Communications to Saudi Arabia, Japan, France, USA, and the UK, and 13 financial institutions concerning Saudi Aramco’s business activities in the fossil fuel sector

On June 26 and/or June 27, 2023, five UN Special Procedures on business and human rights, climate change, environment, toxic wastes and water and sanitation, jointly issued communications to Saudi Arabia, Japan, France, USA, and the UK, and 13 financial institutions domiciled in these countries (i.e. JP Morgan, Citigroup, HSBC, SMBC, Crédit Agricole, Morgan Stanley, BNP Paribas, Goldman Sachs, Mizuho Group, Sumitomo Mitsui Banking Corporation, Société Générale and EIG Global Energy). The communication is also addressed to, and directly concerns, Saudi Aramco’s business activities in the fossil fuel sector. Saudi Aramco is a State-owned enterprise, owned for 98.5 per cent by the Government of the Kingdom of Saudi Arabia. It holds the exclusive right to explore, drill, prospect, appraise, develop, extract, recover and produce hydrocarbons, as well as to market and distribute hydrocarbons, petroleum products and liquid petroleum gas in the Kingdom. According to the communication, Saudi Amraco’s activities and business strategies are not aligned with the Paris Agreement goals, obligations and commitments, including the ambitions of the Saudi government, and Saudi Amraco’s own responsibilities for human rights protection as a business enterprise under the UN Guiding Principles on Business and Human Rights (UNGPs). Specifically, despite Saudi Arabia’s net zero targets for 2060, and Saudi Aramco’s own ambition to achieve net zero Scope 1 and 2 GHG emissions by 2050 across its wholly owned operating assets, the company is maintaining production of crude oil; further exploring for oil and gas reserves; expanding into fossil fuel gas; and its misrepresenting information about GHG emissions. Rather than cutting fossil fuel production and emissions ‘at the rapid rate necessary to meet the 1.5°C climate mitigation goal’, it is expanding its fossil fuel activities based on the argument that it has ‘low-cost production’ compared to other countries. According to the UN Special Procedures, this approach undermines ‘the ability of the Kingdom of Saudi Arabia to discharge its duties under international law and commitments in the context of the Paris Agreement’, and further ‘disregards Saudi Aramco’s own responsibility to reduce production to address its climate change-related human rights impacts’, as much as other companies. In fact, based on ‘the size, sector, operational context, ownership and structure of Saudi Aramco’ – including the fact that it is a State-owned company – and ‘in the context of the alleged contributions of its business operations to the severity of the human rights impacts of climate change’ over time, there is a ‘heightened expectation’ that this company takes its responsibility under international human rights law. Saudi Amraco bears ‘increased responsibility […] existing over and beyond compliance with applicable laws [...] to act fully in line with international standards and best practices to prevent and mitigate against the human rights impacts of climate change’. International responsibilities to protect human rights by mitigating GHGs through its own business activities and products follow from the UNGPs (2011), HRC Resolution 48/13 (2021) and UNGA Resolution 76/300 (2022) on the Right to a Clean, Healthy and Sustainable Environment, and the UN Framework Principles on Human Rights and the Environment (2018). Special attention is drawn to the report of the UN Special Rapporteur on Human Rights and the Environment on States’ obligations in relation to climate change (A/74/161), stating that ‘further exploration for additional fossil fuels’ must be prohibited because ‘not all existing reserves can be burned while still meeting the commitments of the Paris Agreement’. In addition, States must prohibit the most polluting and environmentally destructive fossil fuel activities, including ‘oil and gas produced from hydraulic fracturing’. All of this follows from the right to a healthy environment, and related human rights, ‘including the rights to life, health, food, water, housing and culture’. In relation to ‘access to information’, Saudi Arabia acts in violation of ‘international human rights standards that require that businesses should ensure adequate and accurate disclosure and reporting of their climate impacts in an accessible manner’. Saudi Amraco omits important information about Scope 3 emissions from its reporting and advertising, which is ‘inconsistent with the Greenhouse Gas Protocol and Task Force on Climate-related Financial Disclosures standards’. Inaccurate information on GHG emissions can lead to underestimating the climate change crisis, and in turn, exacerbate negative human rights impact due to climate change. Therefore, all companies ‘should refrain from supporting and/or engaging in public information campaigns based on inaccurate, misleading, and unfounded assertions that harm the ability of States and the public to make informed decisions pertaining to climate change’. Finally, the communications note that Saudi Amraco increasingly sought and received private financial support from a range of financial institutions, e.g. through borrowing funds, selling bonds or equities, or getting support for financial transactions, or for investments in its oil and gas infrastructures. Each of these financial activities help finance the harmful activities of Saudi Amraco that ‘are contributing to climate change-related human rights impacts’, in a manner that is contrary to the human rights responsibilities of these financial institutions. In August-September 2023, Japan, UK and France responded to communication, as well as Société Générale S.A., Crédit Agricole S.A., BNP Paribas, HSBC, Mizuho Financial Group, and Sumitomo Mitsui Banking Corporation. The companies all outline their respective approaches to human rights under the UN Guiding Principles on Business and Human Rights; OECD Guidelines; as well as Equator Principles, UN Global Compact or International Bill of Rights more generally.