The Accountability of Climate Crisis also Lies with the Financial System

By Maju Varghese

Centre for Financial Accountabiliy

27 September 2019

‘We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth – how dare you!’

These are the words of young Greta Thunberg, a sixteen year school girl who has ignited a passion among school children, youths and climate activists to bring forth the issues of a climate crisis which is expected to bring disastrous changes in climate resulting in destruction of habitats, livelihoods, start massive migrations and will have an impact on vulnerable populations particularly who live by natural resources, be it forest, land or water.

The accountability of climate crisis also lies with the financial system, the banks who have fueled it through massive investments in fossil project and companies who have used the money to alter the environment, destroy forests and lakes for private profit. There is a lot of attention to coal which is said to be the biggest contributor to climate change. A lot of campaigns have been targeted to bring down investments in the coal industry and infrastructure. According to the 2018 IPCC report, coal-fired power generation must decrease by 78% by 2030 if we want to keep the 1.5°C limit within reach.

The annual fossil fuel report card 2019 reports financing of fossil fuel industry to a tune of $1.9 trillion since the Paris Agreement was adopted. These include Canadian, Chinese, European, Japanese and US banks with US bank JP Morgan Chase being the top funder of fossil fuels.

Moreover, banks supported $600 billion to 100 top companies in the last three years. The global coal exist list published by Urgewald finds that many companies are still in the process of coal expansion and associated building infrastructures like ports and transport systems. Coal plants are still planned or under development in 60 countries around the world. This would mean an increase of 295% of the coal-fired capacity currently installed globally.

India is one of the world largest thermal coal producer with Coal India producing 534 million tons last year and National Thermal Power Corporation (NTPC) being the largest coal plant developer in the world. Indian Banks continue to finance coal and other infrastructure projects irrespective of the fact that many of the worlds leading banks, financial institutions, pension funds and insurance companies have withdrawn from supporting the coal. In 2018, twenty-five commercial and state-owned lenders financed 6081 crores with SBI[State Bank of India] leading with 743 crores and ICICI bank with 736 crores.

The wave of accountability of financial institutions has missed either policy prescriptions or civil society action in the country. As of September 2019, 22 banks have stopped direct financing to new thermal coal mines projects and 26 banks have stopped direct funding to new coal plants projects worldwide. According to UK based Institute for Energy Economics and Financial Analysis (IEEFA), 100 global financial companies which include 40 per cent of the top 40 global banks and at least 20 globally significant insurers have cut back on coal funding.

About 30 banks from different countries have come together to draft the principles for responsible banking which is now being endorsed by 130 banks supporting the global commitment to climate action and sustainability. However, these commitments are voluntary in nature and do not have any consequence nor have specific targets been attached to banks. It is, however, disappointing to note that only 31 banks have signed the collective commitment to climate action to align their portfolio with financing the low-carbon, climate-resilient economy required to limit global warming to well below 2, striving for 1.5 degrees Celsius. Not even one bank from India was part of these initiatives and they  continue to do business as usual.

This is true with regard to bank unions as well; globally many bank unions have pledged the support for the climate strike and have committed to showing that the workforce demands strong action for climate change. Our unions have not come forward to forge a new alliance with civil society actors to protect environmental and social destruction and support human rights.

The issue of the climate crisis and climate justice in India, however, is more than limited to coal mining or thermal energy.

It is also linked, as in many places around the world. with an economic model which is extracting resources by overpowering communities and management systems which were utilising those resources in a sustainable manner.

The present model of development has opened up seas, rivers, mineral-rich areas, forests and land to far greater exploitation, pushing fishers, dalits, adivasis and people who live by these resources. The fairy tale of economic growth is marching over the land and land resources.

Our shouts will be:

* How dare you touch my forests, rivers and common lands?
* How dare you finance our death?

Banks and other financiers, both national and international, will have to answer.