Campaigners against a controversial oil pipeline have said the decision by a major bank to refuse to finance the project is a major victory in its effort to stop its development.
Standard Chartered has announced that it will not finance the East African Crude Oil Pipeline (EACOP) project, following pressure from the StopEACOP campaign. The group said the announcement was particularly significant as the bank had previously confirmed that it was undertaking due diligence on financing the $5 billion project.
Though construction has not started, the controversial EACOP project, being led by French oil major TotalEnergies, has been best with protests. Local campaigners said compensatory processes have been unfair, leading many communities impacted to suffer the unfair loss of their land and other income-generating streams due to the pipeline’s development.
Local communities and activists have also raised concerns about the project’s potential impact on the environment and the well-being of those who live in the pipeline’s path, not forgetting that the EACOP could trigger a dangerous spike in carbon emissions and the apparent threat to local wildlife populations, including protected and sensitive ecosystems.
In reaching this decision, Standard Chartered becomes the 25th major bank to have publicly
distanced itself from the EACOP. The project, which still needs a $2-3 billion project finance loan in order to proceed, has lost the backing of nine out of TotalEnergies’ 10 largest financiers.
“Standard Chartered’s decision to refuse to finance the EACOP project is a significant victory for communities impacted by this pipeline and for climate activists worldwide who have been calling for an end to fossil fuel projects that threaten people, nature and the climate. This move should signal other financial institutions on the fence about whether to support this destructive project to act in the interest of the people of Uganda and Tanzania by taking a firm stand against EACOP,” said Zaki Mamdoo, the StopEACOP Campaign Coordinator.
Standard Chartered is the current chair of the Equator Principles, the banking sector’s rules for assessing environmental and social risk when financing large projects, with which the EACOP project sponsors have committed to comply. The bank’s decision to withdraw after assessing the project against the Equator Principles clearly conveys that the EACOP and associated oil projects fail to live up to the required international standards.
The StopEACOP campaign said it is determined to push other firms considering getting involved in this controversial EACOP project, in particular, the three banks acting as financial advisers to the project: South Africa’s Standard Bank, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and the Industrial and Commercial Bank of China (ICBC), as well as US insurance broker Marsh, to follow Standard Chartered in pulling out of the project and instead increase their investment in genuine climate solutions.
“The negative impacts of the EACOP project on local communities are undeniable, and
Standard Chartered’s decision to not finance the project sends a clear message that banks
cannot ignore the concerns of those affected by their investments,” said Diana, senior
communications officer, AFIEGO.
“Standard Chartered had, until Friday, looked like the only European bank prepared to stand with TotalEnergies on EACOP. Its decision will make Total’s attempt to pass off this project as somehow compatible with international standards like the Equator Principles even less credible than they are already,” said Ryan Brightwell, research and communications director at BankTrack.
“As the chair of the Equator Principles Association, Standard Chartered’s sudden decision to withdraw support for EACOP speaks volumes about the project’s non-compliance with international standards. This should send a strong signal to any other Equator banks still on the fence, including SMBC and Standard Bank. Insurers and reinsurers should also take heed, as the financial and reputational risks of this project continue to skyrocket,” said Coleen Scott, legal and policy associate at Inclusive Development International.