Become a member of The Cuenca Dispatch and access exclusive weekly reports on Ecuador's economy, politics, crime and more that you will not find published anywhere else on the web.

Ecuador's Original English Language Newspaper

International banks fund oil extraction, groups say it puts Ecuadorian Amazon at risk

Published on July 20, 2021

If you find this article informative…

Members receive weekly reports on Ecuador’s economics, politics, crime and more. Plus, NO ADS.

Start your subscription today for just $1 for the first month.

(Regular subscription options $4.99/month or $42/year/)

Click here to subscribe.

A new report from Amazon Watch and Stand.earth says that entities that finance oil extraction continue to fail to take sufficient action.

Several European and US banks continue to fail to take sufficient action to mitigate their contribution to the oil industry that affects the Amazon, according to a new report by environmental organizations Amazon Watch and Stand.earth. The report reveals that financial institutions have not followed up on where the $10 billion they have given in financing to the oil industry since 2009 has gone. Furthermore, it concludes that the banks’ own environmental policies are contrary to the way in which they have acted with respect to the Amazon of Ecuador.

In August 2020, these same organizations revealed that 19 European banks – most of them Swiss – financed the oil trade of the Ecuadorian Amazon, putting millions of hectares at risk in the basins of the Napo, Pastaza, and Marañón rivers in Ecuador and Peru.

The new report released July 8th, revealed that banks are still not taking action to mitigate their financing risks.

The study published July 12th evaluated the risk management policies (RAS) of these banks and compared them with their financing and investment in the Amazon. Each bank was assigned positive and negative scores to obtain a rating on the risk potential that their investments have for the destruction of the Amazon.

The 8 risk areas evaluated by the report were:

  • Oil expansion
  • Deforestation
  • Biodiversity loss
  • Indigenous rights
  • Contamination
  • Corruption
  • Participation strategies
  • Resolution mechanisms

The level of risk calculates the environmental and social implications that banks could cause when financing and investing in oil and gas in the Amazon. The report says that in these cases, financial institutions are “complicit in the negative effects that these entail.” To calculate this risk, they compared current policies – such as zero deforestation, protection of biodiversity, among others – contrasted with their current investments and credit lines in the Amazon.

The banks analyzed were:

  • Rabobank from Holland
  • ABN Amro from the Netherlands
  • ING from the Netherlands
  • BNP Paribas from France
  • Credit Suisse of Switzerland
  • UBS from Switzerland
  • Société Générale de France
  • Credit Agricole from France
  • Natixis from France
  • Citigroup from the United States
  • JP Morgan Chase from the United States
  • Goldman Sachs of the United States
  • Deutsche Bank of Germany

What did the report conclude?

The study concluded that none of the banks has a low level of risk. In other words, despite the fact that many have environmental commitments in force, “they still run a high risk when financing the destruction of the Amazon.” In addition, they concluded that there are banks that have the potential for improvement, but still finance the oil and gas industry in the Amazon, despite having contrary environmental policies to that end.

One of the ways in which banks finance oil extraction is by giving billions of dollars of credit lines to companies involved in the oil trade. The report says that they have no control or monitoring of the final destination of that money. Amazon Watch and Stand.earth say that merchants “spend those resources on any working capital without sufficient scrutiny to detect environmental and social risks or corrupt business practices.” That is why, the report says, banks continue to “finance corruption” in the Amazon.

Another factor that was taken to establish the risk level of the banks is the rights of the Amazonian indigenous peoples. The report concluded that the policies of the financial institutions analyzed “do not respect the right of indigenous peoples to give or deny consent to any activity in their territories.” They do so despite the fact that the concept of Free Prior and Informed Consent (FPIC) is derived from international legal standards that recognize the rights of indigenous peoples to self-determination and control over their territories.

The report says that the Amazon is at ” a point of no return ” and that it is imperative that oil expansion stops and fossil fuel production is reduced. The document warns that unless the banks “take decisive action today” they will continue to support activities that violate the rights of indigenous communities and destroy the Amazon rainforest and climate.

The environmental policies that these banks have do not work to mitigate the effects that their investment has or has had in oil extraction for decades. The report says that while many have zero deforestation policies, most of those do not include areas where oil or gas is extracted. According to Amazon Watch and Stand.earth, the roads that must be built to get the oil or gas open “the way for further deforestation and pollution.”

Furthermore, the report says that if banks were serious about protecting biodiversity – as some of their commitments to the environment say – they would not allow their financial decisions to support activities that lead to the degradation of flora and fauna. Especially from a territory like the Amazon, which encompasses 10% of the known species on the planet.

How much money have banks delivered for oil activity in the Amazon?

The funding from the banks was revealed in a report by Amazon Watch and Stand.earth published in August 2020.

This study showed that despite having internal environmental sustainability policies, several financial entities put millions of hectares at risk in the basins of the Napo, Pastaza, and Marañón rivers in Ecuador and Peru. According to the 2020 report, banks had turned over more than $10 billion since 2009.

The Amazonian oil trade contributes to climate change and has direct impacts on indigenous peoples in the area, according to Amazon Watch. The report cites as an example the oil spill of April 7, 2020 that contaminated the Coca river and reached the Napo river. They also include that of the Shiripuno river spill, in the Amazon province of Orellana, in November of last year. Amazon Watch says that the impact of the latter was “extensive in the indigenous communities of the Waorani people” because it advanced towards the territories of peoples in voluntary isolation.

The August report last year concluded that when European banks finance oil trade they get involved in the process. “They help build bridges between buyers and sellers who have different needs, risks, time horizons, and incentives,” the report says. Furthermore, banks often physically receive the crude.

That forces them to be consignees in customs documents to ensure that merchants can cover their risks. Those firms allowed researchers at Amazon Watch and Stand.earth to track their involvement in the oil trade. According to the study, the 155 million barrels of oil that were extracted from Ecuador’s Amazon rainforest – between 2009 and 2019 – generated more than 66 million metric tons of carbon dioxide (CO2), an atmospheric pollutant. That’s the same amount that 17 coal-fired power plants emit annually.

What is the solution?

The Amazon Watch and Stand.earth report says that “the only real solution to managing the risk of destruction of the Amazon is for banks to exclude Amazonian oil and gas from their portfolios.” This is a decision already taken by the banks of the BNP Paribas Group, from France, Credit Suisse, from Switzerland, and ING, from Belgium. These corporations were responsible for more than 50% of the financing provided in the last 10 years.

In January 2021, representatives of those institutions sent emails to Stand.earth and Amazon Watch with the announcement that they will no longer finance the trade in crude oil from the Ecuadorian Amazon. It was the first time that banks like these have adopted policies that exclude financing for extractive activities in the Amazon. However, these 3 banks still have a high risk level because some of their policies contradict their commitments, according to the analysis of the organizations.

Furthermore, in 2020, Rabobank – from the Netherlands – told Reuters that it “stopped financing shipments of Ecuadorian crude in early 2020.” The report released today says that although compliance with its environmental protection policies exceeds the average of the other institutions, Rabobank still invests in areas that cause deforestation such as agricultural plantations.

Also, UBS – from Switzerland – said that “it had already decreased some oil transactions in the region due to concerns about indigenous land rights.” However, according to Amazon Watch, USB has not yet made a firm commitment not to finance crude oil trading in the future.

In addition, the report says that indigenous organizations and allied organizations “make an urgent call for the implementation of measures that prevent the Amazon from continuing on its destructive trajectory towards the tipping point.” Amazon Watch and Stand.earth say that banks “are running out of excuses not to take this step.”


  1. I totally agree with the goal of stopping the financing of the explorations in the Amazone. But I would wish more accuracy in this report.
    – the majority of the banks seem not to be from Switzerland (2):
    France: 4
    USA: 3
    Netherland: 3 (Holland is the same country)
    Germany: 1
    U.K. 1

  2. Why don’t these lending institutions instead contribute funding to the very resourceful and hardworking Ecuadorian people in the form of small, low or no interest business loans, and arrange training in start-up family businesses. This way, instead of importing billions of dollars of sub-standard Chinese goods flooding the market in Ecuador, families could be trained, and have home-based manufacturing businesses. They would become self-sufficient, boost the economy, and grow to employing other people.

  3. You my recall that El Presidente is also a banker…


Submit a Comment

Your email address will not be published. Required fields are marked *

Share This