Taking The Earth Into Account

(2 of 2)
Veteran green campaigners have been surprised by the speed with which banks have embraced change. "I think that many activists may have assumed that bankers were priests of the Church of Greed," says Steve Kretzmann, director of Oil Change, a Washington group that specializes in tracking project finance. "But many bank representatives have a sophisticated and advanced sense of the environmental, social and reputational risks."

Just ask Citigroup. In 2000, U.S. environmental activists from ran began campaigning against the bank's funding of old-growth logging projects and a controversial new oil pipeline through an Ecuadorian ecological preserve. ran placed a full-page advertisement in the International Herald Tribune labeling ceo Sandy Weill an environmental villain. Citigroup started meeting with ran, and last year it announced it would apply the Equator Principles to its business. The bank committed to banning investment in firms logging primary tropical forests and pledged to invest in renewable energy projects.

Don't expect the campaigning to stop just yet, though. In a scathing report published last year entitled Principles, Profit or Just PR?, BankTrack accused many firms of failing to deliver on their lofty principles. The report highlighted the decision by nine Equator Principles banks — including ABN Amro, Italy's Banca Intesa and Citigroup — to fund BP's controversial Baku-Tbilisi-Ceyhan (BTC) pipeline, which will run through Azerbaijan, Georgia and Turkey to bring Caspian Sea oil to the West. The project, argued BankTrack, violates the Equator Principles in key areas, notably in regard to the protection of indigenous peoples. The ngo suggests the Turkish government may use the new pipeline as an excuse to crack down on ethnic Kurds living along its route. Last December, Banca Intesa withdrew from the project, but both Citigroup and ABN Amro reject BankTrack's criticisms and have stayed on. "BTC is a complex and challenging transaction, but we felt on balance that it did meet the Equator Principles," says Richard Burrett, ABN Amro's managing director for sustainable development.

Just last month, another Equator Principles member, Credit Suisse First Boston, found itself the target of new global protests for its decision to underwrite Shell's controversial Sakhalin II pipeline in the northern Pacific, a project environmentalists say threatens the endangered Western gray whale. Without adequate transparency and monitoring of sensitive projects, ngos fear the Equator Principles will become meaningless. "What good is a series of principles like this is if you can't verify that they are being applied on a project-by-project basis?" asks Oil Change's Kretzmann. "Equator banks are saying to people 'Trust us,' but not allowing any independent verification. That's a problem."

Despite these differences, banks and ngos are likely to keep working together. The reason is simple: socially and environmentally responsible investment makes good business sense. HSBC, Citigroup and ABN Amro all say that green issues are increasingly important when they consider funding global projects. In the future, "the Equator Principles will be seen as a catalyst for how banks conduct themselves in other areas of their business," says ABN Amro's Burrett. If that happens, activists in haz-mat suits will have to find another target.