As delegates from different African countries converge in Nairobi from Monday for the inaugural Africa Climate Summit, a new report has shown how banks outside the continent finance projects that fuel the climate crisis.
The report, How the Finance Flows; the banks fueling the climate crisis, shows that every year, 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.
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Some of the top banks fingered in the report are HSBC, Citigroup and JP Morgan Chase.
Since 2015 when the landmark Paris Agreement, which is known for, among other things, limiting global warming to about 1.5 degrees Celsius, the banks have funded the expansion of fossil fuels to the tune of $3.2 trillion.
The latest Intergovernmental Panel on Climate Change (IPCC) report says that human activities such as the burning of fossil fuels and changes in land use are the culprits for 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 also shows that the banks gave out about $370 billion towards projects in industrial agriculture, whose emissions, after burning fossil fuels, are the second greatest contributors to greenhouse gases.
In a statement sent to newsrooms on Sunday, Arthur Larok, the secretary-general at ActionAid International, said that the report must not be ignored especially by the banks paying for the projects that derail reductions in 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 said.
Teresa Anderson, Global Lead on Climate Justice at ActionAid International and author of the report, said that there is a need for global banks to make public declarations that they are addressing climate change but the scale of their continued financing of 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,” she said.
“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 authors of the report urge governments to regulate the banking, finance, fossil fuel and industrial agriculture sectors to stop gassing the continent.
They argue that human rights are not always part of the equation when such projects come into force, and urge governments to strengthen their policies in that line.
They also say that there should be free, prior and informed consent (FPIC), robust safeguards and effective disclosure and redress mechanisms.
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The report lauded Kenya’s dominance of renewable energy on the continent. Electricity access in the country almost tripled from about 28 percent in 2013 to about 71 percent in 2020 BY BUSINESS DAILY