U.S. Firms Bankroll Oil Extraction in the Amazon – Report

Major U.S. financial institutions are funneling billions of dollars into crude oil expansion in the western Amazon rainforest, according to a report released today that underscored Indigenous peoples' long-standing opposition to fossil fuel extraction on ancestral lands.

Amazon Watch, which conducted the analysis, said those investments undercut emissions targets that scientists say could curb global warming. They also negate commitments by banks and money managers to shield the environment – and the financial system – from the mounting impacts of climate change, the group said.

Amazon Watch identified BlackRock Inc., HSBC Bank, Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. as five of the "dirtiest" financiers of crude energy companies operating in the rainforest ecosystem.

Using equity and debt financing data from the Bloomberg Terminal and Profundo, a Dutch financial research company, the environmental advocacy organization found that between 2017 and 2019, the five Wall Street firms pumped billions of dollars into four energy companies through debt financing and stock and bond holdings.

Those companies – Andes Petroleum Ecuador Ltd., Frontera Energy, Amerisur Resources PLC and GeoPark – have all faced decades of resistance from Indigenous groups in Peru, Ecuador and Colombia over alleged human rights and environmental abuses that they say have caused widespread "social disorder" in their communities.

The Siona Indigenous people, for example, have alleged that Amerisur contaminated their principal water source, the Putumayo River, which has resulted in a "dramatic increase in the last decade of welts and rashes following contact with the river," the report says.

"Financing from these firms not only makes it possible for crude oil companies to spend on new infrastructure, it [also] sends a message to the business world that endangering rainforests, Indigenous peoples and the climate is acceptable corporate behavior," said Moira Birss, director of finance at Amazon Watch.

The analysis found that Goldman Sachs provided $998 million in debt financing to Andes Petroleum and GeoPark over the three-year period, and in 2019 held $25 million of those companies' stocks and bonds. It came as Goldman Sachs committed to honor Indigenous rights and made headlines in 2019 when it announced it would begin cutting ties with coal mines and oil activity in the Arctic.

In January, BlackRock CEO Larry Fink jolted the financial sector when he unveiled a plan to forge a "fundamental reshaping of finance" to prioritize sustainability.

But despite what many deemed a watershed Wall Street moment, the Amazon Watch analysis found that BlackRock holds $2.5 billion of GeoPark, Frontera Energy and Andes Petroleum stocks and bonds. HSBC's crude oil contributions hit $1.2 billion, the report says.

JPMorgan Chase was found to have contributed $890 million to crude oil extraction over the same time period. According to a spokesperson, the firm is "expanding its commitment to a low-carbon economy" by facilitating $200 billion in 2020 for transactions that support climate action, among other initiatives.

Goldman Sachs, BlackRock, Citigroup and HSBC did not immediately respond to questions about the figures cited in the report or their stances on sustainability.

The analysis – and the financial sector's still-nascent sustainability tilt – comes as the world's banks, asset managers and insurers face rising pressure from investors and activists to cut ties with industries that are the principal drivers of climate change.

Goldman Sachs, JPMorgan Chase and Wells Fargo & Co., for example, have recently bolstered their sustainability stances and clarified that they will not provide financing for new fossil fuel projects in the Arctic – including in the highly contested Arctic National Wildlife Refuge.

Birss noted that these commitments are a step in the right direction and a testament to the advocates who have long fought to curb energy development in the region. But she also called the firms' moves "woefully inadequate," given that they largely shun fossil fuel projects in one high-profile region – rather than the sector at large. Pavel Molchanov, an energy analyst with investment bank Raymond James & Associates, said the Arctic is a "higher-risk, higher-cost area" for the oil industry, which makes it an easier region to back away from (Climatewire, March 4).

"The more meaningful test for banks will be whether any of them will take steps to phase out oil-related lending more broadly, in states such as Texas and North Dakota where there is more industry activity," Molchanov said in a recent email.

But Birss said that if financial institutions remain committed to moving away from fossil fuels in a "piecemeal or step-by-step" fashion, the Amazon rainforest should be an obvious next move.

"Unless corporate rhetoric and commitments to environmental and social responsibility turn into concrete actions, private financial institutions will continue to bankroll the path to an unlivable and inequitable world," Birss said.

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