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CalPERS questions banks on Dakota Access Pipeline

More than 130 investors have signed a letter addressed to lenders backing the contentious project, asking that concerns of environmentalists and the Standing Rock Sioux be addressed.

The California Public Employees' Retirement System has joined a list of more than 130 investors asking banks backing the controversial Dakota Access Pipeline to address concerns raised by the pipeline's opponents. 

The list of investors, which also includes several New York City pension funds and dozens of religious groups, has called on 17 banks with financial ties to the pipeline, including Wells Fargo, Citibank and Sumitomo Mitsui Banking Corporation, to address or support the Standing Rock Sioux Tribe's request for a reroute of the pipeline. On Thursday, the investors released a statement saying they are “very concerned by the reputational and potential financial risks due to these banks being associated with DAPL”.

Banks backing the project have faced calls for boycott or divestment. Earlier this month, the Seattle City Council voted to sever ties with Wells Fargo over its role in financing the pipeline. 

But CalPERS, which has about $6.5 billion invested in 16 of the banks, is not going that far. Anne Simpson, CalPERS investment director of sustainability, said Friday that the pension manager believes engaging with the companies is “a preferred option over divestment where we lose our voice as an investor”.

Banks targeted over their connection to the pipeline have maintained that they are legally obligated to honour their agreements regarding the project. 

The pipeline, which is being built by Energy Transfer Partners and aims to transport oil from North Dakota to Illinois in the Midwestern US, has drawn criticism from environmental groups as well as the Standing Rock Sioux, who say the project violates treaty obligations. The Army Corps of Engineers halted the project in November, but President Trump has since signed orders allowing the pipeline to move forward.

CalPERS, meanwhile, holds shares worth close to $39 million in the pipeline’s owner, Energy Transfer Partners, as of the end of last year. ETP, a Dallas-based MLP founded in 1995, is backed by investors including Goldman Sachs, Morgan Stanley, UBS, BlackRock and Brookfield.