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NGOs seek Sakhalin compensation from Shell, UK banks

Sakhalin production complex: compensation due? (Photocredit)
1 August 2012

Three environmental groups have called on UK banks Barclays, RBS and Standard Chartered to compensate Sakhalin residents for pollution caused by a large oil and gas project that they helped finance.

Oil major Shell, as a part owner of the Sakhalin II project on the Russian Pacific island, is also named in the complaint. It was filed with the UK and Dutch governments on Tuesday and alleges that the companies are in breach of the voluntary OECD Guidelines for Multinational Enterprises.

“Shell, RBS, Standard Chartered and Barclays share responsibility for the environmental and community damage caused by the Prigorodnoye Production Complex,” said Doug Norlen, policy director at Pacific Environment, a US-based NGO.

It was joined by Russia-based Sakhalin Environment Watch and Accountability Counsel in filing, on behalf of local residents, the complaint with the UK and Dutch ‘National Contact Points’ (NCPs), government offices which are responsible for promoting observance of the OECD guidelines.

“Shell and these banks are only the tip of the iceberg in terms of the multinational corporations involved in the Sakhalin II project, but they are among the most influential,” added Norlen.

“Communities demand the UK and Dutch NCPs’ involvement after years of unsuccessful engagement with SEIC and its financial supporters,” said Sarah Singh, an attorney at US-based NGO Accountability Counsel, referring to the Sakhalin Energy Investment Company, which operates the project.

“Shell, RBS, Standard Chartered and Barclays have thus far failed to use their influence over the project operator to correct the environmental and human rights abuses associated with this project,” she said.

“The complainants hope the process will achieve fair and just resettlement and compensation,” Norlen told Environmental Finance, arguing that Shell and the banks were “complicit” in the environmental problems caused by the complex. “The financiers have made environmental and social commitments to the public, and specifically on this project” that Norlen says they are not upholding.

Shell, Barclays and Standard Chartered declined to comment. RBS said it could not comment, as it had not yet been contacted by the UK’s NCP.

According to a UK government leaflet, the OECD guidelines “provide voluntary principles and standards that governments adhering to the guidelines encourage international businesses to comply with wherever they are trading and operating”, including on environmental impacts.

The NCP will assess the complaint and, if it has merit, it will attempt to bring the two sides into mediation. If mediation fails, the NCP will publish a “final statement” which sets out whether the guidelines have been breached or not.

Although the guidelines are not legally binding, “businesses do not generally wish to attract the publicity or press coverage which a complaint against them might entail,” the leaflet says.

A UK government spokesman confirmed that the complaint had been received, and said that the NCP aims to complete an initial assessment within three months.

Mark Nicholls


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