Banks finance harmful projects
A new report by ActionAid, an international non-governmental organization, has revealed how global banks are financing projects that contribute to the climate crisis in Africa. The report, titled 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 fossil fuel and industrial agriculture projects in the continent. These projects are 20 times more than the ones that support climate solutions.
According to the report, some of the top banks involved in this practice are HSBC, Citigroup and JP Morgan Chase. Since 2015, when the landmark Paris Agreement was signed to limit global warming to about 1.5 degrees Celsius, these 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 main causes of climate change.
The report also shows that the banks gave out about $370 billion towards projects in industrial agriculture, which is the second greatest source of greenhouse gas emissions after fossil fuels. These projects often involve deforestation, land grabbing, water pollution and displacement of local communities.
Banks ignore human rights and environmental impacts
The report was released on Monday, September 4, 2023, as delegates from different African countries converged in Nairobi for the inaugural Africa Climate Summit. The summit aims to discuss ways to enhance climate action and resilience in the continent, which is among the most vulnerable to the impacts of climate change.
Arthur Larok, the secretary-general at ActionAid International, said that the report must not be ignored by the banks that are paying for the projects that worsen the climate crisis. “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.
The report urges governments to regulate the banking, finance, fossil fuel and industrial agriculture sectors to stop harming the continent. It also calls for human rights to be respected and protected when such projects are implemented. It recommends that there should be free, prior and informed consent (FPIC), robust safeguards and effective disclosure and redress mechanisms for affected communities.
Kenya leads in renewable energy
The report also lauded Kenya’s dominance of renewable energy on the continent. Kenya has been investing heavily in geothermal, wind and solar power, which account for more than 80 percent of its electricity generation. Kenya also hosts the largest single-site geothermal power plant in Africa, located at Olkaria.
On Sunday, September 3, 2023, President William Ruto drove himself in an electric car from State House to KICC for the closing ceremony of the Youth Africa Climate Change Summit. The summit was a precursor to the main event and brought together young people from across Africa to share their ideas and solutions for tackling climate change. President Ruto said that Kenya was committed to achieving net-zero emissions by 2050 and supporting green growth in Africa.
