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Nordea bans investment in Dakota Access pipeline

Nordea, the Nordic bank, has banned its fund managers from investing in the companies constructing the $3.7bn Dakota Access oil pipeline, just weeks after Donald Trump, the US president, decided to push forward with the controversial project.

The bank’s fund management division will no longer invest in Energy Transfer Partners(ETP), the main company that oversees the disputed project, amid concerns about the environmental and reputational risks of the 1,100-mile pipeline.

It has also banned its portfolio managers from investing in Sunoco Logistics, which is in the process of buying ETP, and Phillips 66, a US multinational energy company that owns a minority stake in the project.

Nordea’s decision comes after months of protests by the Native American Standing Rock Sioux tribe, their supporters and environmentalists against the construction of the pipeline.

The protesters fear the project, which would take oil from the Bakken oilfields of North Dakota to Illinois, would contaminate drinking water and damage sacred Native American burial sites.

Sasja Beslik, head of sustainable finance at Nordea Wealth Management, the division that includes the fund business, said the company visited North Dakota in December 2016 to assess the management of environmental and social issues at the site.

“Our conclusion was that consultation with [the] Standing Rock [tribe] needs to be improved and the pipeline route moved from the disputed area,” he said.

He added that there were “significant risks in community relations”, as well as environmental concerns around carbon emissions, sewage and waste.

“This means that the environmental, social and governance criteria we apply when investing in companies operating in this sector are not fulfilled and pose a risk we are not willing to [take],” he said

Other investors are coming under pressure to end their exposure to the project. More than 43,000 signatures have been collected calling on Calpers and Calstrs, two of the US’s largest public pension funds, to divest from ETP.

A bill has also been proposed in the California state assembly to require the two pension funds, which are estimated to have $100m in combined investments in ETP, from putting any additional money into the companies constructing or funding the construction of the pipeline.

Protesters plan to meet outside the pension schemes’ offices on Monday to push for an end to their investments in the project. Calpers’ board is due to discuss its investments in ETP this week.

Calstrs said its board is due to discuss the issue in April. It added: “Calstrs believes that, where appropriate, active engagement with the companies involved is the most effective way to resolve issues and influence positive change.”

Janet Cox, a member of the board of directors at Fossil Free California, a campaign group, said: “Beneficiaries of our state’s huge public pension funds are telling the state’s huge pension funds that they don’t want their pension security linked with construction of the pipeline against the determined opposition of Native American tribes.”

Construction of the project was suspended last year, after an intervention from the administration of Barack Obama, the former US president. Last month Mr Trump backed the projects in a presidential memorandum, easing the way for construction to recommence.

ETP declined to comment on Nordea’s decision. It said it expects the pipeline to be in service in 83 days. Sunoco Logistics did not respond to a request for comment.

A spokesperson for Phillips 66 said the company had “extensive dialogue with Nordea regarding their concerns over the Dakota Access pipeline”.

He added: “At Phillips 66 our values are safety, honour and commitment. These values lie at the heart of our business, our operations and our activities.”

Via FT