Press release: 14 September 2021
Banks’ support of Cambo oil field operators is ‘hypocrisy’: ClientEarth lawyers
ClientEarth lawyers have written to 17 major UK and international banks – including Barclays, HSBC and Standard Chartered Bank – requesting they justify their support for the operators of the Cambo oil field project, in light of the banks’ climate commitments.
These institutions, together with Bank of America, Deutsche Bank, Morgan Stanley, Société Générale and ten others, all provide finance or advisory services to Shell and Siccar Point Energy – the two firms behind the controversial North Sea project.
At the same time, the banks have committed to address their climate impact by aligning their portfolios with pathways to reach net zero emissions by 2050 as members of the Net-Zero Banking Alliance or signatories of the Collective Commitment to Climate Action.
The environmental law charity’s legal experts warned that continuing to do business with the fossil fuel firms would make a mockery of these promises if Cambo is approved.
Shell and Siccar Point have applied for a permit to develop the oil field, which would allow them to produce as many as 170 million barrels of oil over 25 years in its first phase despite the disastrous consequences expanding fossil fuel production will have on the climate.
If given the green light, Cambo would be one of the first proposals to receive approval since the International Energy Agency declared that there could be no new oil and gas supply projects if the world is to limit global warming to 1.5°C.
ClientEarth maintains that the scientific consensus on climate change necessitates that financial institutions no longer provide financial or advisory services relating to projects, or to companies involved in projects, that involve new exploration or development of fossil fuels.
ClientEarth lawyer Jamie Sawyer said: “You cannot claim to be transitioning to net zero, while at the same time supporting clients that are spearheading a risky oil and gas project clearly at odds with net zero goals.
“We challenge the directors of every bank that is enabling the Cambo project to justify such hypocrisy. Not only are they putting their credibility and reputation on the line, but if the project proceeds they are unnecessarily exposing the bank to significant financial and legal risks with no clarity on how these will be managed.”
Participants of the Net-Zero Banking Alliance or Collective Commitment to Climate Action have committed to using credible science-based decarbonisation scenarios and promised to engage with their clients on their transition.
The lawyers argue that by contradicting these pledges, directors risk breaching their fiduciary duty to act in a way that promotes the success of the bank.
There is additional risk of the banks breaching regulatory requirements in relation to prudential risk management. This includes failure to manage the stranded asset risk associated with the project, which would lock in oil production up to 2050 or beyond.
In their letters, ClientEarth lawyers also highlighted the banks’ legal obligations under international standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
These include engaging with Cambo’s operators to influence them to stop pursuing the proposed development, and considering terminating their relationships if they refuse.
Aside from legal risk, banks could come under significant pressure from investors to withdraw financing, including through shareholder climate resolutions calling for strengthened energy policies, and votes against directors.
Sawyer added: “The sad fact is that the Cambo oil field is just one example of where these banks’ actions don’t match their words. What is it going to take for these institutions to listen to the science and start demanding that polluting companies stop oil and gas expansion immediately, or consider ending their relationships with clients that refuse?
“It’s time for these powerful financial actors to put their money where their mouth is. With Cambo, they have the opportunity to help avoid millions of tonnes of harmful emissions from damaging our fragile climate even further and help get the world on track for net zero.”
Notes to editors:
ClientEarth sent letters to the directors of the following banks:
Bank of America; Barclays; BNP Paribas; BPCE/Natixis; Citi; Crédit Agricole; Credit Suisse; Deutsche Bank; HSBC; ING Bank; Lloyds; Morgan Stanley; Banco Santander; Société Générale; SpareBank 1 Markets; Standard Chartered; UBS
- Each bank, as a member of the Net-Zero Banking Alliance and/or a signatory to the Collective Commitment to Climate Action, has committed to:
- Align their portfolios with pathways to reaching net zero emissions by 2050 or sooner, consistent with a maximum temperature rise of 1.5°C, taking into account best available science;
- Use credible science-based decarbonisation scenarios and provide a rationale for the scenarios chosen;
- Prioritise efforts where the bank has, or can have, the most significant impact; and
- Engage and work with the bank’s clients on their transition.
ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account, and defend everyone’s right to a healthy world. From our offices in Europe, Asia and the USA we shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.