NGOs lash out at banks involved in Aramco IPO

Several NGOs have lashed out at the big international banks likely to accompany the IPO of Saudi oil giant Aramco, accused of being one of the worst projects for the climate of recent years.

In total, eight environmental organizations warned in a letter Thursday the bosses of seven banks, the US Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley, Swiss Credit Suisse and British HSBC.

These NGOs, including Rainforest Action Network, Global Witness, ShareAction and Oil Change International, are concerned that these big names in finance are working on the Aramco IPO, which "should be by far the biggest investment in fossil energy since the Paris agreements of late 2015 ".

The Paris International Climate Agreement aims to limit global warming to + 2 ° C, or even 1.5 ° C, compared to the level of the Industrial Revolution, which will, according to the NGOs, have to be drastically reduced by use of highly polluting fossil fuels such as oil.

This gigantic operation of Aramco should take place "soon", assured a few days ago the Saudi state group, which had to backtrack for the first time due to difficult market conditions and lower crude prices.

The company could be valued around $ 1.5 trillion and enter both the Saudi market and an international financial center. Investors will initially be able to buy 2% of the capital of the behemoth.

NGOs also find it problematic that banks are helping the kingdom to raise billions of dollars "given the horrendous human rights record of the Saudi regime," referring in particular to the assassination of journalist Jamal Khashoggi.

The letter finally recalls, quoting the financial press, that some investors have refused to participate in the IPO of Aramco for environmental reasons, including the Singaporean Temasek Holdings.

The Norwegian sovereign wealth fund, for its part, has started to exit the capital of some oil companies but not "majors".

The call of the NGOs comes as the finance is pressed from all sides to stop investing in the most polluting energies.

Many banks or pension funds have decided to no longer lend or buy securities in the coal sector and to focus more on renewable energy, although many remain invested in hydrocarbons.

Some voices rise however like that of the billionaire and philanthropist Bill Gates who in the Financial Times in September considered that stopping to finance the fossil fuels did not allow to stop frankly the rise of carbon emissions.

He believes it would be more useful to invest heavily in new technologies to reduce pollution and help people adapt to climate change.