Many investors are calling on the banks financing the Dakota Access pipeline to push for a rerouting of the pipeline or, better still, to withdraw from the project on financial grounds. The appeal has not fallen on deaf ears.
The Dakota Access pipeline (Dapl), the project to build an underground pipeline in the United States, is managed by a network of oil companies, joint ventures and holding companies. After President Donald Trump relaunched the project in January, without the consent of the indigenous Sioux tribe and without complying with environmental laws, many investors in the United States and around the world called on banks to try to reroute the pipeline or to pull out of the investment.
The project is controversial because it has a negative impact on the Standing Rock Sioux reservation, located between North and South Dakota, and violates the principles of the United Nations Declaration on the Rights of Indigenous Peoples, including the right to health, water and livelihoods, free, prior and informed consent, and protection against threats to sacred sites and cultural and traditional practices.
Energy Transfer Partners, a company that holds a diversified portfolio of energy assets in the United States, and its subsidiary Sunoco Logistics currently own more than 38.25 per cent of the pipeline. MarEn Bakken, a joint venture between Enbridge Energy Partners and Marathon Petroleum, owns 36.75 per cent of the pipeline, while a subsidiary of energy producer Phillips 66 holds the remaining 25 per cent of the project.
In March, the Dutch bank ING became the first of 17 banks to withdraw from the group of lenders, selling back the $120 million in loans it had extended to the Dakota Access pipeline project. A few days later, Norway's largest bank, DNB, published a statement announcing that it is selling more than $331 million in loans earmarked for the construction of the pipeline, a sum representing almost 10 per cent of the project's cost.
Norway's largest private investor, Storebrand ($68 billion in assets), sold shares linked to the financing of the Dapl worth $34.8 million (in Phillips 66, Marathon Petroleum Corporation and Enbridge). This divestment was something of a last resort, after Storebrand had already tried, without success, to push for a rerouting of the pipeline by contacting the companies directly. Other investors, including the mutual fund Odin Fund Management, also decided to sell their shares in November 2016, worth $23.8 million, in companies linked to the pipeline. Similarly, Swedish bank Nordea removed from its portfolio investments in Energy Transfer Partners, Sunoco Logistics and Phillips 66, after those companies refused any form of dialogue to create an alternative pipeline route. Finally, it appears that German bank Bayern LB is also seeking to divest from the pipeline.
What we hope is that our actions and those of other like-minded investors who are divesting or calling for an alternative pipeline route will have an impact. The signal should not be underestimated. Even if it is too late for the Dakota Access pipeline, the fact that so many people have spoken out and that there have been many protests will lead companies to take the rights of indigenous peoples more seriously in future projects.
(Matthew Smith, head of sustainability at Storebrand)
In February, a group of around 120 investors, with a combined total of $653 billion in assets under management, told the banks financing the Dapl that the pipeline should be rerouted away from the Native American reservation. Among them are CalPERS, which oversees the largest public pension fund in the United States, as well as asset management firms and religious organisations. The investors set out their concerns in a statement: "If the pipeline route is not changed, the result will almost certainly be an escalation of conflict and unrest and a possible contamination of water resources."
The banks to which the statement was addressed are:
Under the hashtag #DefundDapl, activists are campaigning for individuals and institutions to withdraw their money from the banks financing the pipeline. Among other things, this led the Seattle city council not to renew its $3 billion contract with Wells Fargo because of the bank's involvement. The Californian city of Davis also divested from Wells Fargo after its council voted unanimously to find another bank to manage its finances. Other cities such as San Francisco, Santa Monica, Boulder, Minneapolis, Philadelphia and Portland are considering similar measures.
The Defund Dapl campaign estimates that a group of individuals has pledged to withdraw more than $70 million from financial institutions that do business with the pipeline's owners. Another way to divest from companies associated with the Dapl is OpenInvest, a technology startup that has developed a feature which automatically removes companies that finance the pipeline from investment portfolios and replaces them with new ones.
Surprisingly, many of the banks financing the Dapl are signatories to the Equator Principles (EPs), the global best-practice standard for assessing and managing social and environmental risks in project finance. In November, a consortium of civil society groups, including BankTrack, wrote an open letter to the Equator Principles Association expressing concern that thirteen Equator Principles financial institutions (EPFIs) are involved in a credit agreement with Dakota Access and Energy Transfer Crude Oil for loans of up to $2.5 billion for the construction of the pipeline, and that a further eight EPFIs are extending additional credit to the project's sponsors. This runs counter to Equator Principle number 5, which states that "projects with adverse impacts on indigenous peoples require free, prior and informed consent".
Lawrence Summers, former chief economist of the World Bank, once famously stated that "the economic logic behind dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that." Applying the same logic to the poorest areas of the United States, it is clear that the banks and investors involved in DAPL continue to place greater importance on corporate profits than on human rights. However, in the face of unprecedented protests against the pipeline, involvement in the project would not make much business sense. Banks with financial ties to the pipeline could, in fact, lose customers and creditors, suffer reputational and brand damage as a result of consumer boycotts, and face potential legal liability. Investors who are the principal shareholders of these banks could also find themselves exposed to reputational and, potentially, financial risks. Even if it may be too late to stop DAPL, this could nonetheless demonstrate the importance of blocking corporate investment in projects that violate the rights of indigenous peoples in the future.
Tradotto da Camilla Soldati