Eye on the Amazon

Investing $46 Billion in Client Money on Amazon Destruction

How the world’s largest asset managers quietly pour billions into oil companies tied to rights abuses

The world's three largest asset management firms have billions tied up in environmental and Indigenous rights abuses across the Amazon through the oil companies they invest in. Amazon Watch's latest report, Investing in Amazon Crude II: How the Big Three Asset Managers Actively Fund the Amazon Oil Industry, exposes BlackRock, Vanguard, and State Street risk in providing debt and equity investment in oil companies operating throughout the rainforest, despite pledges to prioritize climate and Indigenous rights. The asset managers control the vast majority of the investment management market and are collectively referred to as the “Big Three.” Together, these firms have provided $46 billion to oil companies currently operating in the Amazon rainforest that are linked to Indigenous rights abuses, hazardous pollution, corruption, biodiversity loss, and climate warming.

In late May, the world's foremost authority on energy policy, the International Energy Association (IEA), published a new "roadmap" for the energy sector in which it argued that the world needs a "radical" shift in energy sources in order to meet the goal of a 1.5°C global warming limit laid out in the Paris Climate Agreement. The report affirmed that “there is no need for investment in new fossil fuel supply in our net zero pathway.” This is significant: There is now mainstream consensus that avoiding climate disaster requires immediately ending all further investment in new fossil fuel supply.

The “Big Three” manage trillions of dollars of investments for individual and institutional investors all over the world, including pension funds and university endowments. Together they control nearly 20 trillion dollars. By investing in oil companies with horrific environmental and human rights records, they are not only flagrantly ignoring scientific experts, but also actively supporting the Indigenous and human rights abuses, forest destruction, biodiversity loss, and further climate chaos inherent in oil production in the Amazon rainforest.

Concern and awareness around the links between major financial firms and these issues are mounting. In early 2021, communities impacted by GeoPark – a Chilean oil company with operations in the Colombian Amazon in which BlackRock, Vanguard, and State Street collectively own over $10.4 million of debt and equity – denounced that the company was actively paying paramilitary forces to threaten and intimidate local residents of the campesino community known as Perla Amazónica, in Putumayo, Colombia, in order to ensure that oil operations could continue. The United Nations Development Programme (UNDP) attempted to partner with GeoPark on an “economic revitalization” project for the region, but quietly cut ties with the oil company after its links with paramilitary groups were made clear. This is only the latest in a long history of extractive companies disregarding the health and safety of local communities and attempting to broker partnerships to greenwash their image.

The report provides numerous examples of local opposition to oil projects. It outlines, for example, the decades-long struggle of the Kichwa Peoples of Sarayaku in the Ecuadorian Amazon to stop oil companies ENAP and Petroamazonas – operating in Ecuadorian oil Block 28 which overlaps Kichwa territory – from continuing to drill and spill devastating amounts of oil in their lands. Currently, BlackRock and Vanguard control $1.2 billion of debt and equity in ENAP and Petroamazonas, despite public statements both firms have made about the importance of environmental sustainability.

As long as BlackRock, Vanguard, and State Street continue to provide equity and investment in oil companies operating in the Amazon, they cannot claim to be climate champions. Our report concludes by outlining five essential actions that the Big Three must take immediately if they are serious about walking their talk. First, they must immediately exclude from their active funds all Amazon and climate-harming companies. This must be accompanied by an expansion of their stewardship teams' pro-climate engagement and voting practices. While these firms claim to have ESG (Environmental, Social, Governance) funds that are free of climate-damaging companies, they have yet to adopt a global baseline climate standard for ESG funds, and as such cannot be held accountable for ensuring that the funds they are marketing to their clients are indeed safe for the climate. These firms must also actively promote human and Indigenous rights in their investments, and ensure that all funds they offer to their clients are climate- and Amazon-safe by default.

The reality is that the world's largest asset managers have a huge role to play in the fight against climate change and injustice. The decisions they make about how to invest their clients' money have tremendous impacts not only on the lives of frontline communities in the Amazon but on all of us. It is vital, therefore, that we hold the industry accountable and demand it center Indigenous peoples, human rights, and the climate.

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