Actionaid: Global Bank Financing of Fossil Fuel Industry Estimated at $3.2tn

Ugo Aliogo

A report by Actionaid International has stated that bank financing provided to the fossil fuel industry in the Global South reached an estimated $3.2 trillion in the seven years since the Paris Agreement on Climate Change was adopted.

The report also noted that bank financing provided to the largest industrial agriculture companies operating in the Global South amounted to $370 billion over the same period. 

The report revealed that banks have provided an annual average of 20 times more financing to fossil fuels and agriculture activities in the Global South than Global North.

The report further explained that the glut of unsustainable financing is being provided by many of the world’s biggest banks, adding that the largest European financiers of fossil fuels and agribusiness are HSBC, BNP Paribas, Société Générale, and Barclays. 

The report remarked that in the Americas, the three largest US banks such as Citigroup, JPMorgan Chase and Bank of America were the most enthusiastic funders of both industries, noting that the largest Asian financiers of fossil fuels and industrial agriculture are the Industrial and Commercial Bank of China, China CITIC Bank, Bank of China and Mitsubishi UFJ Financial.

The report averred that the largest recipient of industrial agriculture financing in the Global South is Bayer, the German multinational which bought the controversial agrochemical and biotechnology company Monsanto in 2018, adding that Bayer has received an estimated US$20.6 billion in financing for its agribusiness operations in the Global South since 2016.

The report hinted that the other major industrial agriculture recipients of bank financing in the Global South include ChemChina (Syngenta), COFCO Group, Archer-Daniels-Midland (ADM) and Olam Group, which are all involved in either the sale of climate-warming agrochemicals or deforestation-driving animal feed and biofuels.

The report espoused that the largest recipients of fossil fuel financing in the Global South include the State Power Investment Corporation (US$203.9 billion since 2016) and several other Chinese power companies and producers heavily invested in coal, the commodities trader Trafigura, and major oil and gas companies including Saudi Aramco, Petrobras, Eni, Exxon Mobil, BP and Shell. 

According to the report, “The financing provided for fossil fuels and industrial agriculture in the Global South is likely to dwarf the financing provided by banks for renewable energy and agroecology over the same period. “Recent research has shown that only seven percent of the financing provided by the major international banks featured in our report has gone to renewable energy in the seven years since the Paris Agreement.  Although no equivalent dataset exists for agroecology financing, lending from ‘traditional’ banks accounts for only a small proportion of the financing in this sector.”