Equator Principles complaint made against MUFG and potential Papua LNG project financiers

Copublished with CELCOR, Market Forces, Jubilee Australia Research Center, Asian Peoples’ Movement on Debt and Development, JACSES

Port Moresby/Melbourne/Tokyo/Paris/London. Wednesday 10 December – Today, six organisations have submitted the first formal complaint to the Equator Principles detailing urgent concerns about the potential climate, biodiversity and human rights impacts of the proposed Papua LNG project in Papua New Guinea, led by TotalEnergies with co-venturers ExxonMobil, Santos and ENEOS.

The complainants – which include organisations in Papua New Guinea, Asia, Australia and Europe – argue that the project does not adhere to the Equator Principles – a financial industry set of risk management standards initiated in 2003. The complaint is addressed to the Equator Principles, which represents 130 public and private financial institutions that have signed the Equator Principles, from 38 different countries.

The complaint focuses on risks from Papua LNG’s extraction and production. Papua LNG will affect at least 12,700 mostly rural, Indigenous peoples in the Gulf Province of Papua New Guinea (1). The project area includes 100 species unknown, or undescribed, by external science and at least 27 threatened terrestrial species. The complaint outlines concerns about the project’s apparent lack of adherence to six out of ten of the Equator Principles, ranging from a lack of verifiable evidence of communities’ Free, Prior and Informed Consent to severe biodiversity risks (see endnote).

This complaint highlights a host of serious human rights, climate and biodiversity concerns with the Papua LNG project. The people of Papua New Guinea deserve true development which respects Indigenous Peoples’ rights, nature and our precious climate. We are urging the Equator Principles to act.

Peter Bosip, Executive Director, Centre for Environmental Law and Community Rights, Papua New Guinea

Complainants are calling for the Equator Principles to initiate an investigation into these concerns and to alert its signatories of the complaint. The complaint specifically raises concerns about Mitsubishi UFJ Financial Group (MUFG) – the Japanese megabank reported to be acting as financial advisor and seeking to raise finance for the project despite its membership of the Equator Principles – and any other Equator Principle Signatory that may be supporting the project.

The Papua LNG project is a clear test case for the credibility of the Equator Principles. Thousands of Indigenous Peoples will be impacted by the project’s upstream aspects. Yet, we’ve been unable to find any community information materials that clearly explain the project, its risks or impacts, or their rights under human rights law or international standards. This is shocking. We are extremely concerned about a wide range of potential, irreversible impacts of the project and call for an immediate investigation.

Shona Hawkes, Director of Environmental Justice, Jubilee Australia Research Centre

MUFG’s role as financial advisor to a project rejected by many banks highlights serious failures in its risk management and a clear contradiction with its commitment to achieving net zero emissions. MUFG must take this complaint seriously, conduct a thorough investigation, and withdraw from the Papua LNG project to uphold its environmental and human rights promises.

Eri Watanabe, Japan Energy Finance Campaigner, Market Forces

Almost 1 in 10 Equator Principles banks have ruled out financing Papua LNG, based on their policies or statements made. In 2024, Papua LNG’s previous financial advisor, Crédit Agricole, stated that it would not finance the project following extensive civil society mobilization regarding the project’s climate, biodiversity and human rights impacts. All major PNG, Australian, French and Italian banks have ruled out financing to the project, including the largest bankers of project lead TotalEnergies.

15 private or public financial institutions have already ruled out support to the project. TotalEnergies and MUFG are pressing hard on other financial institutions across the globe to get their financial support. Equator Principle signatories must recognize that Papua LNG would be a disaster for the people of Papua New Guinea, its biodiversity and the climate, and a breach of the Equator Principles. They must commit not to support the project.

Antoine Bouhey, Defund TotalEnergies Campaign Coordinator, Reclaim Finance

Over a hundred civil society organizations have joined the Don’t Gas Asia campaign, and communities across the region are calling for a rapid and just transition from fossil fuels directly to renewable energy systems that respect human rights, the environment and energy sovereignty. Papua LNG not only poses risks and harms for communities affected by the extraction but also for the communities affected by the power plants that will burn fossil gas. MUFG has shown willful disregard for the climate and people, and now the people of Asia are demanding that they and other companies commit to stop funding gas now.

Lidy Nacpil, Coordinator, Asian Peoples’ Movement on Debt and Development

Contacts:

Antoine Bouhey, Defund TotalEnergies Campaign Coordinator, antoine.bouhey@reclaimfinance.org

Notes:

Human Rights Impact Assessment commissioned by TotalEnergies in 2017 counted that approximately 12,700 people lived in 39 villages in the project area of influence in 2016. The Danish Institute for Human Rights, Papua LNG Human Rights Impact Assessment, Focus on Gender, Security and Conflict, 2019.

Endnotes:

The complainants are the Centre for Environmental Law and Community Rights (PNG), the Jubilee Australia Research Centre, the Asian People’s Movement on Debt and Development, Japan Center for a Sustainable Environment and Society (JACSES), Market Forces and Reclaim Finance.

About the complaint mechanism

While the Equator Principles lack a formal grievance mechanism, the grievance is filed through an online complaints channel initiated by BankTrack to support civil society organizations to file grievances with the Equator Principles. BankTrack is a Netherlands based NGO with two decades experience advocating on the Equator Principles. While the Equator Principles has previously faced criticism – this is the first public, formal complaint submitted.

About the Equator Principles

The Equator Principles is a framework to enable financial institutions to identify, assess and manage environmental and social risks when financing projects.

The Equator Principles outline 10 specific principles that Equator Principles Financial Institutions agree to meet. They also refer to other industry standards, such as the International Finance Corporation Performance Standards. The complaint addresses a lack of adherence with individual principles 2, 3, 4, 5, 6 and 10, and provides an additional commentary on Equator Principles 8.

Concerns raised include:

A lack of community information materials that clearly describe specific aspects of the project, its risks, impacts or alternatives.
A lack of evidence that communities have been informed of provisions for their rights under: 1) the Equator Principles; 2) the French Duty of Vigilance Law; 3) the EU Corporate Sustainability Due Diligence Directive; 4) the UN Guidelines on Business and Human Rights or 5) the OECD Guidelines on Multinational Enterprises.
A lack of verifiable evidence of Free, Prior and Informed Consent (FPIC) or that Indigenous Peoples have been informed of their right to FPIC under international law, including their right to refuse the project.
A lack of a public Climate Change Risk Assessment (CCRA). Public scrutiny of a CCRA is particularly key, given that two courts – in France and Germany – have found against TotalEnergies in “greenwashing” cases over climate claims.
A lack of a full, public and up-to-date Human Rights Impact Assessment.
A lack of an upstream decommissioning plan.
A lack of economic modelling. There is no systemic cost-benefit analysis of the economic impacts of the Papua LNG project on Gulf Province or PNG.
A lack of discussion of financial crime risks and related impropriety. The international Financial Action Task Force has put PNG on notice of potential grey-listing due to risks related to corruption, environmental crime and politically exposed persons.
Very severe biodiversity risks. The project area covers 100 new-to-external science or undescribed-by-external science species and multiple threatened species on the IUCN Red List as well as the CITES Appendix I. The project has excluded the Bulmer’s Fruit Bat – one of the world’s 100 most at-risk species – from its consideration of biodiversity risks, contravening the advice of its initial baseline assessment, without providing studies or any materials to explain this position.
A lack of robust consideration of gender risks.
Failure to post the project’s Environmental Impact Statements and other key materials online. The Upstream EIS Addendum refers to underlying studies that are not included in its annex.
Concerning approach to the potential resettlement of a small community living within 700m of the proposed Central Processing Facility.
A lack of consideration of the cumulative impacts of some other proposed fossil fuel projects in Gulf province, such as Pasca A and a proposed floating LNG facility linked to the Pandora and Urama gas fields.
A lack of effective grievance mechanism, given the lack of proper community information.