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Banks fossil fuel financing hits $3.2tn in 7 years – ActionAid raises climate change concerns

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ActionAid Ghana has called on the government and other African leaders to implement stringent regulatory regimes in the banking and financing sectors to stop the financing of fossil fuels and large-scale industrial agriculture projects. The research conducted by ActionAid revealed that major banks have invested an estimated $3.2 trillion in fossil fuel projects and $370 billion in industrial agriculture in developing countries over the past seven years since the adoption of the Paris Agreement. The findings were made in research conducted by ActionAid on how investments in fossil fuels were having a negative impact on the global climate crisis.

The report tracked financial flows from banks to fossil fuels and industrial agriculture in 134 countries in the developing world. It found that despite global banks’ public declarations of addressing climate change, the scale of their continued financing of fossil fuels and industrial agriculture was staggering. The research also found that none of the major banks had adequate policies to genuinely decarbonize their portfolios.

The report, titled “Where the finance flows: banks fueling the climate crisis,” focused on the core activities of the banks providing credit to companies through loans, underwriting shares, and bond issuances. It described the huge investment in fossil fuels and industrial agriculture as one of the greatest threats to the fight against climate change. The investment of over $3.2 trillion in fossil fuels over the last seven years raises concerns because a considerable proportion of the funding is going to contribute towards greenhouse effects.

The investment in fossil fuels ran contrary to the Paris Agreement, which set clear targets for countries to work systematically to de-invest in that sector as a measure to reduce greenhouse emissions. The development was problematic because most of the resources invested in fossil fuels could have been channeled into renewable energy transitions to balance the level of pollution on the earth.

The way forward for Ghana and other developing countries is to prioritize investment in organic agriculture, which would help build climate resilience and ensure food security. The Vice-Chancellor of the University of Environment and Sustainable Development (UNESD) stressed that the skewed investment of banks towards fossil fuels and industrial agriculture was a trigger for industrial activities that destroyed the environment and escalated the climate crisis.