Barclays Cooks its Goose

Bank in hot water with environmental groups as its 'green' credentials are compromised by backing for Iceland dam project that threatens migrating birds. Severin Carrell reports
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The Independent Online

Barclays has been accused of breaking its "green" pledges after backing a highly controversial dam project in Iceland that threatens three species of goose. Furious British environmental groups are threatening consumer boycotts and shareholder action after the bank's finance arm, Barclays Capital, agreed to help arrange a $400m (£240m) loan for Iceland's national power company.

The money will help Landsvirkjun build a vast hydroelectric dam deep in Iceland's wilderness to supply power to a big new Alcoa aluminium smelter. The dam, Karahnjukar, dominates Landsvirkjun's current investment programme.

However, conservationists led by the Royal Society for the Protection of Birds and WWF UK have warned that the dam will destroy the nesting and feeding grounds for 7,000 rare pink-footed geese who winter in Britain, and wreck the "staging areas" for barnacle and greylag geese who nest every summer in the UK.

To Barclays' embarrassment, the row comes only a month after it signed the "Equator Principles", a voluntary code of practice agreed by 10 big banks on corporate social and environmental responsibility. The code would uphold "sound environmental management practices" and force all projects worth over $50m to be audited and tested against criteria including environmental damage, pollution and sustainability.

Barclays' corporate social responsibility director, Chris Lendrum, said last month that the bank took its CSR duties "seriously". He added: "We have long been aware of the sensitivities surrounding project financing and only lend when we are satisfied that environmental impacts are being managed in accordance with stringent environmental criteria."

Barclays has now been asked by a consortium of environment groups - led by the US group International Rivers Network, and backed by the RSPB and Friends of the Earth - to withdraw from the financing scheme.

WWF UK will register identical protests with Barclays this week.

Peter Bosshard, policy director of International Rivers Network, has written to Barclays insisting that the dam would violate the Equator Principles' codes on pollution and the environment. The proposed Alcoa smelter's emissions would breach World Bank air-quality standards that Barclays is now committed to upholding under the principles.

The bank said the credit deal did not fall directly under the terms of the Equator Principles, which cover project financing loans, but it has voluntarily funded two environmental impact assessments. Neither, it said, had persuaded it to withdraw from the deal.

"This has been looked at with some rigour," a spokes-man said. "We're as happy as we can be, based upon the information provided, that the environmental aspects are being managed properly at this point."