A new report by ActionAid, an international non-governmental organization, reveals that major banks are pouring trillions of dollars into the expansion of fossil fuel and industrial agriculture industries in the global south, despite the urgent need to reduce greenhouse gas emissions and tackle the climate crisis.
Banks Ignore Paris Agreement and Support Fossil Fuel Expansion
The report, titled Banking on Climate Chaos 2021, analysed the loans and underwriting of 60 of the world’s largest banks to fossil fuel and agribusiness corporations from 2016 to 2022. It found that in the five years since the Paris Agreement was adopted, these banks have provided over $3.2 trillion to the fossil fuel industry to expand operations in the global south. This includes companies behind highly controversial projects like the East African Crude Oil Pipeline, the expansion of fracking in Argentina’s Patagonia region, and the Trans Mountain tar sands pipeline.
The report also found that fossil fuel financing was higher in 2020 than in 2016, a trend that stands in direct opposition to the Agreement’s stated goal of rapidly reducing carbon emissions with the aim to limit global temperature rise to 1.5°C. Even amidst the global economic downturn caused by the Covid-19 pandemic, the world’s 60 largest banks increased their financing in 2020 to the 100 companies most responsible for fossil fuel expansion by over 10%.
Banks Support Industrial Agriculture, a Major Source of Emissions
The report also exposed the role of banks in supporting the expansion of global south-based industrial agriculture, which is the second-most planet-heating industry globally. Industrial agriculture contributes to climate change through pollution from the production and use of chemical fertilizers, methane emissions from livestock, and deforestation to make space for farms.
The report found that between 2016 and 2022, major international banks have loaned and underwritten at least $370 billion for the expansion of industrial agriculture in the global south. The leading banks include Europe’s HSBC and the United States’ Bank of America, JP Morgan Chase and Citigroup. These banks have offered billions of dollars to big agricultural giants like Bayer (which acquired Monsanto in 2016), ADM, Cargill and ChemChina.
Banks Need to Align Their Practices with Climate Science and Justice
The report highlights the disconnect between financial institutions’ public statements on climate change and their actions. Many banks have committed to align their financing with the Paris Agreement and to support the transition to a low-carbon economy. However, their continued funding of fossil fuel and industrial agriculture expansion shows that they are not taking their commitments seriously.
The report calls on banks to stop financing new fossil fuel projects and phase out existing financing for fossil fuels and industrial agriculture. It also urges banks to respect human rights and Indigenous rights, and to support renewable energy and agroecology solutions that are aligned with climate science and justice.
The report is endorsed by over 300 organizations from 50 countries around the world. It is authored by ActionAid, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Sierra Club.
