Summary:
- Action Aid’s report reveals global banks are funding climate-damaging projects.
- Despite ‘net zero’ pledges by 2050, banks lack genuine decarbonization policies.
- Since 2016’s Paris Agreement, $3.2 trillion has been directed to fossil fuels in the Global South.
- A mere 7% of bank financing has gone to renewable energy post the Agreement.
- The need to invest in sustainable solutions, such as renewable energy, is emphasized
According to a recent report by Action Aid, many of the world’s leading banks are funneling trillions of shillings into projects that are exacerbating the climate crisis. This comes in stark contrast to the public declarations of these banks about their commitment to address climate change. The report, titled “How Finance Flows”, examined the monetary flows to fossil fuel and industrial agriculture projects in 134 developing nations.
Despite numerous banks committing to ‘net zero’ emissions in their financing by 2050, the report indicates a glaring lack of policies that genuinely support decarbonization efforts. Vanessa Nakate, a notable climate justice activist, pointed out the harm of continued investments in projects that further climate change, especially in already vulnerable communities.
The report underscores the severe impact of these financial decisions on developing countries that already bear the brunt of the climate crisis. Highlighted developments include coal mines, oil pipelines, coal-fired power plants, and monoculture plantations using fossil fertilizers and pesticides. Notably, several banks, despite having coal phase-out targets, continue to finance major coal power producers and mining entities.
The report presents alarming figures: Since the adoption of the Paris Agreement in 2016, financing for the fossil fuel industry in the Global South has amounted to an estimated $3.2 trillion. In the same period, bank financing for top industrial agriculture companies in the Global South reached $370 billion. Conversely, only a meager 7% of the financing from the major international banks has been allocated to renewable energy.
This raises concerns for climate justice activists, who warn of the stark imbalance between financing harmful industries and underfunding potential solutions to the climate crisis. The report concludes by emphasizing the pressing need to redirect financial resources towards sustainable and renewable energy solutions, which have the potential to meet and exceed global energy demands by 2050, provided they receive the required financial support.
