Located in the Ecuadorian Amazon, Yasuní National Park is a UNESCO World Biosphere Reserve and an IUCN category II national park. It is overlapped by eight oil concessions, including the highest producing oil block in Ecuador.
The Amazon contains a number of nationally protected nature areas, such as Yasuní National Park, Cuyabeno Wildlife Reserve, Cayambe-Coca Ecological Reserve, Sumaco-Napo-Galeras National Park, among others.
The Amazon, and particularly the Yasuní region, is widely considered one of the most biodiverse areas on Earth. It contains at least over 130 globally threatened and endangered species, including the giant otter, white-bellied spider monkey, golden-mantled tamarin, giant armadillo, and jaguar. It contains the second highest concentration for reptile species in the world, and is ninth in regards to mammal biodiversity. In just one hectare in Yasuní, at least 655 different tree species were identified.
The Amazon rainforest is the largest contiguous tropical rainforest and contains some of the most ancient, old growth forests in the world. The Amazon is world renowned as a critical carbon sink, and recent studies have shown that further deforestation may jeopardize humanity’s ability to meet the Paris Agreement. However, the oil industry is a well established driver of deforestation in the Amazon.
Ecuador’s northern Amazon is ground zero for the country’s oil industry. Here, the Aguarico River is subject to ongoing contamination from surrounding wells, flowlines, and toxic waste pits. In April 2020, two oil pipelines running alongside the Coca River, an Amazon tributary, ruptured and spilled their toxic contents into the river. Oil contamination then spread to the free flowing Napo River, further polluting the water for downstream populations.
Oil related activities, such as oil trading, continue to harm traditional and Indigenous communities inhabiting the Amazon Sacred Headwaters region, and whose cultures and livelihoods depend on the well-being of forests and rivers. For instance, oil pipelines are a common source of spills and pollution, which in turn directly cause long lasting environmental and social problems. Dozens of riverine Indigenous communities are and continue to have their health, livelihoods, and cultures put at risk by regular spills. Despite language in the Ecuadorian Constitution on the core principles of Free, Prior, and Informed consent (FPIC), the country currently lacks any law or regulation that actually allows Indigenous peoples to fully exercise this right. Upstream oil extraction projects on Indigenous territories are currently and consistently in violation of this fundamental right. Indigenous and traditional communities have long protested government, corporate, and banking infringements on their right to Free, Prior, Informed consent, which is codified in the United Nations Declaration on the Rights of Indigenous Peoples.
The Amazon River Basin is a critical, transboundary ecosystem, spanning across Ecuador, Peru, Bolivia, Brazil, Venezuela, Columbia, and Guyana. Its superlative cultural significance and biodiversity, in addition to its natural beauty, should guarantee its protection from any activities which harm these traits, including bank-financed oil extraction and shipping.
In addition to financing oil exploration and extraction projects, banks play an overlooked role in facilitating the trade and shipment of oil to international markets. Known as trade finance, this type of credit is an important link in enabling companies to move oil from its origin to refineries. According to findings from Amazon Watch and Stand.earth, ING, Credit Suisse, UBS, Rabobank, Natixis, and BNP Paribas are the top six banks financing oil trading in Ecuador’s Amazon Sacred Headwaters between 2009 to June 2020, accounting for 85 percent of trade-financed oil shipments.
Many of these banks have developed varying degrees of environmental and social policies which may exclude oil, gas, or coal financing. Despite their announcements of these institutional policies, they are still supporting the fossil fuel sector by providing trade finance. For instance, ING’s Environment and Social Risk Policy excludes financing for Arctic offshore exploration, and prohibits some activities related to deforestation of tropical rainforests. This policy also requires that ING clients assess critical natural habitats and cultural sites. Credit Suisse requires clients to align with the UN Declaration on the Rights of Indigenous Peoples and Free, Prior, and Informed Consent, and its oil and gas policy excludes projects operating in high conservation values and internationally protected areas. Many of these banks are members of the Equator Principles and the Principles of Responsible Banking – both of these frameworks for sustainable finance obligate banks to support the Paris Agreement and meaningfully engage with affected stakeholders.
However, in spite of policies or frameworks purporting to address sustainability, Indigenous Peoples’ rights, and climate change, in practice financial support for oil trading still props up fossil fuel sectors, even if they may have developed institutional commitments excluding direct fossil fuel finance. This is why banks need to extend fossil fuel, environmental, social, and sustainability commitments across their lending portfolios to account for the full impacts of all of their direct and indirect financing, and not just those which banks may directly finance. By failing to address this gap, many of these banking policies contain loopholes which still allow and foster harmful fossil fuel activities.
Oil-related activity and its transportation to international markets continues to cause long standing environmental, social, health, and climate impacts. According to research, crude oil production is associated with stomach, skin, and kidney cancer in adults, and leukemia in children. Furthermore, oil related pollution since the 1960s, whether caused by the extraction process or pipeline leaks, is disastrous for the region’s biodiversity, water supply, and Indigenous and local communities. Oil pollution and spills continue today. In April 2020, both of Ecuador’s transnational oil pipelines ruptured, polluting the only source of water for some 30,000 Kichwa Indigenous people and shutting down water in the city of Coca for several days.
©Amazon Watch
Government plans for oil expansion and the tendering of new oil concessions for exploration consist of opening up roadless, primary forest, and titled Indigenous territories. This is particularly harmful from a climate perspective, as the oil industry is a major driver of direct and indirect deforestation. Preventing encroachment into frontier forest areas and maintaining standing forests is essential for ensuring successful climate change mitigation efforts. Furthermore, pursuing and extracting new fossil fuel reserves produces a double carbon impact for the climate, and is not compatible with the Paris agreement. Additionally, the lack of FPIC regulation in the country means that any future tenders and new upstream expansion, which would in turn increase oil trading, would violate this internationally recognized right.
In response to the oil sector’s long standing legacy of harm and mistreatment towards Indigenous peoples, Indigenous Peoples of Ecuador and Peru are calling for more action to protect the Amazon and those who inhabit it:
We call on the governments of Ecuador and Peru and on the corporations and financial institutions to respect Indigenous rights and territories and stop the expansion of new oil, gas, mining, industrial agriculture, cattle ranching, mega-infrastructure projects, and roads in the Sacred Headwaters. The destructive legacy of this model of “development” has been major deforestation, forest degradation, contamination, and biodiversity loss, decimating Indigenous populations and causing human rights abuses. We challenge the mistaken worldview that sees the Amazon as a resource-rich region where raw materials are extracted in pursuit of economic growth and industrial development.”
Due to historically and ongoing catastrophic oil activities in the Amazon, in addition to the global urgency in meeting the Paris Agreement, banks should prohibit direct or indirect financing for unsustainable, environmentally, and socially harmful activities in or near the Amazon.
