Marsh McLennan faces OECD complaint over EACOP insurance role

By David Whitehouse

Posted on Thursday, 9 February 2023 06:00
On July 1, 2022 activists with the Insure Our Future Coalition rallied outside the headquarters of Marsh McLennan in New York, urging CEO Dan Glaser and other top executives to cut ties with the East African Crude Oil Pipeline (EACOP). (Photo by Erik McGregor/Sipa USA)

US insurance broker Marsh McLennan faces a formal complaint claiming that it is breaching OECD guidelines for responsible business conduct through involvement in the East African Crude Oil Pipeline (EACOP).

The complaint has been filed by US-based Inclusive Development International (IDI) and 10 human rights and environmental organisations in Uganda and Tanzania. The groups are staying anonymous due to fear of reprisals.

EACOP is planned to be the world’s biggest heated oil pipeline, with construction due to start in November. The pipeline will transport oil from Kabaale in Uganda to Tanzania’s Port of Tanga for international export. The partners in the project are Total Energies, Uganda National Oil, China National Offshore Oil and the Tanzania Petroleum Development Corp.

The EU parliament in September adopted a resolution denouncing the human rights violations and environmental and climate risks associated with the project. Ugandan President Yoweri Museveni has promised to ensure that EACOP goes ahead and has labelled the pipeline’s critics as “insufferable.”

In May 2022, The Bureau of Investigative Journalism and the Financial Times reported that Marsh had won the contract to serve as insurance broker for the construction phase of EACOP. Marsh McLennan is playing a “critical role” enabling EACOP to move forward in the face of “widespread opposition and overwhelming evidence that the project will be a disaster for Ugandans and for the planet,” said Coleen Scott, a legal and policy associate at IDI.

The OECD responsible business guidelines are recommendations from governments to multinational enterprises with operations or headquarters in OECD countries. The non-binding guidelines set standards for responsible business conduct in areas such as human rights and the environment.

The complainants are calling on the OECD National Contact Point (NCP) in the US to make recommendations to Marsh to align its conduct in line with the standards. The complaint is the first to be filed against an insurance broker with an NCP anywhere in the world.

The complaint states Marsh is instrumental in what IDI says are the damaging characteristics of EACOP:

  • Improper land acquisition processes including failure to provide prompt and adequate compensation
  • Intimidation, harassment, threats and arbitrary arrests of community members, environmental and human rights defenders and journalists
  • Inadequate consultation with affected communities
  • Threats to natural resources relied upon by communities, including the risk of oil spills affecting Lake Victoria, which supports 40 million people
  • Damage to local ecosystems and habitats
  • Increased carbon emissions. IDI says that if the project is completed, it would enable the transportation of enough oil to generate 34 million tons of CO2 emissions per year at peak production.

EACOP is “diverting resources away from renewable energy projects that Ugandans want and threatening natural resources and existing industries that we rely on,” said a Ugandan complainant who is staying anonymous for security reasons.

Marsh McLennan responds

The Africa Report contacted Marsh McLennan for a response. The spokesperson did not confirm or deny that the company is involved with EACOP. Insurance agreements typically contain a confidentiality clause meaning that only the insuring party can disclose the agreement. There would be nothing to stop Marsh McLennan from denying EACOP involvement if it was not taking part.

“We are committed to helping businesses develop low-carbon business models and manage risks associated with the transition from fossil fuels to renewable energy,” the spokesperson said.

“As we do our part to accelerate this transition, we recognise that a secure energy supply is crucial for the global economy and society as a whole – this is particularly true in the context of today’s geopolitical environment.

We believe all communities are best served by working with operators of clean energy assets to accelerate progress to a lower carbon world and with traditional energy clients to enable them to manage the risks associated with current projects and make the transition as quickly and responsibly as possible.”

READ MORE EACOP: A boon or curse for East Africa

The complainants say they contacted Marsh numerous times to attempt to engage in dialogue on EACOP but that Marsh never responded.

Bottom line

The OECD’s National Contact Point complaints procedure offers a mechanism for raising allegations of corporate irresponsibility which might otherwise remain hidden.

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