Five of the world’s top banks are failing to implement effective policies to protect the Amazon when financing oil and gas extraction in the region, a report said this week, accusing the financial giants of “greenwashing”.
Produced by environmental advocacy group Stand.earth and the Coordinating Body of Indigenous Organizations of the Amazon Basin (COICA), the report urged the banks to stop financing oil and gas extraction to help protect 80 per cent of the world’s largest rainforest by 2025.
On average 71 per cent of the Amazon is not effectively protected through the environmental and social risk management (ESRM) frameworks of the five top financiers of Amazon oil and gas - Citibank, JPMorgan Chase, Itaú Unibanco, Santander and Bank of America, according to the report, Greenwashing the Amazon.
“This means these banks leave most of the Amazonian territory vulnerable, with no risk management for climate change, biodiversity, forest cover and Indigenous peoples’ and local communities’ rights,” the report’s authors said in a statement.
They added that the report “underscores the abyss between the environmental and social policies claimed by the top financiers versus the destruction they are bankrolling in the region”.
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Oil and gas are the tips of the spear with deforestation.
Angeline Robertson, senior investigative researcher, Stand.earth
The report said that HSBC, which has also financed Amazon oil and gas, was the only bank in the analysis that presented a positive example of policy, citing its decision in 2022 to exclude oil and gas financing from the Amazon.
The other banks challenged the report’s findings, saying their policies do protect biodiversity and Indigenous territories.
Angeline Robertson, senior investigative researcher at Stand.earth and lead author of the report, said extraction of oil and gas not only leads to the burning of more fossil fuels but also created infrastructure that facilitated forest destruction.
“Oil and gas are the tips of the spear with deforestation” as roads built for fossil fuel projects are later used in the expansion of soy, palm oil and other commodities deeper into the forest, she told Context.
Risk of tipping point
The report analysed over 560 transactions related to fossil fuel financing by some 280 banks over the last 20 years using the Amazon Banks Database to determine whether deal structures that bypass exclusions and screens were common.
It found that 72 per cent of all fossil fuel financing transactions were structured in ways that minimise the identification and prioritisation of environmental and social values in the banks’ risk management frameworks.
This means that risks to people and nature may not be accurately identified, limiting the application of exclusions and screens, which are designed to help banks make financing decisions, it said.
According to a 2023 assessment by Brazilian environmental NGO Arayara, governments have awarded 255 oil and gas blocks in the region with another 547 assigned for future development.
Between them, the banks invested over US$20 billion in oil and gas projects in the Amazon over the last 20 years, 47 per cent of the total amount detected by the report.
In terms of impact of oil and gas extraction on Indigenous peoples, the report cited government data from Ecuador identifying more than 4,600 oil spills and contamination between 2006-2022, with over 530 of these spills occurring in Indigenous lands.
The report recommended that the banks adopt a geographic exclusion covering all transactions in the oil and gas sector in the Amazon.
“This is proposed as the only viable solution to avert a tipping point in the Amazon, which must remain at least 80 per cent protected in order to avoid a dieback, stop biodiversity loss, mitigate climate change, and uphold Indigenous Peoples’ and local communities’ rights,” it said.
A spokesperson for Citi said in a statement that the bank had “a comprehensive Environmental and Social Risk Management Policy, which outlines our expectations for clients and requires us to do enhanced due diligence around activities with elevated risks related to human rights, biodiversity, Indigenous Peoples, critical habitats, community conflict and/or environmental justice”.
The spokesperson also said the bank engaged directly with clients to evaluate their capacity to manage specific environmental and social risks.
A spokesperson for JPMorgan Chase said the bank supported fundamental principles of human rights, including Indigenous people’s rights, across all its business.
“Our 2023 ESG (Environmental, Social and Governance) Report reflects our policies and practices regarding environmental and social risks as well as human rights, including restricted activities and sensitive business activities,” the spokesperson added.
Itaú Unibanco, Latin America’s largest bank and the only one analysed by the report with no exclusions or screens that apply to oil and gas operations in the Amazon, said in a statement it had been working to “fight deforestation through monitoring of environmental, social and climate risks”.
Santander said in an emailed statement that “all financing decisions are oriented by a rigorous set of directives … and all our activities are aligned with the region’s environmental norms”.
Bank of America declined to comment but referred Context to its Environmental and Social Risk Policy Framework.
The report also criticised the lack of consultation with Indigenous peoples, and the fact that these communities were not able to veto oil and gas projects that might affect them.
In an email interview, Fany Kuiru Castro, head of COICA, said effective rules to consult with Indigenous peoples were needed.
“No single Amazon oil barrel has gone through a consultation process leading to free, informed consent,” she said.
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