A recent report titled ‘How the Finance Flows; the banks fueling the climate crisis’, has shown the extent to which banks located outside of Africa provide funding for projects that contribute to the worsening of the climate crisis.
According to the report, 11 banks from Europe, the Americas and Asia pump in money to finance such projects 20 times more than they do for climate solutions on the continent.
Published by Action Aid, the report analysed financial flows in more than 100 countries in the Global South whose fossil fuel projects (coal, oil and gas) and those in industrial agriculture were paid for by the said banks.
According to the report released by Action Aid, annually, 11 banks from Europe, the Americas, and Asia provide significant funding for projects in the Global South, which primarily involve fossil fuels (coal, oil, and gas) and industrial agriculture.
Interestingly, the report reveals that the funding allocated to these projects is 20 times greater than the funding directed towards climate solutions in the same region.
The report’s analysis covers financial transactions in over 100 countries in the Global South, revealing significant financial backing provided by these banks to such ventures.
Among the prominent banks identified in the report are HSBC, Citigroup, and JP Morgan Chase.
Fossil Fuel and Industrial Agriculture Funding Since Paris Agreement
Since the landmark Paris Agreement in 2015, which is renowned for its objective of restraining global warming to approximately 1.5 degrees Celsius, banks have provided financial support amounting to $3.2 trillion for the expansion of fossil fuel industries.
According to the most recent report from the Intergovernmental Panel on Climate Change (IPCC), human activities such as the combustion of fossil fuels and alterations in land use are identified as the primary contributors to climate change.
“Limiting global warming will require major transitions in the energy sector. This will involve a substantial reduction in fossil fuel use, widespread electrification, improved energy efficiency, and use of alternative fuel,” says the IPCC report.
The report further reveals that the banks allocated approximately $370 billion to projects in industrial agriculture, which, after fossil fuel combustion, stand as the second-largest contributors to greenhouse gas emissions.
In a statement released to the media on Sunday, Arthur Larok, the Secretary-General of ActionAid International, emphasised that the report should not be disregarded, especially by the banks funding projects that undermine efforts to reduce greenhouse gas emissions.
“The world’s money is flowing in the wrong direction since the Paris Agreement, banks have provided 20 times more financing to fossil fuels and industrial agriculture. This is absurd and must stop,” he stated.
Teresa Anderson, who serves as the Global Lead on Climate Justice at ActionAid International and authored the report, emphasised the importance of global banks publicly declaring their commitment to addressing climate change.
However, she highlighted that the extent of their ongoing funding for fossil fuels and industrial agriculture is staggering.
“It is communities in Africa, Asia and Latin America who are suffering the impacts of decisions made in distant banking boardrooms.
“By financing fossil fuel and industrial agriculture in the Global South, banks are condemning communities to the cruel combination of landlessness, deforestation, water pollution and climate change.
With this report, banks can no longer pretend that the issue is out of sight, out of mind,” Anderson stated.
“Banks need to own up to the harm that they are unleashing on the communities and the planet, and urgently stop financing the destruction wreaked by fossil fuels and industrial agriculture.”
The report’s authors are calling on governments to implement regulations within the banking, finance, fossil fuel, and industrial agriculture sectors to prevent further harm to the continent’s environment.
They assert that human rights considerations are often overlooked when these projects are initiated, and they urge governments to enhance their policies in this regard.
Additionally, the authors emphasise the necessity of incorporating principles like free, prior, and informed consent (FPIC), robust safeguards, and effective mechanisms for disclosure and redress.