• Standard Bank continues to come under fire for its involvement in a crude oil pipeline.
• The bank is a financial advisor to the project but has not yet taken a decision to fund it.
• Activists say Standard Bank continues to fall back on the same, nonfactual arguments about fossil fuels.

Responding to fierce criticism of its support of an East African oil pipeline, Standard Bank said it had not yet decided to back the project as it works to complete a due diligence process. The bank has, however, stood firm on its commitment to fund gas projects on the continent.

The bank’s annual general meeting (AGM) was held virtually on Tuesday, but environmental and climate justice organisations, including the Extinction Rebellion, gathered outside the bank’s Rosebank offices to protest the funding of fossil fuels.

During the AGM, activist organisations took the group on about its approach to the funding of fossil fuel projects.

A prominent line of questioning was the bank’s involvement in the East African Crude Oil Pipeline (EACOP) – a project that will enable the extraction and transport of crude oil from Hoima, Uganda, to the port of Tanga in Tanzania.

Standard Bank has been acting as a financial advisor for the EACOP project finance loan since 2017.

Ryan Brightwell, researcher and human rights lead at BankTrack, a global nongovernmental organisation (NGO), noted that Standard Bank last year said consultants were finalising a social and environmental report on the project, but that this report had yet to see the light of day.

In its interim report, Standard Bank noted that the consultants had raised no red flags.

However, Brightwell said a civil society assessment had raised critical issues, including harassment of human rights defenders, farmers facing restrictions on how they use their land, years of delays to a compensation process, low-cost water crossings raising pollution risks, and harm to natural resources.

Standard Bank CEO Sim Tshabalala said the bank had not committed to funding the project yet and would not do so unless it was satisfied that the project was compatible with the bank’s policies, including its climate policy, as well as all applicable local and international laws and regulations.

“We continue to engage with NGOs who oppose the project. And we know that they argue that it has already caused human rights abuses, that it will cause irreparable environmental damage, and that it will not benefit the economies of east Africa. However, we’ve also engaged with Total [Energies, the largest shareholder in the project] as well as the government of Uganda who make a different case,” Tshabalala said.

“We take all inputs very seriously. And we will reach a conclusion based on a fair and thorough weighting of the economic, social and environmental pros and cons associated with this project. We recognise the potential for very large economic and fiscal benefits from this foreign direct investment for the countries involved. But we will continue to consider the environmental and social costs and benefits and weigh all the information accordingly.”

As advisors, Tshabalala said Standard Bank had impressed upon the project developers the need to follow responsible processes concerning environmental and social risks.

He further said the findings of an independent environmental and social intelligence report were being reviewed, “and our final assessment and subsequent decision will follow”.

Tracey Davies, executive director at shareholder activist organisation Just Share, said Standard Bank had for years said it was still mulling a decision to fund the pipeline.

“It seems to me that these responses to these questions today, and at every other engagement for the past four years, have just been a deflection, a kind of failure to tackle the questions head-on and a way of delaying scrutiny on the decision that they have to make,” she told Fin24 after the AGM.

Davies said Standard Bank had consistently fallen back on its argument that the project’s potential economic benefits must be balanced with social and environmental harms.

“We’ve reached a point in history, and with the benefit of hindsight and the benefit of climate science, where it’s quite clear to everyone looking at this with an objective mindset, not a profit-motivated mindset, that for the vast majority of people, the impact of this project will be negative rather than positive,” she said.

The bank’s policy requires it to reduce its exposure to fossil fuels, except for natural gas, to which its exposure will increase up until 2030, dropping off after that.

Just Share questioned the bank’s support for gas, noting that the Intergovernmental Panel on Climate Change and the International Energy Agency both make clear that new oil and gas projects will be fatal to the goals of the Paris Agreement.

In addition, multiple peer-reviewed studies show that gas is not necessary for poverty alleviation, energy security or development in Africa. “Why does Standard Bank consistently fail to acknowledge these, and what is your evidential basis for claiming that new gas development provides the cheapest and most equitable pathway to energy security in Southern Africa?” Just Share asked at the AGM.

Tshabalala countered that the bank’s policies are based on the imperative of a Just Transition for Africa and the principle of a common but differentiated responsibility for countries of different levels of development. “Our climate policy sees natural gas as an important transition fuel in Africa … [which] is particularly important to supplement renewable energy as it provides baseload power,” he said, adding that the bank’s funding of natural gas will be subject to strict conditions, including those related to human rights and social development.

Said Davies to Fin24: “It’s frustrating that a huge, sophisticated organisation like Standard Bank, which claims to have the best interests of Africa at the heart of its operations, is just defaulting to very unfactual arguments about fossil fuels and development, essentially to justify the fact that, when it comes to oil and gas, it’s going to do what it wants to do anyway.”

SOURCE:

Standard Bank: Jury is still out on funding of east African oil pipeline | Fin24 (news24.com)