By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
The Financial Times reports today on last-ditch efforts to thwart the Dakota Access Pipeline (DAPL) in Dakota pipe lenders under pressure to withdraw:
A number of banks funding the controversial $3.7bn Dakota Access Pipeline have pulled out of the project, following environmental and human rights concerns from the public and big investors that it would contaminate drinking water and damage sacred burial sites of the Standing Rock Sioux tribe.
Efforts to force divestiture focus on two prongs: those banks funding the project, and on states and cities– such as Seattle, Washington; Eugene, Oregon; and Providence, Rhode Island– that invest in lenders, such a Wells Fargo Bank– that have financed the project, as discussed in this recent opinion piece in The Guardian, We can resist the Dakota pipeline through a powerful tool: divestment.
Impact on DAPL Project
The impact of these moves is unlikely to thwart DAPL — especially as Trump has provided a full-speed ahead for construction of both the DAPL and Keystone XL pipelines, as I discussed more thoroughly in this post, Trump Approves Keystone XL Pipeline, Making Good on Campaign Promise.
I shouldn’t neglect to note that the way for Trump ’s DAPL policy was cleared by his predecessor, who as usual, while virtue-signalling his support for the #noDAPL cause, failed to stop construction of the pipeline during his presidency, as I discussed in this previous post, Obamamometer Whispers DAPL Sweet Nothings to Lure Progressives.
Now, with huge amounts of money at stake, contracts in place, and most of the pipeline built, it would take a massive intervention by a severely avenging Jehovah to prevent DAPL’s completion. Which, at the risk of stating the obvious, is extremely unlikely– as there’s been no clear sign of Jehovah weighing in on US policy matters at this time (as much as such intervention might be welcome in some quarters).
But I am intrigued by the success that #noDAPL advocates have had in pressing various European lenders to pull the plug in DAPL. Allow me to quote at length from the FT’s account:
In March ING, the Dutch bank, sold its $120m loan to the oil pipeline and divested its $220m shares in Energy Transfer Partners (ETP), the company leading the project construction. BNP Paribas, the French bank, followed suit and sold off the same size loan in April. The loans make up part of the $2.5bn credit line funded by 17 banks.
Scandinavian banks and asset managers have added their weight. DNB, the Norwegian bank, cut its involvement in the pipeline, which runs from North Dakota to Illinois….
The bank’s asset manager, DNB Asset Management, divested from the companies behind the pipeline last November, while Nordea, the Nordic bank, banned its fund managers from investing in the companies building the pipeline. Nordea’s decision came after Donald Trump, US president, decided to continue the disputed project, in January. The pipeline starts transporting oil in May. Odin Fund Management, the Norwegian asset manager, and Storebrand, a sustainable investment manager in Norway, have also divested.
With DAPL expected to start transporting oil this month, these perhaps seemingly quixotic divestiture efforts nonetheless suggests a weak ray of optimism for stopping or at very least slowing future pipeline projects –a cheering message, in light of my post from yesterday, Oklahoma Governor Mary Fallin Signs Law Imposing Hefty Fines and Lengthy Jail Terms for Anti-Pipeline Protests, discussing how a state that is a leading fossil fuel industry stronghold has implemented draconian measures designed to suppress anti-pipeline protest and dissent. While this policy and other state initiatives to ban or circumscribe protests– currently under consideration by at least 19 US states– will surely face constitutional challenge, they will certainly have a chilling effect on protest, whether or not they are ultimately upheld by courts. And this in turn will force opponents of pipeline projects to focus on other means of slowing or stymieing future pipeline construction– or indeed, promoting other measures to address the threat posed by climate change.
I should emphasize that the belated investor anti-DAPL effort aims not to scupper the pipeline completely, but to reroute it away from Standing Rock Sioux territory, again as reported by the FT:
Many of the sell offs come after a group of more than 130 investors, led by Boston Common Asset Management, sent a letter to the banks in February requesting a reroute of the 1,100-mile pipeline away from the Standing Rock Sioux territory. They highlighted the reputational damage and potential legal risks of financing the pipeline. The number of investors has since risen to over 160, representing $171bn assets under management.
Now, please do not accuse me of Panglossianism in suggesting this late to the party initiative will derail the DAPL. I certainly don’t want to underestimate the magnitude of the huge lobbying resources that fossil fuel interests are currently deploying to promote this project, and, more broadly, the unchecked further exploitation of fossil fuels. Certainly, massive amounts of money continue to be spent to ensure the status quo with respect to fossil fuels proceeds unchecked (see, for example, Fossil Fuel Companies Spend Big to Boost GOP in Heated Special Elections for Congress). And please note, that despite the cratering of oil prices, major fossil fuel exploitation projects proceed apace– such as effort to open Alaska to fracking, as reported this week in this DeSmogBlog piece, After Years’ Long Push, Fracking Has Quietly Arrived in Alaska.
I note in passing that many banks that have pulled the plug are European– and that European countries in general have in general been more open to in assessing climate change risk than has been the case in the US (and certainly when compared to the climate change denialists Trump has installed in key positions in the Environmental Protection Agency and in the White House staff).
South Africa and Divestiture
I’m old enough to remember in real time the hard-fought efforts to force universities to to divest themselves of their investments in companies that invested in or otherwise participated in South Africa’s apartheid regime. Might that serve as a model for those investors– both within and outside the United States– to shape the course of pipeline politics, or more broadly, with respect to climate change?
The Trump administration is currently actively debating pulling out of initiatives such as the Paris Climate Accords, as discussed in today’s post, Road to Trump’s Climate Change Hell Paved by Obama and Clinton. Although the anti-DAPL investment efforts have peaked too late to have any meaningful impact on DAPL’s construction, campaigns that focus on diverting investment in other pipeline projects– or even more broadly, on other fossil fuel investments– might show some promise, in the absence of US government initiatives.
I should mention that the FT article notes that some investors– such as Calpers– have rejected a straight divestment strategy, in favor of an “engagement” strategy to raise their concerns about the pipeline’s routing. Their concern is that by making a formal divestment, investors lose any influence. I’m not convinced that this engagement alternative is not simply an effort to have one’s cake and eat it too– but will concede that it least pays some lip service to the objective of forcing some change.