ANZ in breach of IFC 2012 Equator Principles
Sunday, February 19th, 2012
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The ANZ Bank publicly claims it has adopted the Equator Principles of the World Bank’s International Finance Corporation (IFC).
These are ‘voluntary standards designed by the World Bank’s International Finance Corporation (IFC) to help banks identify and manage social and environmental risks associated with the direct financing of large projects‘ – i.e. Natural Resource projects like Gunns Pulp Mill.
[Source: ANZ Bank website, ^http://www.anz.com/aus/values/environment/Equator.asp].
“ANZ has voluntarily committed to fund only new projects that can be developed and operated according to sound social and environmental standards.”
~ ANZ website
ANZ Bank’s new brand represents a bank “for the people”
For the people or for its executives?
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As at 1 Jan 2012, the IFC’s Equator Principles Performance Standard 3 ‘Resource Efficiency and Pollution Prevention” states that its aim is
- To avoid or minimize adverse impacts on human health and the environment by avoiding or minimizing pollution from project activities.
- To promote more sustainable use of resources, including energy and water.
- To reduce project-related GHG emissions.
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ANZ’s prominent project finance client, Gunns and its planned Tamar Valley Pulp Mill project seems set to fail each of these objectives in its airborne emissions and waste water. In September 2007, the ANZ was ranked the most sustainable bank globally by the Dow Jones Sustainability Index. So what is the ANZ Bank not telling the IFC?
A Gunns Woodchip Mill at Longreach, Tasmania
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IFC’s Sustainability Framework – 2012 Edition:
Performance Standard 6: ‘Biodiversity Conservation and Sustainable Management of Living Natural Resources’
Clause 14: The client will not significantly convert or degrade natural habitats, unless all of the following are demonstrated:
- No other viable alternatives within the region exist for development of the project on modified habitat;
- Consultation has established the views of stakeholders, including Affected Communities, with respect to the extent of conversion and degradation;8 and
- Any conversion or degradation is mitigated according to the mitigation hierarchy.
Gunns Clearfell of Tasmanian Heritage
© Photo by Alex Wise
Source: ^http://www.alexwisephotography.net/blog/2008/11/08/tasmania-clearfelling/
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Clause 17: In areas of critical habitat, the client will not implement any project activities unless all of the following are demonstrated:
- No other viable alternatives within the region exist for development of the project on modified or natural habitats that are not critical
- The project does not lead to measurable adverse impacts on those biodiversity values for which the critical habitat was designated, and on the ecological processes supporting those biodiversity values
- The project does not lead to a net reduction in the global and/or national/regional population13 of any Critically Endangered or Endangered species over a reasonable period of time;
- A robust, appropriately designed, and long-term biodiversity monitoring and evaluation program is integrated into the client’s management program.
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Back to ANZ’s website…
‘ANZ will comply with the Principles for all project finance proposals, regardless of their size, and apply the same Equator Principles standards to all projects in all countries.’
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These people don’t think so..
Pulp Mill protest, Launceston Tasmania
A pulp mill for the people?
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Grassroots community action group in Tasmania, Pulp the Mill Alliance, continues to oppose Gunns’ proposed Tamar Valley Pulp Mill for the following reasons:
- Toxic effluent in Bass Strait
- Threats to the livelihood and lifestyle of thousands of Tamar Valley residents
- Fresh water usage
- Possible future use of native forests
- The draconian and undemocratic Section 11 of the Pulp Mill Assessment Act
- Lack of an independent, transparent assessment of a “critically non-compliant” mill
- Lack of public hearings and community consultation
- A complete lack of integrity on Gunns’ part
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The No Pulp Mill Alliance is undertaking a national campaign to warn the ANZ that if they renew their debt facility to Gunns Ltd then we will renew our national campaign targeting ANZ as the bank that is financing the corruptly approved, environmentally destructive, divisive, and financially risky Tamar Valley pulp mill.
‘We will be placing national advertisements, undertaking direct actions, sending letters/petitions, and anything else it takes to let ANZ know that we don’t want them to finance the Gunns’ Tamar Valley pulp mill.’
With Gunns’ share price at its lowest ever and a capital equity of only $82 million, Gunns Ltd is in serious financial trouble. It is selling everything to try and get its pulp mill built. In fact, the name Gunns Ltd could now be considered as synonymous with the Tamar Valley Pulp Mill.
Gunns has a net debt of $616 million, of which the primary financing facility – a $350 million senior debt facility – is maturing in January 2012. ANZ is the primary financing facility and thus is the Aussie Bank that keeps Gunns standing. Current site works taking place to prepare for construction of the proposed pulp mill are directly financed by the ANZ bank.
Gunns’ Chairman stated in his Annual General Meeting speech in November 2011 that Gunns Ltd is in discussion with ANZ to extend the debt with the: “objective of these discussions is to provide financing terms which facilitate the completion of the asset sale program and financial close of the Bell Bay pulp mill project.”
Gunns’ pulp mill site on the Tamar River, Tasmania.
We demand that ANZ do not extend the debt facility for Gunns Ltd, and warn ANZ that if it does announce an extension of the debt facility, then our national campaign will result in letting its customers know worldwide that it is backing a polluting project that does not comply with the Equator Principles.’
[Source: ANZ Campaign to stop funding the Pulp Mill, ^http://www.pulpthemill.org/]
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The current ten banks committed to Gunns in a syndicated loan are gambling solely on the go ahead and profitability of the proposed Pulp Mill.
Whereas Gunns once had a reliable cash inflows stream from multiple revenue streams – plantation sales including interstate, sawmilling, and hardware earlier on, all non pulp mill assets are being treated as “non-core”.
This strategy has already shown to be poor by the fire sale desperation of these assets in order to maintain operating cash flow to remain solvent, while the myopic focus on the proposed $2.3 billion Bell Bay pulp mill drives the Gunns’ Board. Gunn’s revenue strategy is hedged on one big risky pulp mill – risky from the point of view of fickle international market demand and pulp commodity prices, mired by political controversy and considerable community opposition to the mill.
It’s equivalent to gambling all the $340 Million on the red to win on the roulette wheel.
These banks must be privy to some revenue guarantees and that is likely from ‘commercial in confidence’ assurances from the Tasmanian Labor Party.
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Further Reading:
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[1] World Bank’s International Finance Corporation (IFC) Equator Principles , ^http://www.equator-principles.com/.
[2] Pulp the Mill Alliance Inc. ^http://www.pulpthemill.org/.
[3] Friends of the Tamar River, ^http://ftv.org.au/.
[4] TAP, ^http://www.tapvision.info/.
[5] The Wilderness Society (Tasmania), ^http://www.wilderness.org.au/regions/tasmania.
[6] Tasmanian Times (forum), ^http://tasmaniantimes.com.au/, ‘Tasmanian Times is a forum of discussion and dissent – a cheeky, irreverent challenge to the mass media’s obsession with popularity, superficiality and celebrity’. Article: ^http://tasmaniantimes.com/index.php?/article/gunns-pulp-mill-lifeline-extended-community-will-protest/.
[7] Tasmania Clearfelling, Alex Wise Photography, ^http://www.alexwisephotography.net/blog/2008/11/08/tasmania-clearfelling/
