UK financial giants HSBC, Barclays, and Aviva all have significant financial stakes in the company behind a controversialย tar sands oil pipeline approved by Canadian Prime Minister Justin Trudeau last week, new analysisย reveals.
Financial data seen by DeSmog UK shows HSBC holds almost $118 million (ยฃ93.7m) worth of shares in Kinder Morgan, which owns the recently approved Trans Mountainย pipeline.
Barclaysโ shares are worth around $48 million (ยฃ38m), and Aviva holds $27 million (ยฃ21.4m) worth ofย stock.
Tar sands pipelines are bad news for indigenous communities and the climate, but they can be big business for investors based thousands of miles away from the environmental destruction theyย bring.
Youโve probably heard of the Keystone XL pipeline, that Obama finally vetoed in his final year in office. You may have heard of the Dakota Access Pipeline, with Native American communities holding their ground at Standing Rock to prevent it destroying their land and waterย resources.
Lesser known is the Kinder Morgan Trans Mountain pipeline. Trudeau disappointed many local residents when he approved a controversial extension to the pipeline in what was seen as an early test of his commitment to tackling climateย change.
As DeSmog Canada reported, the expansion project will increase oil transport capacity from 300,000 barrels of oil per day to 890,000 barrels per day, and open up the tar sands market to ever further-flung corners of theย world.
Trudeau also approved an application to increase capacity of the Enbridge Line 3 pipeline from 390,000 to 915,000 barrels perย day.
According to Environment and Climate Change Canada, the two pipelines combined represent an increase of 23 to 28 megatonnes of carbon dioxide equivalent released into theย atmosphere.
And some big names in British business are helping to bankrollย it.
Millions atย Stake
Kinder Morganโs stock jumped three percent when Trudeau announced the government was giving the pipeline expansion the goย ahead.
Data given to DeSmog UK by think tank InfluenceMap shows millions of Kinder Morgan shares are controlled by HSBC, Barclays, Aviva and the companiesโย subsidiaries.
Lloyds bank and the Royal Bank of Scotland also previously held shares in theย company.ย
Such assets seem to jar with the companiesโ strongly-worded climate commitments.
HSBCโs statement on climate change says it is committed to โmaking financial flows consistent with a pathway to low greenhouse gasย emissionsโ.
Barclaysโ sustainability statement says it is committed to โminimising our operational environment impact when and whereverย possibleโ.
And Avivaโs strategic response to climate change claims the company โwill divest highly carbon-intensive fossil fuel companies where we consider they are not making sufficient progress towards the engagement goalsย setโ.
Itโs hard to see how holding millions of shares in a company that is building a major tar sands oil pipeline extension fits with any of thoseย pledges.
These big UK high street names are joined by some familiar fossil fuelย companies.
ExxonMobilโs investment arm holds $10 million (ยฃ7.94m) of Kinder Morgan stock. BPโs investment wing owns $9 million (ยฃ7.15m) of shares, and Shellโs owns stock worth about $4 millionย (ยฃ3.18m).
Tar Sand Assetย Management
While those shares clearly help Kinder Morgan bankroll its activity, they do not count as an โinvestmentโ as far as the UK companies areย concerned.
Barclays told DeSmog UK that it is โholding certain shares on behalf of clients (for hedging etc), and to hedge exposure against client facingย transactions.โ
Essentially this means that a client โ possibly a hedge fund or a group of investors โ has told Barclays to buy shares in a particular type of company to offset some shares theyโre buying elsewhere in theย market.
In other words, investors could be playing gas and oil off against each other (hoping one will go up, but covering themselves if the other does). In which case, the Kinder Morgan stock would be the โoilโ part of theย equation.
Barclays is keen to stress that โthis does not amount to an investment made byย Barclaysโ.
Of course, Barclays doesnโt do this for free. Theyโre still making money by investing in Kinder Morgan on othersโ behalf by taking a flat free for managing theย asset.
And thereโs no particular reason why they couldnโt choose another company on behalf of their clients, such as one that hasnโt just had a big new tar sands pipelineย approved.
Avivaโs situation also isnโtย straightforward.
Well-known high street brand Aviva has over 30 million customers in the UK. While they are related, itโs Aviva Investors that holds theย stock.
Confusingly, Aviva Investors is an asset manager, not an investor. In other words, it manages various financial products that its clients buy.
In this case, it holds the stock as part of whatโs known as a passive tracker fund, it told DeSmog UK. These funds buy shares from a wide range of companies that the fund administrator โ not Aviva, in this case โ puts into itsย index.
The idea is that these passive funds track the market; so if the whole market goes up or down, so do the value of the shares. Itโs a low-cost, low-effort, way toย invest.
Aviva told DeSmog UK that anyone buying this kind of product should already be aware that they may be buying stock in companies such as Kinderย Morgan.
If people want to make sure they invest more ethically, Aviva says it has products for that as well and they can buy thoseย instead.
Because it offers these products, Rob Davies, Avivaโs head of PR and thought leadership, said holding these shares is โnot in conflictโ with the companyโs position on climateย change.
โItโs just that weโre not the investor. So ultimately while it technically looks like it belongs to us, it actually doesnโt. Weโre managing it on behalf of investorsโ, heย said.
HSBC did not respond to repeated requests forย comment.
Human and Environmentalย Cost
Itโs clear that these companiesโ practices are still a long way from matching their words on climateย change.
Christian Aid recently released a report that showed UK banks were not prepared to shift their high carbon investments in light of a global commitment to tackle climateย change.
Ken Boyce, Christian Aidโs head of private sector engagement, said โitโs a scandal that UK High Street banks are bankrolling some of the worst fossil fuel projects in the world with apparent disregard for their moral and financialย responsibilities.
โMany customers of these banks who do their bit to live sustainably, would be horrified to learn their savings are being funneled into fossil fuel projects causing climateย change.โ
Credit: Mark Klotz via Flickr CC–BY
Friends of the Earth climate campaigner Simon Bullock pointed out that Barclays in particular has history with this kind ofย project.
โBarclays involvement is no Kinder Surprise โ Barclays are up to their necks in funding new fossil fuel projects, from oil pipelines in Canada to plans to frack in Yorkshireโ, heย said.
Thereโs also a real human and environmental cost that comes with building theย pipelines.
Analysis commissioned by the Raincoast Conservation Foundation found the anticipated increase in tanker traffic due to the pipeline extension gives the local Southern Resident Killer Whale population only a 50 per cent chance ofย survival.
The Kinder Morgan pipeline also runs through miles of land occupied by Canadaโs First Nation population. Only 39 of 120 First Nations consulted by Kinder Morgan have given their support for the pipelineย extension.
And over 18,000 people have already signed up to be โcoast protectorsโ to prevent the project goingย ahead.
Leaders of Canadaโs First Nations have promised to resist the pipeline in the same way indigenous communities have resisted the Dakota Access Pipeline (DAPL) further south, in the face of fierce officialย opposition.
Fossil Free UK, which has previously campaigned against Barclaysโ involvement in fossil fuel projects,ย said:
โWe need to urgently start reorienting funds away from the increasingly unprofitable and calamitous fossil fuel industry towards a democratic energy system that serves people rather thanย profit.
โLike DAPL, this pipeline will not go unchallenged โฆ People who will suffer the most from Kinder-Morgan will make their voicesย heard.โย
And just like DAPL, some of that opposition will be aimed at the UK companies that continue to help financeย it.
Main image: Wikimedia Commons CCย 2.0
Subscribe to our newsletter
Stay up to date with DeSmog news and alerts