Just Share again blasts Standard Bank’s flirtation with East African oil pipeline

Just Share, the shareholder activist group, has accused Standard Bank of isolating itself from its peers by continuing to flirt with financing carbon-intensive projects even as its main rivals spurn such deals amid growing climate change concerns.

Last week, French and Chinese oil giants Total and Cnooc signed the final investment decision to proceed with the East African Crude Oil Pipeline (EACOP) project, a planned $10bn deal on which Standard Bank shareholder Industrial and Commercial Bank of China (ICBC) is listed as an adviser. The controversial project aims to tap the oil reserves of poverty-stricken Uganda and transport the fuel more than 1,400km across the East African nation, as well as neighbouring Tanzania, where it will be exported from the port of Tanga.

However, detractors argue the project will displace small-scale farmers and poses a serious risk to wildlife and the sensitive East African ecosystems at a time when much of the world is looking to reduce its reliance on fossil fuels. While FirstRand, Nedbank, Absa and Investec have all reportedly opted out of financing the project, Standard Bank has thus far refused to rule out its participation, much to the ire of Just Share.

“Standard Bank’s participation in the funding of the EACOP project remains subject to the findings of environmental and social due diligence assessments and meeting the Equator Principles requirements,” Standard Bank said in response to questions from Business Day. “It is also subject to a full assessment of the EACOP sponsors’ climate change strategies and targets.”

However, with the EACOP project still facing a funding shortfall, the decision by four of SA’s five largest banks to steer clear of it could put further pressure on Total, the majority shareholder in the project, to unlock additional finance for its construction.

Just Share, which has been lobbying against Standard Bank’s participation in the project since 2020, has now accused Africa’s biggest lender by assets of balking on its environmental, social and governance (ESG) obligations by associating with what it calls a “highly destructive project”.

“The EACOP, if completed, would pump enough oil to add up to 34.3-million tonnes of carbon dioxide —  about seven times the current emissions of Uganda and Tanzania —  into the Earth’s atmosphere each year, at a time of acute climate crisis,” Just Share said in a joint statement with BankTrack and StopEACOP, organisations that are also opposed to the controversial pipeline. “The project will have severe impacts on people, climate and wildlife, and has already infringed on the rights of the communities who lie in the pipeline’s 1,443km path.”

According to StopEACOP, the decision by four of SA’s main banking groups to avoid financing the oil pipeline now brings the number of lenders worldwide that have ruled out their involvement to 15. Among the international banks listed by the group as not being supportive of the project are Barclays, BNP Paribas, Credit Suisse and HSBC.

Lenders named as active supporters of the project are Japan’s Sumitomo Mitsui Bank and China’s ICBC, a 20.1% shareholder in Standard Bank, both of which are listed by StopEACOP as being among the three key financial advisers on the project.

FirstRand, Nedbank and Investec all confirmed to Business Day that they had decided not to finance the EACOP project and Absa had not yet responded to questions by the time of going to print. Just Share also claims that Standard Bank has been advising the governments of Uganda and Tanzania on the project since at least 2017.

“Despite the show of progress with last week’s final investment decision, Total and Cnooc stayed quiet on the crucial question of where the money will come from,” said Ryan Brightwell, the human rights campaign lead at BankTrack. “The reality is that this project is struggling to find financiers unscrupulous and reckless enough to back it.”

theunisseng@businesslive.co.za