Pipeline controversy sees broking giant accused of OECD breaches

Global insurance broker Marsh has been hit with a legal challenge over its involvement with a controversial oil pipeline.

Inclusive Development International and 10 human rights and environmental organizations in Uganda and Tanzania, filed a complaint to the US government yesterday alleging that Marsh, violated international guidelines for responsible business conduct by serving as insurance broker for the highly controversial East African Crude Oil Pipeline (EACOP).

The groups, which are remaining anonymous due to fear of reprisals, submitted the complaint to the US National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises, an office within the US State Department tasked with handling allegations against American companies.

When completed EACOP would be the world’s biggest heated oil pipeline, stretching nearly 900 miles (1,443 kilometres) through the heart of East Africa.

Protestors said the project has already caused large-scale displacement of local communities and poses grave risks to protected environments, water sources and wetlands in both Uganda and Tanzania.

They added if completed, it would also enable the extraction and transport of enough oil to generate over 34 million tons of CO2 emissions per year at peak production, exacerbating the ongoing climate emergency.

“An insurance broker’s role is often invisible to the public, which allows them to avoid accountability, but Marsh deserves to be scrutinised,” said Coleen Scott, a legal and policy associate at Inclusive Development International. “Marsh is playing a critical role enabling the East African Crude Oil Pipeline to move forward in the face of widespread opposition and overwhelming evidence that the project will be a disaster for Ugandans and for the planet.”

The OECD Guidelines set out principles and standards for responsible business conduct across a range of issues, including human rights and the environment. These standards apply to multinational enterprises with operations or headquarters in OECD countries, including the United States.

“While the OECD guidelines are non-binding, they are an important and widely accepted international standard for ethical business conduct,” Inclusive Development Internationla explained. “The complainants are calling on the U.S. NCP to consider the allegations against Marsh and make recommendations to the insurance broker to bring its conduct in line with these standards. This is the first NCP complaint filed against an insurance broker anywhere in the world.”

The complaint alleges that by providing insurance brokerage services, without which the EACOP could not move forward, Marsh is contributing to the serious harm that the project has already or is expected to cause, including:

  • Improper land acquisition processes characterised by failure to provide prompt and adequate compensation.
  • Intimidation, harassment, threats and arbitrary arrests of community members, environmental and human rights defenders, as well as journalists critical of the project.
  • Inadequate consultation with affected communities.
  • Threats to natural resources relied upon by communities, including the risk of oil spills affecting vital freshwater resources such as Lake Victoria, which supports 40 million people.
  • Immense and irreversible harm to local ecosystems and habitats along the pipeline’s route, which passes through numerous protected wildlife areas in Uganda and Tanzania.
  • Increased carbon emissions that will tip the world closer to climate catastrophe

The campaigners said in their view Marsh’s failure to conduct adequate human rights and environmental due diligence before engaging on this project, and its ongoing contributions to its harmful impacts, constitute a breach of the company’s responsibilities under the OECD Guidelines.

The complainants are calling on Marsh to bring its operations back into alignment with the OECD Guidelines by withdrawing from its role as broker for the project and committing to abstain from offering brokerage services for the EACOP project in the future. Given the severity of the claims, the complainants suggest that Marsh should at minimum commit immediately to withhold its services until the complaint is resolved.

A spokesperson for Marsh said: “Marsh McLennan has a long-standing policy of not confirming the identity of clients. We are committed to helping businesses develop low-carbon business models and manage risks associated with the transition from fossil fuels to renewable energy.”

“As we do our part to accelerate this transition, we recognise that a secure energy supply is crucial for the global economy and society as a whole – this is particularly true in the context of today’s geopolitical environment. We believe all communities are best served by working with operators of clean energy assets to accelerate progress to a lower carbon world and with traditional energy clients to enable them to manage the risks associated with current projects and make the transition as quickly and responsibly as possible.”