Foreign banks fuelling climate crisis in Africa

Onshore oil wells on the outskirts of Muanda, on the southwestern tip of the Democratic Republic of Congo on October 19, 2021.

Photo credit: AFP

As African countries gather in Nairobi from today for a regional climate summit, a new report details how banks outside the continent are funding projects that are oiling the wheels of the climate crisis.

The report, titled "How the finance flows; the banks fuelling the climate crisis", shows that, every year, 11 banks from Europe, the Americas and Asia pump money into such projects — 20 times more than they spend on climate solutions on the continent.

The report, published by Action Aid, analysed financial flows in more than 100 countries in the Global South whose fossil fuel (coal, oil and gas) and industrial agriculture projects were funded by HSBC, Citigroup and JP Morgan Chase.

Since 2015, when the landmark Paris agreement on climate change that seeks to limit global warming was signed, the banks have funded fossil fuel expansion to the tune of $3.2 trillion.

The latest report from the Intergovernmental Panel on Climate Change (IPCC) states that human activities such as the burning of fossil fuels and changes in land use are to blame for climate change.

"Limiting global warming will require major transitions in the energy sector. This will involve substantial reductions in fossil fuel use, widespread electrification, improved energy efficiency and the use of alternative fuels," the IPCC report said.

The report further shows that banks have lent some $370 billion to projects in industrial agriculture, whose emissions are the second largest contributor to greenhouse gases after the burning of fossil fuels.

The report has called out Bayer, a global biotechnology company that also operates in Kenya and 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," it says.

Bayer's website has a section on biodiversity and climate change, where it mentions that one of its goals is to "decarbonise agriculture through solutions".

"By 2030, Bayer is committed to helping our farmer customers reduce their greenhouse gas footprint in the field by 30 per cent," it reads.

In a statement sent to newsrooms yesterday, Action Aid International secretary-general Arthur Larok said the report should not be ignored, especially by the banks that pay for projects that fail to reduce greenhouse gas emissions.

"The world's money is flowing in the wrong direction. Since the Paris Agreement, banks have given 20 times more funding to fossil fuels and industrial agriculture. This is absurd and must stop," he said.

Ms Teresa Anderson, Global Lead for Climate Justice at Action Aid International and author of the report, said that, while global banks need to make public statements about tackling climate change, the scale of their continued financing of fossil fuels and industrial agriculture is staggering.

“It is communities in Africa, Asia and Latin America that suffer the consequences of decisions made in distant bank boardrooms. By financing fossil fuels and industrial agriculture in the Global South, banks are condemning communities to the cruel combination of landlessness, deforestation, water pollution and climate change," she said.

The report praises Kenya's dominance in renewable energy on the continent, showing that energy access in the country will almost triple from about 28 per cent in 2013 to about 71 per cent in 2020.