Most of the world’s biggest banks are channelling trillions of shillings to harmful projects causing climate crises, a report shows.
The report by Action Aid reveals that far more of the world’s money flowing into developing countries is directly harming vulnerable communities than creating solutions.
The report titled “How Finance Flows” tracked financial flows from banks to fossil fuels and industrial agriculture in 134 developing countries.
It reveals that despite global banks’ public declarations, that they are addressing climate change, the scale of their continued fossil fuel and industrial agriculture financing is staggering.
The report exposed many of the world’s biggest banks, who despite having committed to reaching ‘net zero’ emissions in their financing by 2050, have no adequate policies to genuinely decarbonise their portfolio.
Vanessa Nakate, a climate justice activist and founder of the Rise Up Movement, said that money continues to be pumped into harmful activities that cause climate change rather than into its solutions.
“As communities in Africa, Asia, and Latin America living on the front lines of the climate crisis suffer floods, droughts, cyclones, and rising sea levels, the banks continue to add insult to injury by funding activities that push the same communities off their land and pollute their waters,” Nakate said.
Developing countries, the report reveals, are already disproportionately affected by the impacts of the climate crisis, yet they are playing host to an increasing number of fossil fuel and industrial agriculture developments.
These developments include coal mines, gas wells, oil pipelines, coal-fired power plants, and monoculture plantations blasted with agrochemicals such as fossil fertilisers and pesticides.
The report flagged several banks, who despite having long-term targets to phase out coal lending, continue to finance some of the largest coal power producers and mining companies in the interim.
It reveals that the banks are funding corporations responsible for controversial projects that are devastating local communities and ecosystems.
While none of the major banks mentioned in the report has a policy to fully phase out oil and gas financing as required their financing is to be consistent with a 1.5°C climate goal. Instead, the main recipients of bank financing are the largest oil and gas companies.
”As the climate crisis escalates, fossil fuels and industrial agriculture – the two industries that are the largest contributors to climate change – continue to expand and thrive. Meanwhile, the solutions needed to address the climate crisis remain woefully underfunded,” reveals the report.
It adds: “The climate impact of burning fossil fuels is well known, but the role of industrialised agriculture in the climate crisis is less widely publicised.”
The report found that bank financing for the fossil fuel industry in the 134 countries of the Global South reached an estimated $3.2 trillion dollars since 2016 when the Paris Agreement on Climate Change was adopted.
Bank financing to the largest industrial agriculture companies operating in the Global South amounted to $370 billion over the same period.
Climate justice activists are now worried that financing provided for fossil fuels and industrial agriculture in developing countries is likely to dwarf the funds provided by banks for renewable energy and agroecology over the same period.
It revealed that only seven per cent of the financing provided by the major international banks featured in the report has gone to renewable energy in the seven years since the Paris Agreement.
It reveals that while renewable energy has the potential to far exceed projected global energy demand by 2050, appropriate financing is still lacking.