New report: Banks continue to finance climate chaos

The report highlights the importance of banks fulfilling their promises in terms of climate action, and urges them to stop financing activities related to fossil fuels and deforestation.

Since the commitment to limit global warming to 1,5°C above pre-industrial levels was made, there has been a significant increase in funding for climate-polluting industries in the Global South than governments in the Global South. Global North have given those same countries to address the climate emergency.

The report "How finances flow: banks fueling the climate crisis", published on Monday by ActionAid, reveals an important finding. According to the report, banks play a significant role in exacerbating the climate crisis.

“This report names the biggest offenders in the banking world and asks them to realize that they are destroying the planet, while damaging the present and the future of their children,” Ugandan climate activist Vanessa Nakate wrote in the foreword. . "It is time to hold financial institutions accountable and demand that they end their financing of destructive activities."

In the report we will analyze in detail the financing of two key industries in the fight against climate change in 134 countries in the Global South: fossil fuels and industrial agriculture.

“People generally know that fossil fuels are the main cause of greenhouse gas emissions. But what is less understood is that industrial agriculture is actually the second largest cause of climate emissions,” said Teresa Anderson, global climate justice lead at ActionAid International, during a press conference ahead of the report's release.

The relationship between the sector and the deforestation, as well as the emissions generated by the production of industrial fertilizers, are the factors that contribute to this.

Since the signing of the Paris agreement in 2015, banks have provided financing to large agricultural companies operating in the Global South for a total of $370 billion. In addition, a considerable sum of 3.2 trillion dollars has been allocated to the oil, gas and coal sectors.

The top three banks that invested the most in these sectors were the Industrial and Commercial Bank of China with $154.300 billion, the CITIC Bank of China with $134.700 billion, and the Bank of China with $125.900 billion. Citigroup came in fourth with $104.500 billion, followed by HSBC with $80.800 billion.

The report highlights China as the world's largest economy, but according to Anderson, much of what it produces ends up being purchased by consumers in the Global North. This means that China plays an important role as a supplier of products to the global market.

The three main banks in America that provide financing to large agricultural and fossil fuel companies are Citigroup, JPMorgan Chase and Bank of America. Citigroup has been recognized as the leading financing provider in the region for fossil fuel-related projects. On the other hand, JP Morgan Chase stands out as the main donor in the field of industrial agriculture.

After HSBC, the main financiers in Europe were BNP Paribas, Société Générale and Barclays. As for Asian financiers, Mitsubishi UFJ Financial was the most prominent.

The aforementioned money is used for different purposes, and in this specific context, in the field of agriculture, a large amount of that money has gone to Bayer, which acquired Monsanto in 2018. In addition, banks have provided financing of $20.600 billion to support businesses in the Global South since 2016

A lot of fossil fuel money has been invested in the China State Energy Investment Corporation and other Chinese companies, as well as commodities trader Trafigura. Also among the common recipients of fossil fuel money are companies such as ExxonMobil, BP, Shell, Saudi Aramco and Petrobras.

"This is absurd," Anderson said of the findings. "Global banks often make public statements that they are tackling climate change, but the scale of their continued support for fossil fuels and industrial agriculture is simply staggering."

The report was called the "flagship" document by ActionAid in its Fund Our Future campaign. This campaign aims to redirect global funds currently allocated to the causes of the climate crisis towards solutions that address this problem. The report calls on banks to deliver on their climate promises and stop financing fossil fuels and deforestation, as well as put in place additional safeguards to protect the rights of local communities and increase the ambition of their targets to achieve “true zero” emissions. . and improve transparency and other measures to ensure that the projects they fund behave ethically.

“This can be stopped,” Farah Kabir, national director of ActionAid Bangladesh, said during the press conference. "Banks can no longer finance fossil fuel industries and industrial agriculture."

The report provides valuable recommendations to governments in the Global North to ensure an equitable transition to a sustainable future that benefits all. These measures included the implementation of more rigorous regulations in the banking, fossil fuel and agricultural industries. In addition, it was proposed to end public subsidies for these sectors and redirect funds towards more sustainable solutions such as renewable energy and agroecology.

Niranjali Amerasinghe, executive director of ActionAid USA, highlights that the way funds are sent to the Global South makes a significant difference. Rather than being in the form of private loans, it is preferable that they be provided as public financing.

“Providing more loans to countries that are already in significant debt situations will not support their transition to a climate compatible future,” he said.

Loans can have negative consequences due to the recipient nations' obligation to generate a return on investment. Currently, the main industries offering this return are fossil fuels and industrial agriculture. This dependence can be counterproductive for the environment and for sustainable development.

In addition to using public funds, there are other strategies that could be useful to help these countries in their transition to a more sustainable future. For example, debt forgiveness or restructuring could ease the financial burden and allow them to allocate more resources to green projects. If companies like Exxon or Bayer doing business in the Global South “paid taxes equitably, that would allow those governments to raise public revenue that could then be used to support climate action,” Amerasinghe said.

The report highlights the importance of agroecology as an effective solution to address climate challenges in countries in the Global South. Specific funding for this approach is recommended as it can generate positive outcomes in terms of agricultural resilience and environmental sustainability.

Mary Sakala, a prominent Zambian farmer, was featured in a press conference where she shared important reflections on the impact of the climate crisis and current agricultural policies on her community.

“Climate change is real in Zambia,” he said, adding that it has caused floods, droughts, pests and diseases that mean “families are currently, as I speak, sleeping on empty stomachs.”

Sakala found hope in agroecology, a practice that not only contributes to food security and resilience, but also allows farmers to be less dependent on the government and big businesses.

"We need policies that allow us to conserve our environment in a cultural way, that help us eat our food," Sakala said. "We want... every seed to be used, saved and shared in solidarity."

The speaker emphasized the responsibility of companies and governments in the Global North to provide support so that they can achieve their goals.

"Those people who continue to pollute and allow climate change to increase must pay us, because we are suffering because of the things that others are doing," he said.

With information truthout.org