Global Coalition on
Environmental and Human Rights to CSFB: "Oil is Over, Fund the Future"
June 30, 2005 — By Rainforest Action Network
Full Page Ad in Financial Times Calls on Credit Suisse First Boston to Sever
Ties with Shell's Destructive Sakhalin II, the World's Largest Oil and Gas
Project
NEW YORK — Eight international civil society groups placed a full page ad in
the Financial Times today urging Credit Suisse First Boston (CSFB) to uphold its
sustainability commitments and sever its relationship as financial advisor to
the controversial Sakhalin II project. Sakhalin II, a $12 billion Shell-led
operation on Russia's Pacific Coast is the single largest oil and gas project
ever undertaken. The ad coincided with renewed demonstrations and indigenous
communities blockades on Sakhalin Island and a week of solidarity events and
protests in New York, London and Moscow. Shell's AGM in London was the site of
resistance to the project as well as Credit Suisse First Boston's Russian
offices in Moscow.
CSFB is a signatory to the Equator Principles, a voluntary set of guidelines
designed to integrate environmental and social criteria into lending decisions,
which Sakhalin II violates. The ad outlined the direct violations of the project
to the Equator Principles, which were launched in June 2003 and have now been
signed by 31 private financial institutions in order "to promote
responsible environmental stewardship and socially responsible
development." A number of Equator Principles signatory banks have already
indicated that they will not fund Sakhalin II. Banktrack, an international
campaign network focusing on private investments, released a report last month
entitled "Sakhalin II Gas and Oil Project: Further Breaches of the Equator
Principles" that detailed the violations of the project. A leading
publication on sustainable finance, Environmental Finance, also called Sakhalin
II a litmus test for the Equator Principles earlier this month.
"As we continue our blockades and resistance to this devastating project on
our land, we call on all financial institutions, especially those who have
signed on to the Equator Principles, to reject this project," said Dmitry
Lisitsyn of Sakhalin Environment Watch, a local environmental organization.
"The future of our land and our way of life is at risk and there is a clear
opportunity here to invest in the long term health of communities and our
environments rather than the short term profits generated from destructive oil
projects."
"Sakhalin II is an environmental time bomb," said Ilyse Hogue,
director of the Global Finance Campaign at Rainforest Action Network. "This
type of radical resource extraction is exactly the type of project that the
Equator Principles were designed to prevent. The Shell-led cartel is exhibiting
a reckless disregard of the precautionary principle in this clear-cut case of
business choosing oil over life. Credit Suisse First Boston and all other
Equator Banks have no other ethical choice but to completely withdraw support
and assistance for Sakhalin II."
Declaring 'Oil is Over. Fund the Future', the ad cited a recent IUCN - The World
Conservation Union report released earlier this year in which independent
scientists found that Sakhalin II could push the last 100 Western Pacific Gray
Whales to extinction. The headline of the ad referenced a recent statement from
the European Bank for Reconstruction and Development which has deemed Sakhalin
II "unfit for purpose" due to environmental concerns. The planned
pipeline would cross 24 active seismic faults and hundreds of wild salmon
spawning habitats. Plans to dump a million tons of dredging spoil into Aniva Bay
will threaten a key fishery and thus the livelihoods of Sakhalin islanders.
Credit Suisse First Boston and Shell's Sakhalin II
CSFB is the lead financial advisor to Sakhalin Energy Investment Company, a
limited liability corporation registered in Bermuda whose majority shareholder
is Royal Dutch/Shell. According to Project Finance magazine, the $12 billion
Sakhalin II project is "the biggest single integrated oil and gas project
ever undertaken." The highly controversial mega-project includes plans for
two oil platforms located near the only known feeding ground of the critically
endangered Western Pacific Gray Whale. Other Equator Banks such as JPMorgan
Chase and HSBC have agreed to apply the Equator Principles to their financial
advisory roles, which will allow for early adoption of environmental and social
safeguards on future projects like Sakhalin II.
If Sakhalin II proceeds as planned, toxic oil will move from offshore platforms
through an earthquake zone and down and 800-kilometer pipeline that crosses 24
active seismic faults and more than 200 wild salmon spawning rivers and
tributaries. {New photographs leaked to Sakhalin Environment Watch by
project-insiders reveal gross violations of Russian law. Reckless pipeline
construction slashes through forest ecosystems and destroys pristine wild salmon
spawning streams and tributaries in its path. (Rights-free photographs available
upon request.)}
As Shell announced an insufficient plan to reroute its dangerous pipeline in
April, Sakhalin islanders discovered a huge amount of debris apparently dumped
by a project sub-contractor in a shallow bay crucial to the island's vital
fisheries. A local outcry forced the oil giant to immediately deploy divers in
an effort to determine how the debris came to be dumped there.
Shell has failed to conduct the required Indigenous Peoples' and Cultural
Heritage Plans prescribed by the International Finance Corporation (IFC)
Safeguard Policies, the basis for the Equator Principle guidelines for managing
environmental and social issues in project finance lending. In January of this
year, indigenous residents endured minus 30-degree temperatures to peacefully
blockade the Sakhalin II construction site and protest the negative impact it
will have on their lives and livelihoods.
Despite obvious violations, Credit Suisse Group stated in a March 24 letter to
Berne Declaration and Greenpeace Switzerland, "We believe that appropriate
measures have been defined such as to limit any significant adverse effects the
Project may have on the environment."
Western Pacific Gray Whales
According to "Impacts of Sakhalin II Phase 2 on Western Pacific Gray Whales
and Related Biodiversity," a report by IUCN - The World Conservation Union
released in February, "the most precautionary approach would be to suspend
present operations and delay further development of the oil and gas reserves in
the vicinity of the gray whale feeding grounds off Sakhalin, and especially the
critical nearshore feeding ground that is used preferentially by mothers and
calves." The report states, "The small population of western gray
whales, numbering only about 100 animals, is on the edge of survival. It was
reduced to such low numbers by commercial whaling that in the mid 20th century
it was thought to be extinct. The population is listed by IUCN - The World
Conservation Union as 'critically endangered' and also has been the focus of
concern by the International Whaling Commission (IWC) and the 3rd World
Conservation Congress. The few surviving animals (possibly including only 23
reproductively active females) face a number of hazards throughout their
range." A complete copy of the report can be found at www.iucn.org.
Market and Legal Response
Leading socially responsible blue-chip investment funds such as Investec
Henderson Crosthwaite and Morley Fund have already sold all their Shell shares
over concerns about the oil giant's lack of environmental ethics in its
activities including those off Sakhalin Island. The European Bank for
Reconstruction and Development (EBRD) has ruled that Sakhalin Energy's
environmental impact assessments are "unfit for purpose." The
Moscow-based legal center Rodnik filed a lawsuit in 2004 to stop the
construction of Sakhalin II on the grounds that it violates Russian
environmental code, which stipulates that any activities harmful to the IUCN Red
List of Threatened Species should be stopped.
"From the likely extinction of Western Gray Whales to oil spills to
destruction of the local fishing economy, the risks of Shell's Sakhalin
boondoggle are too great. Our taxpayer-supported banks are rejecting it - Credit
Suisse and other banks should too," said David Gordon, Executive Director
of Pacific Environment.
Supporting statements:
"Native peoples of Sakhalin -- Nivkh, Nanai, and Uilta, who continue a
traditional subsistence livelihood based on fishing, hunting, and reindeer
herding, have felt the negative environmental impacts from Shell's Sakhalin II
Project most strongly," said Pavel Sulyandziga, vice president of the
Russian Association of Indigenous Peoples of the North. "Offshore oil
production has led to a sharp decrease in limits and harvests of fish by the
native population, even though this traditional food is virtually the only
source of survival for native peoples."
Sulyandziga continues, "The lack of access to full and truthful information
about the oil development and the disinformation in published project
information, along with the lack of interest by the company to carry out a
serious dialogue with native peoples' organizations, has forced us to conduct
civil protests."
"We haven't moved even a step forward in resolving our problems," said
Aleksei Limanzo, the representative of the Council of Delegated Representatives
of Indigenous Peoples of the North in Sakhalin Region. "We believe the oil
companies are trying to drag out the negotiation process, so we're forced to
renew our action."
Andreas Missbach, Berne Declaration, Zurich Switzerland: "Credit Suisse
states on their website, that they 'contribute to sustainable development by
acting in an environmentally responsible manner. Their role in advising the
destructive Sakhalin II project proves, that those are nothing but hollow
words."
"The Equator Banks are already struggling to demonstrate that they are
complying with the EPs. If they fund Sakhalin II in its current form, it will
deal a crippling blow to the credibility of the Equator Principles."
Michelle Chan-Fishel Friends of the Earth-US Program Manager, Green Investments
project.
"BankTrack has approached all potential financiers of the project, Equator
and non-Equator banks alike," said Johan Frijns, coordinator of BankTrack,
based in Utrecht, Netherlands. "If the possible extinction of an entire
whale species is the sort of risk that Equator Banks are ready to 'determine,
assess and manage' with their Principles, what good are such Principles then? At
the end of the day, Principles are about having to make hard choices at times,
and this is what we expect EP banks to do."
"The Sakhalin II project is a chance for banks to show whether they are
serious about the Equator Principles, or just paying lip service to
environmental concerns. Right now, the spotlight is on CSFB, which has already
failed the test. We hope other Equator banks won't be so short-sighted."
Greg Muttitt, Senior Researcher at Platform, UK based advocacy on oil and gas
issues.
Petr Hlobil, Campaigns Coordinator, CEE Bankwatch Network, Czech Republic said
"So far EBRD has taken the reasoned position that it cannot finance
Sakhalin II due to its extreme environmental impacts. We expect that CSFB, an
institution signed on to Equator Principles, must do the same."
*Broadcast quality B-Roll and stills straight from Sakhalin available upon
request.
Contacts:
Celia Alario, Rainforest Action Network, (415) 398-4404 or (310)721-6517, media@ran.org
Rory Cox, Pacific Environment, (415) 399-8850 x302, rcox@pacificenvironment.org