Green groups have warned that banks linked to Saudi Aramco’s $2tn (£1.6tn) market float are undermining global efforts to tackle the climate crisis by supporting the listing of the world’s biggest oil producer.
The world’s biggest-ever IPO is expected to give a $450m windfall to a string of major international banks and advisers, or less than 0.01% of what Saudi Arabia expects to earn by listing 3% of its state oil giant, according to Bloomberg.
In a letter to bank chief executives, including the bosses of HSBC and Goldman Sachs, 10 environmental groups warned that the listing would hinder the battle against greenhouse gas emissions and human rights abuses.
The environmental non-governmental organisations, including Friends of the Earth US, and Oil Change International, warned that the listing, which could be approved by Saudi Aramco’s board by the end of the month, would lead to “the biggest single infusion of capital into the fossil fuel industry” since the Paris climate accord in 2015.
The letter also raised concern over the banks’ eagerness to help raise billions of dollars for Saudi Arabia, “given the horrendous human rights record of the Saudi regime”.
The letter said: “Recent examples of this include the role of Saudi agents in the brutal murder of Jamal Khashoggi in October 2018, and the involvement of Saudi forces in indiscriminate airstrikes on civilians in Yemen.”
The letter was sent to nine international banks that have reportedly been hired by Aramco to help arrange its $2tn (£1.6tn) market debut.
Major banks including JP Morgan, Morgan Stanley and HSBC were picked to play a leading role in the world’s biggest float when the plan was first announced in 2016. Since then, JP Morgan Chase, Citigroup, Credit Suisse, Goldman Sachs and Bank of America have all been linked to the mega-listing.
JP Morgan Chase, Morgan Stanley and Goldman Sachs declined to comment on the letter. The other banks did not respond to requests for comment.
“If you go ahead as lead coordinators in raising tens of billions of dollars for the world’s biggest climate polluter … it will be clear that your words of environmental and social concern are devoid of all sincerity, and that when push comes to shove your concerns for short-term profit outweigh all else,” the groups said.
The letter was also signed by the Rainforest Action Network, Sierra Club, Indigenous Environmental Network, 350.org, BankTrack, Global Witness, Earthworks and Share Action.
The outcry over the upcoming Aramco IPO comes after a Guardian investigation into the world’s 20 most polluting companies revealed Saudi Aramco as the biggest single contributor to the global climate crisis. The company has produced about 4.4% of the world’s total carbon dioxide and methane emissions since 1965.
Aramco is also expected to lead the growth in fossil fuel production between 2018 and 2030, the period in which experts have warned that climate action is crucial to prevent runaway global heating. Oil Change International estimates that the company will produce enough oil and gas to emit the equivalent of 27bn tonnes of carbon dioxide, or 4.7% of the world’s carbon budget, if governments hope to keep global temperatures from rising 1.5C above pre-industrialised levels.
The state oil giant is highly sought-after by investors for its enormous oil reserves and world-leading profits. It reported profits of $46.9bn for the first six months of this year, down from $53.2bn in the first half of last year but still well ahead of the world’s six biggest listed oil companies combined.
Aramco produced 13.2m barrels of oil a day in the first half of the year, more than four times the rate of production of rivals such as ExxonMobil.