Global insurers are wise to drop Trans Mountain pipeline

Trans Mountain continued pipeline construction activity through active salmon-spawning rivers and streams despite their ongoing failure to obtain the Free, Prior, and Informed Consent (FPIC) of all First Nations directly impacted by the proposed line. This baseline right is outlined in the UN Declaration on the Rights of Indigenous Peoples, writes Secretary-Treasurer of Union of BC Indian Chiefs (UBCIC) Kukpi7 Judy Wilson.

Despite the urging of the UN Committee on the Elimination of Racial Discrimination (CERD) to immediately suspend the project until consent is granted, work continued. The UN committee has also called for an immediate cease on the disproportionate use of force and harassment by law enforcement officials, requesting that the use of lethal weapons be prohibited and that Indigenous peoples are no longer forcibly removed by the RCMP while defending their territories.

The entire B.C. corridor of the Trans Mountain Pipeline Expansion Project (“TMX”) cuts through unceded traditional territorial lands and waterways of First Nations, and it does so without the consent of the proper Title holders. Along the proposed route, there are at least 400 unresolved specific claims that have yet to be redressed by the federal government. Several First Nations remain resolutely opposed to the project and have led lawsuits to safeguard their territories, as opposition anywhere along the line can cause significant delays and further cost overruns. 

Not only does this project violate the fundamental rights of Indigenous peoples, it is also an economic disaster for Canada. 

Costs for the controversial pipeline expansion are sitting at $21.4 billion. That’s four times the initial budget of $5.4 billion in 2013. Alongside a commitment to invest no additional public money in the project, the federal government approved a $10 billion loan guarantee on our behalf, which revived project momentum as significant concerns were expressed about running out of money. The project is years behind and about $16 billion over-budget. The Parliamentary Budget Officer confirmed that it ceases to be considered a profitable undertaking for Canada.

Trans Mountain could be on the market to secure adequate insurance coverage for the existing line and the twinned pipeline. Its insurance policies expired on August 31st, and if it does not have the requisite coverage in place, oil cannot flow through the sixty nine-year-old pipeline, or the expansion. Insurance companies and financial institutions who support construction of the TMX are not only walking blindly toward financial risk, but are irreparably damaging their reputation by defying the internationally-recognized and fundamental rights of Indigenous peoples.

18 insurance companies recognize the financial risk and human rights violations of the project - they’ve cut ties with or ruled out insuring TMX, many of them referencing the carbon-intensity of the oil sands sector.  Financial institutions should also include due diligence around matters of Indigenous Sovereignty in their business decisions. 

AXIS Capital adopted a policy requiring that any project that the insurer underwrites must have obtained Free, Prior, and Informed Consent, in accordance with the UN Declaration. This means that they will avoid insuring risky projects like the TMX moving forward and avoid damaging their reputation. Other insurers are being encouraged to follow AXIS’ lead. 

As high-profile conflicts over projects such as the Coastal Gas Link pipeline and Enbridge’s Line 3 pipeline demonstrate, proceeding with pipeline construction without FPIC represents a serious material risk to fossil fuel companies and their financial backers.

In November 2021, the construction of the TMX was halted for months due to the ‘atmospheric river’ flood event in the province; the longest outage in its history. The public may never know the amount that the insurers of Trans Mountain had to pay for the damages, but insured losses were estimated to be $675 million across the province and reconstruction is slated to cost $9 billion. 

Trans Mountain successfully petitioned to keep its insurers confidential last year, citing increased costs and difficulty reaching coverage limits. 

The public deserves to know which companies still underwrite the pipeline project for the sake of protecting the climate, human health and indigenous rights. 

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