DBS faces pressure from green activists

DBS is the latest bank here to face scrutiny over its lending activities, with a human rights grievance complaint served to the bank by a group of indigenous Australians on Tuesday (Apr 4).

The lender is part of a consortium of 12 banks providing a US$1 billion syndicated loan to Australian energy company Santos. The complainants said that these funds are being used to finance the Santos-operated Barossa gas project.

The project involves drilling deep wells and building gas pipelines in waters off the Tiwi Islands in Australia’s Northern Territory, and has been the subject of a number of legal claims. The islands’ indigenous owners said that the development of this gas field would threaten their sacred sites and cultural practices, in addition to causing environmental harm.

The indigenous leaders filed their grievances through Equity Generation Lawyers, an Australian law firm active in climate cases, and called for the banks to withdraw the loan to Santos.

The complaint served to DBS comes just weeks after United Overseas Bank (UOB) got itself into a pickle, with reports emerging that it is part of a consortium of banks that refinanced a US$350 million loan to a subsidiary of coal miner Adaro Energy Indonesia.

The Straits Times on Tuesday reported that UOB participated with a US$50 million loan to Santos, but is not among the group of lenders that were served a complaint. However, additional complaints may be filed for other banks, said Equity Generation Lawyers.

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In a sample complaint that Equity Generation Lawyers posted on its website, DBS is said to have contributed US$60 million to the syndicated loan to Santos. Other banks served with complaints include Australian lenders ANZ, Commonwealth Bank, Westpac, National Australia Bank; ING from the Netherlands; DNB from Norway; Citigroup from the United States; Royal Bank of Canada; MUFG, SMBC and Mizuho from Japan.

In response to queries from The Business Times (BT), a DBS spokesperson said that the loan is not providing direct project financing to the Barossa project and that it has not been approached to finance the development of the gas field.

UOB said that it does not have direct exposure to this project, and it has not committed to new project financing for upstream oil and gas projects approved for development after 2022. ING said that it is not directly involved in financing the Barossa project even though Santos is its client.

Legal experts told BT that incidents like these reflect the growing litigation risks that financial institutions are likely to face over environmental, social and governance (ESG) issues.