Banks warned of tar sands pipelines investment risks in new report
By: Greenpeace & Oil Change International
2017-10-31
Contact:

Charlie Kronick, Greenpeace UK Senior Programme Advisor, Greenpeace UK, +44 (0)7801 212963

charlie.kronick@greenpeace.org.

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A new report by Greenpeace and Oil Change International warns of major banks’ exposure to financial and reputational damage due to their financing of tar sands pipelines. The report, In the Pipeline: Risks for funders of tar sands pipelines, examines in depth the range of risks related to all three proposed tar sands pipelines including legal challenges, opposition from Indigenous and local communities, threats to drinking water and economic vulnerability.
 
Barclays, JPMorgan Chase and the TD Bank Group are among the world’s major banks financing tar sands pipelines and the companies behind them (Kinder Morgan’s Trans Mountain Expansion, TransCanada’s Keystone XL, and Enbridge’s Line 3 expansion).
 
Among the major risks identified in the report are:

  • Lack of Free, Prior and Informed Consent (FPIC) from all Indigenous communities impacted by the pipelines. On-the-ground resistance is already unfolding along the routes of the Kinder Morgan and Line 3 pipeline expansions. JPMorgan Chase’s human rights policy states that the bank expects its clients to align with FPIC requirements, raising questions about its pipeline lending.

  • Negative environmental impacts, including the contamination of drinking water from leaks. The companies proposing to build the three new tar sands pipelines have seen one spill a week, on average, in the U.S. since 2010. New pipelines threaten thousands of watercourses, aquifers and bodies of water with spills. Kinder Morgan’s Trans Mountain Expansion goes through a UNESCO World Heritage site, Jasper National Park, which appears to contravene TD’s policy of not financing projects that operate in such sites.

  • Tar sands pipelines’ economic success is dependent on tar sands expansion. Low oil prices and structural changes in oil demand, including Asian and European markets’ shift away from fossil fuel vehicles, raise questions about the long-term viability of the tar sands, and pipelines dependent on their expansion.

  • Short-term lending decisions undermine bank and investor action on climate. The three proposed pipelines could add almost 2 million barrels per day in pipeline capacity. Facilitating the expansion of the tar sands and enabling decades-long carbon-lock in risks fatally undermining Barclays’ plans to develop a sustainable approach for its global energy client portfolio, JPMorgan Chase’s policies, which recognize the goals of the Paris Agreement, and as TD’s work with the UN to better assess and disclose climate risks and opportunities..

The report, therefore, recommends that banks do not finance or arrange financing (including the issuance of securities), related to new tar sands pipelines. Existing funders are encouraged to sell their stakes in full or not renew credit facilities. The report further provides bank investors with a list of questions to pose to management to understand whether risks are being properly managed.
 
A forthcoming report by Rainforest Action Network and partner organizations grades large multinational banks on their policies concerning tar sands financing, finding that most lack policies to curtail their significant exposure to these risky pipelines and the companies behind them. The report will be published on November 2nd and available at www.ran.org/fundingtarsands.
 
Another report released earlier this month by the Secwepemc Nation in B.C., whose land Kinder Morgan’s new pipeline is slated to cross, further details risks related to Indigenous assertions of their rights and title over unceded land.

Download the Greenpeace and Oil Change International Report here:  https://www.greenpeace.org.uk/InThePipeline.

Related banks

Barclays United Kingdom

JPMorgan Chase United States

Toronto-Dominion Bank (TD Bank) Canada

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