Banks invest trillions in Global South fossil fuel expansion despite climate warnings

Bank financing for the fossil fuel industry in the 134 countries of the Global South has reached an estimated $3.2tr since 2016, when the Paris Agreement on Climate Change entered into force, according to ActionAid. Bank financing to the largest industrial agriculture companies operating in the same area amounted to $370bn over the same period. The two industries are the largest global contributors to climate change.

The Global South includes Brazil, India, Indonesia and China, alongside countries with smaller economies such as Nigeria and Mexico.

These countries, already disproportionately affected by climate change, are playing host to an increasing number of fossil fuel and industrial agriculture developments such as coal mines, gas wells, oil pipelines, coal-fired power plants and monoculture plantations that require copious quantities of fossil fertilisers and pesticides.

In the report, How the Finance Flows: the banks fuelling the climate crisis, banks including HSBC, Barclays, Citibank and JPMorgan Chase were shown to be some of the biggest funders of such projects.

Earlier this year, a group of 30 investors representing over $1.5tn (£1.24tn) in assets wrote to many of the banks featured in the report, urging them to stop directly financing new oil and gas fields by the end of this year.

The largest recipient of industrial agriculture financing in the Global South is German multinational Bayer – which has received an estimated $20.6bn in financing for its industrial agriculture operations in the Global South since 2016.

Bayer – which owns the biotechnology company once known as Monsanto – is the world’s second-largest producer of agrochemicals, many of which are major contributors to the greenhouse gas emissions that cause climate change.

ActionAid also warned that the solutions needed to address the climate crisis remain “woefully underfunded”.

It called on the banks to “immediately” stop 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.

Banks were also urged to strengthen polices against human rights abuses and deforestation to protect the rights of communities.

Finally, it said that governments needed to regulate the banking and finance sectors to stop the financing of fossil fuel expansion, and scale up support and planning for renewable energy and agroecology.

Arthur Larok, secretary-general at ActionAid International, said: “This report must not be ignored by the banks funding 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 activities in the Global South than Global North governments have provided as climate finance to countries on the front lines of the climate crisis. This is absurd and must stop.”