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Mark Trahant
Indian Country Today

A group of investors is calling on banks to rethink funding Enbridge’s oil sands projects, including the Line 3 pipeline.

“We believe that financiers of oil sands projects like Line 3 should develop policies that limit or eliminate funding for oil sands projects and/or companies engaged in oil sands projects proceeding without the [Free, Prior and Informed Consent] of impacted Indigenous Peoples. We believe that the global trend toward renewable energy use mandates the adoption of such a policy,” said the letter to banks from 158 global investors and their representatives, managing some $2 trillion in assets. Investments in Line 3 and other oil sands projects are incurring “tremendous risks and costs” that include the cultural survival of Indigenous practices, the long-term health of local water systems, and the climate.”

Banks and other publicly traded companies are under pressure both from investors, and soon government regulators, to match their corporate ESG or Environment, Social, Governance, statements with their business practices.

The Wednesday news release from the Investors & Indigenous Peoples Working Group said: “Prompted by the extensive social conflict surrounding Enbridge Energy Partners’ Line 3 pipeline replacement project in Northern Minnesota, we are concerned that many of the banks that provided corporate loans and underwriting to Enbridge before and during the Line 3 project have not met their ESG and human rights commitments.”

The investors letter said since going into operation in October 2021, Line 3 has triggered multiple “legal, environmental, reputational, and human rights risks attendant to construction without a social license to operate from affected Indigenous Peoples.”

The Investors & Indigenous Peoples Working Group serves as a clearinghouse for education, news, and joint action to bridge and bring together Indigenous and non-Indigenous communities on issues related to sustainable and responsible investing. First Peoples Worldwide serves as secretariat for the working group.

"With this statement on Line 3, investors confirm what water protectors have been saying since the pipeline expansion was proposed in 2014: that moving forward without free, prior, and informed consent has financial consequences," said Kate Finn, Osage, executive director of First Peoples Worldwide. "This letter underscores that social license to operate for Indigenous Peoples is securing FPIC as aligned with the United Nations Declaration on the Rights of Indigenous Peoples. And investors continue to see this as a critical material aspect of any company's ESG commitments."

“We are also concerned that these companies have commitments to reduce the greenhouse gas (“GHG”) footprint of their lending and investment portfolios, including many commitments to achieve net zero emissions by 2050,” the investors’ letter said. “We would like to understand how such commitments are consistent with financing that supports GHG intensive development and infrastructure such as Line 3, and how they meet the minimum standards” for Free, Prior and Informed Consent from Indigenous nations and communities.

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The investors group includes Boston Common Asset Management, Domini Impact Investments, EOS at Federated Hermes, Investor Advocates for Social Justice, Trillium Asset Management, and Unitarian Universalist Association

The statement was delivered to the U.S. and Canadian banks that finance Line 3, including Bank of America, Bank of Montreal, Citi, CIBC, Royal Bank of Canada, Scotiabank, TD, and Wells Fargo; as well as JP Morgan Chase and Morgan Stanley.

Each of these companies have public ESG statements.

Construction of the Enbridge Line 3 pipeline was underway at the Fond du Lac reservation in Minnesota in February 2021. (Photo by Mary Annette Pember, Indian Country Today)

The investors group asked how companies can meet their ESG goals while still financing projects such as Line 3 or Line 5.

“We would like to understand how such commitments are consistent with financing that supports GHG intensive development and infrastructure such as Line 3, and how they meet the minimum standards for FPIC,” the letter said.

In its annual report to shareholders, for example, Bank of America says “we are focused on supporting and financing areas critical to the transition to a low-carbon economy. Accordingly, we have a goal, publicly announced in early 2021, to achieve net zero greenhouse gas emissions in our financing activities, operations and supply chain before 2050 (Net Zero Goal). More broadly, achieving this goal will require technological advances, clearly defined roadmaps for industry sectors, public policies, and better emissions data reporting, as well as ongoing, strong and active engagement with clients, suppliers, investors, government officials and other stakeholders.”

All of the other companies on the investor list have similar policies regarding ESG. As does Enbridge. In its corporate filing, Enbridge says “we’ve taken a gradual approach which involves testing the technology, developing the capability and then expanding the opportunity set over time.”

Finn said it's clear there are consequences for a company that ignores investor concerns.

"This puts incredible pressure on Enbridge's board and shareholders to reconsider their approach to Line 3, Line 5 and all projects that impact Indigenous Peoples in the U.S. and Canada," she said. "It also points to the fact that we are starting to see the stress fractures on weak ESG commitments that do not encompass adequate disclosure on Indigenous Peoples."

Then ESG is more comprehensive than just a Net Zero carbon emissions strategy. The Star Tribune in Minneapolis reported last September that the company was under pressure from insurance companies, and “an increasing aversion to oil projects due to carbon emission concerns and the low profitability of insurers hit by pollution-related losses.”

In a broader sense, ESG also includes a standard of a “social license to operate.” This is the idea that a company cannot operate without acceptance from employees, stakeholders, and the general public. Tribes and other Indigenous communities add to that the additional global standard of Free, Prior and Informed Consent before any development takes place.

“The response to the Line 3 project demonstrates that when governments and corporations fail to take the steps to consult impacted Indigenous Peoples and procure FPIC, there may be significant social risks which become material to the proponent company,” the investors’ letter said.

The U.S. Securities and Exchange Commission proposed new rules that regulate a company’s public statements regarding the execution of its ESG plans.

There have already been economic consequences.

Last year at New York Climate Week, the Stop the Money Pipeline coalition, a bloc of 175 organizations, said Bank of America was an example of “greenwashing.” That is the practice of a company proclaiming its commitment to climate change initiatives while at the same time financing fossil fuels.

“With the construction of their Line 3 tar sands pipeline, Enbridge is trampling on the rights of Indigenous people, destroying critical clean water resources, and exacerbating the climate crisis,” Sierra Club Fossil-Free Finance Campaign Manager Ben Cushing stated in a news release last year. “Bank of America should be ashamed of their continued support for this disastrous project.”

And in December, Honor the Earth and its Stop the Pipeline project, requested Minnesota regulators to step up requirements for a decommissioning fund for new Line 3, given the pipeline’s shorter-than-expected life span.

According to the Honor the Earth’s petition: “This period is 10 years shorter than the economic life stated by Enbridge” because of “an anticipated reduction in demand to transport Canadian crude oil as global climate policy limits oil production in Canada. Canadian tar sands oil production is the most C02-intensive and expensive in the world, making it particularly vulnerable to advances in climate policy and the impacts of declining global oil demand.” Honor the Earth said the shorter economic life also reduces “Enbridge’s financial capacity to pay for the cost of abandoned pipelines and to decrease its property tax payments to the northern Minnesota counties through which its pipelines pass.”

On another front, Enbridge is also battling several tribes in Wisconsin and Michigan as well as community leaders in both states including Michigan Gov. Gretchen Whitmer, a Democrat, who has ordered the company to shut down its Line 5 pipeline. The 645 mile pipeline, originating in Superior, Wisconsin, transports crude oil and natural gas products through parts of northern Wisconsin, east through the Bad River Ojibwe reservation, Michigan’s upper peninsula, under the Straits of Mackinac terminating in Sarnia, Ontario.

The Bad River tribe is suing Enbridge, demanding the company stop the flow of petroleum products through its 12 mile segment that crosses tribal lands and remove it. Enbridge wants to replace the aging pipeline, first built in 1953 and has proposed an alternative route south of the reservation if they are unable to negotiate a replacement through tribal lands. According to tribal leaders, however, the reroute would still endanger the Bad and White River watersheds that empty into Lake Superior. Bad River claims that since the easement for the current pipeline has not been renewed since 2013, Enbridge is operating Line 5 illegally. Several tribes in Michigan have also passed resolutions calling for the removal of Line 5 through ceded lands there.

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ICT’s National Correspondent Mary Annette Pember contributed to this story.

Mark Trahant, Shoshone-Bannock, is editor-at-large for Indian Country Today. On Twitter: @TrahantReports Trahant is based in Phoenix. The Indigenous Economics Project is funded with a major grant from the Bay and Paul Foundations.

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