In early August, just as protesters from across the country descended on North Dakota to rally against an oil pipeline near the Standing Rock Sioux Reservation, some of the world’s biggest banks signed off on a $2.5 billion loan to help complete the sprawling project.
Now, those banks — which include Citigroup and Wells Fargo of the United States, TD Bank of Canada and Mizuho of Japan — have come under fire for their role in bankrolling the pipeline. In an open letter on Monday, 26 environmental groups urged those banks to halt further loan payments to the project, which the Sioux say threatens their sacred lands and water supply.
In campaigning to reduce the world’s carbon emissions, environmentalists have increasingly focused on the financiers behind the fossil fuel industry — highlighting their role in financing coal, oil and gas projects. It is an expansion of traditional protest efforts, and it has met with some early success.
Environmental groups have also criticized the Dakota Access pipeline as outdated infrastructure with no place in a world racing to stave off the worst effects of climate change. The 1,172-mile pipeline is expected to carry nearly half a million barrels of crude oil daily out of the Bakken fields of North Dakota, according to the company building the pipeline, Energy Transfer Partners.
Late last month, hundreds of police in riot gear used pepper spray and rubber bullets to evict protesters from land owned by Energy Transfer. Over 100 people were arrested in the sweep. President Obama said last week that the Army Corps of Engineers was considering an alternate route for the pipeline.
“Banks have a choice to either finance the transition to renewable energy, or to finance pipelines and power plants that will lock us into fossil fuels for the next 40 years,” said Johan Frijns, director of BankTrack, a Netherlands-based advocacy organization that led the campaign. “If we’re serious about fighting climate change, we can’t continue to finance fossil fuel infrastructure of any kind.”
The letter from BankTrack and other environmental groups, including the Sierra Club, Greenpeace and Friends of the Earth, was addressed to the Equator Principles Association, a consortium of global banks committed to responsible environmental and social practices.
Thirteen of the 17 banks that participated in the latest loan to the Dakota pipeline project, including all five of the lead banks, are members. The group was holding its annual meeting in London on Monday and Tuesday.
The letter came as climate negotiators gathered in Marrakesh, Morocco, to work on the details of executing the Paris climate accord. On the agenda are drafting rules on how to measure and report greenhouse gas emissions, as well as securing financial aid to help poor countries deal with climate change.
Hillary Clinton, the Democrat nominee in the race for the United States presidency, has said she will back the climate policies of President Obama, including continued support of the Paris agreement. Her Republican opponent, Donald J. Trump, has called global warming a hoax, and has said he would “cancel” the Paris deal if he were elected.
In their battles with banks, environmentalists have scored some early victories. After a concerted effort by climate-change campaigners, several global banks, including Barclays, ING and Deutsche Bank, stepped back over the last two years from projects that involve mountaintop removal mining, a practice experts say is particularly damaging to the environment.
Earlier this year, JPMorgan Chase announced that it would no longer finance new coal-fired power plants in the United States or other wealthy nations, a retreat that followed similar announcements by Bank of America, Citigroup and Morgan Stanley. The banks’ move away from coal, however, appeared motivated as much by the plunging profitability of coal as by concerns over climate change.
Experts also question the profitability of the Dakota pipeline, at a time of slumping oil prices.
“A lot of infrastructure investment, particularly pipelines, is built around strong oil-demand projections that go out decades,” said Mark Campanale, founder of the Carbon Tracker Initiative, a financial think tank that focuses on energy and climate change. “If the scenarios around demand for oil is wrong, it’s likely that people are building costly infrastructure on a false promise — that the oil is going to be needed in 30 to 40 years.”
The loan to Energy Transfer and its partners Sunoco Logistics Partners and Phillips 66 was led by Citigroup, Mizuho, Bank of Tokyo Mitsubishi UFJ and TD Bank, according to a filing with the Securities and Exchange Commission.
Citigroup said that it had already raised concerns over the project with Energy Transfer and advocated engagement with the Sioux tribe. It was closely following the outcomes of the federal government’s efforts to engage local communities in a possible review of the project, the bank said in a statement. A Wells Fargo spokesman, Alan Elias, declined to comment.
Judith Schmidt, a spokeswoman for TD bank, declined to comment on the letter specifically. Mizuho and the Bank of Tokyo could not immediately be reached for comment.