Report: Global banks fuelling climate crisis
By Milliam.Murigi, September 5, 2023The world’s largest banks continue to finance fossil fuel and industrial agriculture, the largest contributors to climate change despite their public declarations they are addressing climate change, a new report has revealed.
How the finance flows: The banks fuelling the climate crisis by ActionAid report says banks have put $3.2 trillion towards the expansion of fossil fuels since the Paris Agreement, with $370 billion being funnelled into industrial agriculture.
“As the climate crisis escalates, fossil fuels and industrial agriculture continue to expand and thrive. Banks have provided an annual average of 20 times more financing to fossil fuels and agriculture activities in the Global South than Global North governments have provided as climate finance to countries on the front lines of the climate crisis,” reads the report.
Top banks funding the climate crisis according to the report include HSBC, Citigroup and JP Morgan Chase. Others are BNP Paribas, Societe Generale, Barclays, Bank of America, Industrial and Commercial Bank of China, China CITIC Bank, Bank of China, and Mitsubishi UFJ Financial.
Gas emissions
The largest recipient of industrial agriculture financing in the Global South is Bayer which has received an estimated $20.6 billion in financing for its industrial agriculture operations in the Global South since 2016. Bayer which owns the infamous biotechnology company once known as Monsanto is the world’s second-largest producer of agrochemicals.
The fertilisers, pesticides and deforestation associated with Bayer’s products are major contributors to the greenhouse gas emissions that cause climate change. Other major industrial agriculture recipients of bank financing in the Global South include ChemChina (Syngenta), COFCO Group, Archer-Daniels-Midland (ADM), and Olam Group, which are all involved in either the sale of climate-warming agrochemicals or deforestation-driving animal feed and biofuels.
“Agriculture is the second-largest contributor to climate change, and industrialized approaches marketed and controlled by giant agribusiness corporations are responsible for the bulk of emissions in the sector. These industrialized agriculture approaches drive deforestation, aggressively market agrochemicals that lead to large amounts of greenhouse gas (GHG) emissions, and expand factory farming,” reads another part of the report.
Industrialised agriculture also undermines billions of smallholder farmers and their agroecological farming systems which could otherwise feed the world while cooling the planet. Industrial agriculture’s reliance on fossil fuels to produce agrochemicals is just one way in which the two industries are deeply co-dependent.
The largest recipients of fossil fuel financing in the Global South include the State Power Investment Corporation ($203.9 billion since 2016) and several other Chinese power companies and producers heavily invested in coal, the commodities trader Trafigura, and major oil and gas companies including Saudi Aramco, Petrobras, Eni, Exxon Mobil, BP and Shell.
“Global banks often make public declarations that they are addressing climate change but the scale of their continued financing of fossil fuels and industrial agriculture is simply staggering. It is communities in Africa, Asia, and Latin America who are suffering the impacts of decisions made in distant banking boardrooms,” says Teresa Anderson, Global Lead on Climate Justice at ActionAid International and author of the report.
Adding:“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. 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.”
Financing fossil fuels and industrial agriculture also risks locking Global South countries into building expensive and debt-dependent infrastructure that will quickly become outdated, rather than investing in sustainable opportunities for development like renewable energy and agroecology.
According to the report, many of these banks have committed to reaching ‘net zero’ emissions in their financing portfolio by 2050, but none have adequate policies in place to genuinely decarbonize their portfolio. Apart from that several banks (including Barclays, BNP Paribas, HSBC, and Citigroup) now have long-term targets to phase out coal lending, but continue to finance some of the largest coal power producers and mining companies in the interim.
Major banks are also funding corporations responsible for controversial projects that are devastating local communities and ecosystems. None of the major banks has a policy to fully phase out oil and gas financing, even though this is required if 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.
“None of the banks surveyed by ActionAid have policies limiting the financing of industrial agriculture or favoring agroecology. Where agricultural commodity policies exist, these usually relate to specific sectors – palm oil and soy in particular but are over-reliant on certification schemes that have proven ineffective.”
Policies addressing the role that beef producers play in driving deforestation (especially in the Amazon) are inadequate, or lacking altogether. The harms caused by the agrochemicals sector also go unaddressed by bank policies. No bank recognizes or seeks to reduce the climate harm resulting from the production and application of fossil fuel-based nitrogen fertilisers by industrial agriculture corporations.
“The world’s money is flowing in the wrong direction. This is absurd and must stop. Banks should immediately stop project and corporate financing for all new deforestation, coal, and fossil fuel expansion activities, and rapidly phase out financing of all other fossil fuel and harmful industrial agriculture activities,” says Arthur Larok, Secretary General at ActionAid International.