their ability to monitor and achieve these stated goals.

The banks and their investment institutions are alleged to have given billions of dollars to oil and gas companies involved in projects that are harming the rainforests. Jonathan Watts investigates. [This is No 37 in our Climate Crisis series.]

Watchdog Stand Earth

The report was produced by the watchdog organisation Stand.earth and the Coordinating Body of Indigenous Organizations of the Amazon Basin (COICA). The organisations mapped the extent of the environmental and social governance (ESG) commitments of five leading funders of fossil fuel operators in the South American biome. Those banks – Citibank, JPMorgan Chase, Itaú Unibanco, Santander and Bank of America – together account for more than half of the loans to companies in this sector.

The analysis found that on average, 71% of the Amazon is not effectively protected by the five banks’ risk management policies for climate change, biodiversity, forest cover, and Indigenous peoples’ and local communities’ rights. The gaps ranged significantly from company to company. At one end of the spectrum is JPMorgan Chase, whose biodiversity protections, the report’s authors say, apply only to Unesco world heritage sites that cover just 2% of the Amazon and are, in any case, unlikely to be considered for oil and gas exploration.

On the positive side

The study commended the British bank HSBC, which was once a major funder of destructive projects in the region but has not provided any financing since it adopted a 100% Amazon exclusion policy in December 2022. “So far, HSBC has been true to their word,” said Angeline Robertson, the lead author of the report. “This shows it can be done and has been done, even by a company that used to have a big stake”

Some banks argue they play a positive role by encouraging extractive industries to adopt more responsible policies. However, according to the authors of the report, while bank loan arrangements involve long-term relationships and potential influence, the majority of financing by the big five comes in the form of syndicated general corporate purpose bonds. These bonds, which are standard practice, are for broadly defined purposes and require little or no follow-up once an agreement is signed. This potentially makes it difficult to apply due diligence guidelines on specific environmental or social concerns.

Bank Santander

The Spanish bank Santander – Europe’s largest financier of oil and gas in the Amazon and fourth largest worldwide with almost $1.4bn (£1.1bn) in direct financing between 2009 and 2023 – has one of the most extensive exclusion policies for oil and gas, covering 16% of the Amazon, but the report indicates that 85% of its transactions are in the form of syndicated bonds, which lack transparency and reduce the bank’s liability as a contributor to adverse impacts.

The authors examined 560 transactions involving oil and gas activities by 280 banks over the past 20 years in the Amazon using Stand’s Amazon Banks Database, to determine whether deal structures that bypass ESG exclusions and screens are common.

Citibank and JPMorgan Chase

They found two North American banks, Citibank and JPMorgan Chase, have made the most capital available – $2.43bn and $2.42bn respectively – to companies that operate oil and gas projects in the Amazon. JPMorgan Chase recently withdrew from the Equator Principles Association, which serves as a common baseline for institutions to manage environmental and social risks when financing projects.

The third biggest financier over the past two decades is Itaú Unibanco of Brazil, which, the report claims, does not have any exclusions or screens that apply to oil and gas operations in the region. The database shows it has financed projects by Eneva, Frontera, Geopark, Petrobras, Petroquimica Comodoro Rivadavia and Transportadora de Gas del Perú.

Fifth on the list was Bank of America. Last year, it was the number one financier of oil and gas in the Amazon and extended 99% of transactions in the form of syndicated bonds, the report says, which means these deals would not necessarily have been subjected to enhanced ESG screening.

The report urges banks to adopt a geographic exclusion covering all transactions involving the oil and gas sector in the Amazon. The authors say this is essential because the rainforest is the world’s most important terrestrial carbon sink and home of biodiversity, degrading towards a point of no return.

“We are literally living in a rainforest on fire, our rivers are either polluted or drying up,” said Fany Kuiru, the general coordinator of COICA. “Our fate is your fate: the Amazon is critical for the future of our planet. The banks try to wash their hands of the blame through vague policies but must be held accountable for the damage their money is causing to Amazonian Indigenous peoples and the biodiversity of the rainforest. Not a single drop of Amazon oil has been extracted with the consent of Indigenous peoples. We demand Citibank, JPMorgan Chase, Itaú Unibanco, Santander and Bank of America to end oil and gas financing.”

The promises

Since Stand.earth launched its Exit Amazon Oil and Gas campaign, it says several banks including BNP Paribas, Natixis, ING, and Credit Suisse have promised to end their financing of trade in oil from ports in Ecuador and Peru, which covers much of the fossil fuel trade from the Amazon. HSBC and Barclays have also applied comprehensive geographic exclusion policies.

The authors say they want to work with the remaining funders of Amazon oil and gas to tighten their ESG policies and exclude petroleum projects in the rainforest from their portfolios.

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