By Spy Uganda
Sumitomo Mitsui Financial Group Inc. said it isn’t financing an oil pipeline in East Africa, joining a growing list of financial firms distancing themselves from the project.
“We are not currently involved,” the Japanese bank’s Chief Sustainability Officer Masayuki Takanashi, said at a media briefing Tuesday. Takanashi was responding to a question about the East African Crude Oil Pipeline project, which is planned to carry oil 900 miles from the fields of western Uganda to the coast of Tanzania.
He declined to say if the bank had participated in the project in earlier stages. Environmental group 350.org in February said the bank was a financial advisor which at the time had not withdrawn from the project.
The pipeline, which is budgeted at $5 billion according to analysts at Barclays Plc, has emerged as a test of the finance industry’s appetite for backing fossil-fuel projects. Protesters have targeted individual firms, successfully persuading several European insurers to steer clear of the pipeline. Standard Chartered Plc has also said it isn’t involved in the financing.
The decision, which follows mounting pressure from the StopEACOP campaign, is particularly significant as the bank had previously confirmed that it was undertaking due diligence on financing the $5 billion project.
Though construction has not started, the controversial EACOP project, being led by French oil major TotalEnergies, is said to have already resulted in scores of project-affected persons and frontline activists suffering violence, intimidation, and land use restrictions. The compensatory processes have allegedly been unfair, leading many communities impacted to suffer the unfair loss of their land and other income-generating streams due to the pipeline’s development.
Local communities and activists have also raised concerns about the project’s potential impact on the environment and the well-being of those who live in the pipeline’s path, not forgetting that the EACOP could trigger a dangerous spike in carbon emissions and the apparent threat to local wildlife populations, including protected and sensitive ecosystems.
In reaching this decision, Sumitomo Mitsui and Standard Chartered have now joined the other 24 banks to have publicly distanced themselves from the EACOP. The project, which still needs a $2-3 billion project finance loan in order to proceed, has lost the backing of nine out of TotalEnergies’ 10 largest financiers.
Standard Chartered is the current chair of the Equator Principles, the banking sector’s rules for assessing environmental and social risk when financing large projects, with which the EACOP project sponsors have committed to comply. The bank’s decision to withdraw after assessing the project against the Equator Principles clearly conveys that the EACOP and associated oil projects fail to live up to the required international standards.
The StopEACOP campaign is determined to push other firms considering getting involved in this controversial EACOP project, in particular the three banks acting as financial advisers to the project: South Africa’s Standard Bank, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and the Industrial and Commercial Bank of China (ICBC), as well as the US insurance broker Marsh, to follow Standard Chartered in pulling out of the project and instead increase their investment in genuine climate solutions.