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The UN has told banks including Citi, Goldman Sachs and BNP Paribas that their financing of Saudi Aramco may be in violation of global human rights rules because of the state-run oil company’s contribution to climate change.
A panel of UN appointed human rights specialists has sent letters to Aramco as well its financiers, following a 2021 legal complaint by environmental campaign group ClientEarth that accused Saudi Arabia’s oil company of the largest ever climate-related breach of international human rights law by a business.
Aramco is the world’s biggest corporate emitter of greenhouse gases. The burning of fossil fuels is the largest contributor to climate change, accounting for about 75 per cent of global warming.
The concern is that Aramco’s continued crude oil production and further exploration of oil and gas, alongside other issues, may be in breach of the Paris agreement to limit global temperature rises and a UN resolution that people have a right to a clean, healthy and sustainable environment.
The UN letter warns the banks that if they are aware of a human rights issue but fail to take “reasonable steps” to prevent or mitigate the impact, “it can be viewed as enabling the situation”.
“Businesses should avoid infringing on human rights by taking proactive steps to identify, prevent, mitigate and address adverse impacts with which they are involved, including impacts resulting from climate change,” said the letter.
“The alleged involvement of financial institutions in the financing of Saudi Aramco’s activities could be in violation of international human rights law and standards.”
Banks are already under scrutiny over their role in financing projects that contribute to climate change. While some have set targets to reach net zero carbon emissions, many continue to fund new fossil fuel projects. The International Energy Association said in 2021 that there could be no new fossil fuel projects if the world is to reach net zero emissions by 2050.
The communications, which were signed by five independent human rights experts appointed and mandated by the UN Human Rights Council, are not a legal judgment but may be cited in legal action.
It is the first time the UN has taken action against the oil industry and its financial backers in relation to the human rights implications of climate change.
ClientEarth said it sets “a new legal standard for fossil fuel companies’ human rights responsibilities for the climate crisis”.
“The UN experts could not be clearer: banks bear their own legal responsibility regarding the escalating and detrimental threat climate change poses to human rights.”
Citi declined to comment. Goldman Sachs said: “We consider any correspondence from the UN at the appropriate time.”
HSBC said it was “committed to being transparent around the opportunities, challenges and progress we are making in relation to environmental, social and governance issues”.
BNP Paribas and Aramco did not respond to requests for comment.
Additional reporting by Stephen Morris, Joshua Franklin, Stephen Gandel and Samer Al-Atrush.
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