If Richard Burrett, global head of project finance at the Anglo-Dutch bank
ABN Amro, was hoping for a quiet run-up to Christmas, he may have to think
Later this week, the Dutch bank is expected to lend its weight officially
to the 1,760km Baku-Tblisi-Ceyhan (BTC) pipeline, which even in Mr
Burrett's own words is "seen as highly controversial".
Campaigners have taken issue with the idea to run a pipeline through
Azerbaijan and Georgia to the Turkish coast ever since it was first mooted
in the early 1990s.
Last month's decision by the World Bank to release $125m (72.3m) for the
$3.6bn BTC project has only raised the stakes, especially as protest
groups submitted a 220-page report alleging 153 ways in which the project
contravened the World Bank's own lending criteria.
"It fails local people in every way from paltry compensation to increased
exposure to security incidents and major accidents," alleges Anders
Lustgarten in a statement for the Baku-Ceyhan Campaign.
What has really irked protesters, however, is that as little as six months
ago ABN Amro was making much of having signed up to the so-called Equator
Principles. By signing up to the principles, some 18 banks - including
Barclays - agreed to adopt guidelines on sustainable development drawn up
by the International Finance Corporation (IFC), the private sector arm of
the World Bank. The guidelines cover issues ranging from environmental
assessment and natural habitats to indigenous peoples and child and forced
Of the 15 commercial banks involved in the BTC project, eight others are
understood to be Equator signatories. The list includes Citigroup, ING,
WestLB and Crédit Agricole.
"It's hard to see how ABN and Citi square their supposed environmental
commitment with their involvement in the BTC pipeline. Our research makes
it clear that financing is not consistent with the Equator Principles",
says Greg Muttitt of the campaign group Platform.
Not surprisingly perhaps, the commercial lenders prefer the research done
by the IFC and the European Bank for Reconstruction and Development, which
comes to the opposite conclusion.
One point of agreement, however, is that financing the BTC project - which
the private banks hope to wrap up by the end of the year - will act as a
test case for the Equator Principles. Contrary to the protest wing,
however, Mr Burrett believes that it will put a stamp on the validity of
ABN Amro's progressive environmental and social commitment.
"There is a huge discrepancy between the feedback we're getting from
environmental experts, who are telling us that the kind of work being done
by BP and the other lead companies on the BTC project represents best
practice in the industry, and what the NGOs are saying", says Mr Burrett.
With an estimated project lifespan of 40 years, this is a debate that is
going to run and run. In an important sense, however, the BTC project
already presents a minor triumph for corporate accountability.
"There will always be dissenters for a project of this magnitude", says Mr
Burrett, "but what we've given them is a transparent set of benchmarks
against which we can be judged."
There is no backing out of the public commitments made by the likes of ABN
and Citigroup. If they decide to go ahead with financing the BTC project,
they will have tough questions to answer. Failure to do so will only
exacerbate the kind of damage to their reputation the banks had hoped to
avoid by adopting an ethical position.
The wealth of detail already in the public domain will act as a welcome
resource for those wishing to call the lenders to account. It is the first
time in an infrastructure project of this kind, for example, that the host
government agreements, inter-governmental agreement and production sharing
agreement have been made public.
Even Mr Burrett is ready to confess, however, that the Equator Principles
are not yet perfect. If nothing else, banks are still joining and more
should be pressured to do so. The issue of implementation is also one that
continues to bubble under the surface.
In the case of the BTC pipeline, the IFC has been doing all the running in
terms of the project's transparency. Commercial confidentiality means that
it is unlikely we will find the Equator Principle signatories following
the recent example of the Co-op Bank in disclosing how much business it
has turned down on ethical grounds. More's the pity.
Campaign groups will be following the project with a beady eye.
Nevertheless, Mr Burrett and his Equator peers deserve some credit for
putting their necks out and making themselves accountable to basic social
and environmental standards. Slip up, though, and it won't be Christmas
carols the protesters will be signing on their doorstep.