Marsh McLennan is arranging insurance for a controversial east African oil pipeline, putting the world’s largest broker at the center of a project that has been shunned by major banks and prompted a backlash from its own staff.
The $5bn East Africa Crude oil pipeline (Eacop), which will run from Uganda to the Tanzanian coast, is fast becoming a litmus test for how willing banks and insurers are to work on environmentally contentious projects.
The involvement of Marsh, revealed by the Bureau of Investigative Journalism and the FT, is a boost for the planned pipeline, being developed by France’s TotalEnergies and Chinese state oil group Cnooc.
The project will cross multiple nature reserves and the basin of Lake Victoria, displacing households in Uganda and Tanzania across the stretch of the 1450km pipeline. It will turn Uganda into an oil producer for the first time.
New York-based Marsh is backing the project even as an increasing number of banks and insurers are distancing themselves from it. JPMorgan Chase, Citigroup, Wells Fargo and Morgan Stanley have all ruled out any financing role, according to people familiar the matter.
Beazley, the Lloyd’s of London specialist insurer, is also unwilling to provide any cover. The banks and Beazley declined to comment.
The US banks and Beazley join more than a dozen major lenders and seven insurers, including Munich Re, Allianz and Axa, that have already ruled out working on a project that has become a target of environmental campaigners.
Marsh’s involvement comes in spite of a letter of protest from more than 100 of the group’s staff last summer, in correspondence seen by the BIJ and the Financial Times.
In a letter to Marsh’s management, the employees urged the group not to help secure insurance for the pipeline, citing the “disastrous consequences” for the climate and the company’s reputation.
Describing its involvement as an “unacceptable risk”, the staff questioned whether the group’s clients would “trust us to provide climate risk management if they know we also support projects which worsen these very risks”.