Banks have poured an annual average of $513 billion into financing fossil fuels and industrial agriculture in the Global South from 2016 to 2022 since the adoption of the Paris Agreement on Climate Change, according to international NGO ActionAid.
This funding, approximately $3.2 trillion for the fossil fuel industry and $370 billion for large industrial agriculture companies, is by some of the world’s biggest banks.
Banks have provided an annual average of 20 times more financing to fossil fuels and agriculture activities in the Global South, ActionAid said in its latest report, “How the finance flows: The banks fuelling the climate crisis”.
This amount, it stressed, is “more than Global North governments have provided as climate finance to countries on the front lines of the climate crisis”.
The “glut of unsustainable financing” is being provided by global banks such as HSBC, BNP Paribas, Société Générale, Barclays, Citigroup, JPMorgan Chase and Bank of America.
In Asia, the largest financiers in both of the industries include Industrial and Commercial Bank of China, China CITIC Bank, Bank of China and Mitsubishi UFJ Financial.
“Despite global banks’ public declarations that they are addressing climate change, the scale of their continued fossil fuel and industrial agriculture financing is staggering,” ActionAid said.
Even as the climate crisis escalates, they claim that fossil fuels and industrial agriculture, the two industries that are the largest contributors to climate change, continue to expand and thrive.
But the solutions needed to address the climate crisis remain “woefully underfunded”, noting that a mere $22.3 billion had been allocated, as of 2020.
The 84-page report released two days ago tracks financial flows from banks to fossil fuels and industrial agriculture in 134 countries in the Global South.
Sacred land cleared
In Cambodia, ActionAid looked at an agribusiness project in Ratanakiri, which is allegedly financed by the Bank for Investment and Development of Vietnam (BIDV), an 81 percent state-owned Vietnamese bank and its largest bank by assets.
“The bank has identified ‘green banking’ as a priority, but has not set any targets for exiting fossil fuel or agribusiness investments, and has no specific human rights policy or measures for sensitive agribusiness sectors,” ActionAid said.
It appears that BIDV is the largest financier of about $433 million since 2016 of Hoàng Anh Gia Lai Group (HAGL), which ActionAid alleged is an agribusiness company with “a disastrous record of land grabbing and deforestation”.
According to the NGO, state-owned banks should be well placed to respond to the climate crisis, and to do so while upholding high social and environmental standards, it said.
In practice, however, ActionAid alleged that “they are failing people and the planet in many of the same ways as private banks”.
Based on news articles referenced by ActionAid, the Ratanakiri agribusiness is owned by rubber company Vietnam-listed HAGL.
The company is alleged to have cleared a large piece of sacred land belonging to indigenous people in Muoy and Inn villages in 2020.
The bulldozed area, Patu Mountain, featured a burial site and spirit mountain, and two creeks that were filled, along with the fencing off of a wetland, “traditionally used by local villagers for foraging for wild vegetables”.
Published by Mighty Earth, a global advocacy organisation, on January 21, 2021, the article “Is Nothing Sacred?” stated that the land was part of 742 hectares earmarked to be returned in accordance to a deal brokered by a World Bank watchdog in 2015.
Seventeen indigenous villages in Ratanakiri were supposed to have taken back their native customary land that had earlier been allegedly misappropriated by HAGL and its subsidiaries, Mighty Earth reported.
In a brief response to Kiripost, BIDV acknowledged that it has had a relationship with HAGL since 2005, but that, “from the end of 2015 until now, BIDV has not issued new loans, [we are] only collecting debt from previous credits”.
It did not respond to several other questions relating to the findings and any green measures implemented by the bank.
HAGL did not respond to any of the questions sent to it via email.
While the climate impact of burning fossil fuels is well known, the role of industrialised agriculture in the climate crisis is less widely publicised, the NGO said.
“Agriculture is the second-largest contributor to climate change, and industrialised approaches marketed and controlled by giant agribusiness corporations are responsible for the bulk of emissions in the sector,” it shared.
“These industrialised agriculture approaches drive deforestation, aggressively market agrochemicals that lead to large amounts of greenhouse gas emissions and expand factory farming.”
In that, the industrialised approaches also undermine 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,” they said.
Countries in the Global South, already disproportionately affected by the impacts of the climate crisis, are playing host to an increasing number of fossil fuel and industrial agriculture developments.
These include coal mines, gas wells, oil pipelines, coal-fired power plants and monoculture plantations heavily-laden with agrochemicals such as fossil fertilisers and pesticides.
In effect, this leads to “conflicts over land and water, premature deaths, destroyed ecosystems, poisoned rivers and lakes”, driving up the climate impacts that “already devastate their communities”.
Banks, governments listen up
Apart from the call to stop fossil fuel, deforestation and “harmful” industrial agriculture financing, ActionAid urged banks to protect the rights of communities, bring down emissions to “real zero” and strengthen transparency and verification tools.
Governments, on the other hand, need to regulate the banking, finance, fossil fuel and industrial agriculture sectors to end fossil fuel expansion
This includes ensuring mandatory development of climate transition plans consistent with a 1.5 degree celsius climate goal, it said.
ActionAid also asked governments to redirect harmful fuel and industrial agriculture subsidies.
“They should scale up support and planning for just transitions to real solutions, such as renewable energy and agroecology. In addition, governments must finance just transition through scaled-up climate finance, tax justice and debt relief,” the NGO said.
To get the latest news on Cambodia's business and tech, join Kiripost on Telegram.