Ireland a channel for climate-harming investment

• €5.7 billion (US$6.2 billion) in climate-harming investment to the Global South is channelled through Ireland

• Banks worldwide have provided an estimated €3.3 trillion (US$3.8 trillion) to the fossil fuel and industrial agriculture industries in the Global South

• ActionAid Ireland says Fossil Fuel Divestment Act 2018 needs to be strengthened

Climate-harming investment

A new report reveals that Ireland is a significant channel for global institutional investment in fossils fuels and industrial agriculture, with funds registered here holding a staggering €5.7 billion (US$6.2 billion) in bonds and shares in climate-harming activities in the Global South.

The ActionAid Ireland report also reveals that as of January this year Irish financial institutions held €12.1 million (US$13.2 million) of investments in fossils fuels. Of this figure the Ireland Strategic Investment Fund (ISIF) held €10.4 million (US$ 11.2 million), mostly in bonds issued by Chinese electric utility company State Grid Corporation of China.

Staggering Global Figures

The report How the Finance Flows: The Banks Fuelling the Climate Crisis and Ireland’s Role in Enabling This was released to coincide with the global launch of an ActionAid International study which shows that banks all over the world provided an estimated €2.98 trillion (US$3.2 trillion) to the fossil fuel industry in the Global South in the seven years since the Paris Agreement on Climate Change was adopted.

It further shows that bank financing provided to the largest industrial agriculture companies operating in the Global South amounted to €320 billion (US$370 billion) over the same period.

Since the Paris Agreement, banks have provided 20 times more financing to fossil fuels and agriculture activities in the Global South than Global North governments have provided €465.9 billion ($513 billion) as climate finance to countries on the front lines of the climate crisis.

Shocking destructive practice

Today ActionAid Ireland CEO, Karol Balfe, said: “At a time of unprecedented climate crisis, the world’s banks and investments funds continue to invest staggering amounts into fossil fuels and environmentally harmful large-scale agribusiness in the Global South. This is destructive practice and truly shocking. Our research shows that Ireland plays a role in this through our corporation tax regime which depends on foreign direct investment.”

Ms Balfe continued: “More than 1,200 multinational companies have established themselves in Ireland, drawn by its access to the European single market, an English-speaking workforce, and a very attractive corporation tax regime. But this comes at a cost for the world’s poor, particularly women, who are disproportionately affected by the climate crisis.”

“The negative impact of Ireland’s corporation tax regime on the human rights and poverty levels of citizens of the global south, and its lack of coherence with Irish Aid priorities, needs to be questioned.” she said.

Fossil Fuel Divestment Act 2018

Ms Balfe said Ireland became the first country in the world to divest public money from fossil fuel assets through the Fossil Fuel Divestment Act 2018. But as the climate crisis accelerates alarmingly, the Act needs to be reviewed.

“The Fossil Fuel Divestment Act 2018 drew important attention to the responsibility the Irish State has in ensuring investment of public monies does not exacerbate the climate crisis.  However, this only referred to one investment fund, and as we now understand the scale of harmful financial flows from Ireland, we must review and expand this Act.”

The Act is principally concerned with fossil fuel exploration (undertakings) as opposed to all fossil fuel use. This essentially still allows for investment from the Irish Strategic Investment Fund in fossil fuel use, and the Act is silent on agribusiness.

“The fact is that Irish investment managers over the last five years held billions in bonds and shares attributable to fossil fuels and agribusiness in the Global South. This reveals huge flaws in regulation.” said Ms Balfe.

“Unbelievably, given that the world faces a devastating climate crisis, businesses, banks and private pension funds have no legal obligation to divest from practises that are harmful to the environment.”

Ms Balfe added: “Ireland is on one hand making important commitments on climate financing, poverty reduction and domestic climate targets, all of which need greater action and implementation. But Ireland needs to examine the role it plays in enabling billions to flow to harmful fossil fuel and agribusiness in the Global South.”

Fuelling poverty

There are many examples of how fossil fuels are devastating communities.

• In Brazil, deforestation for agribusiness is displacing communities.
• In the Niger Delta fossil fuel exploration is contaminating people’s water and food supplies.
• Climate change has resulted in Malawi and Mozambique facing the terrifying effects of Cyclone Freddy, the longest-lasting cyclone on record.
• Five seasons without rainfall in East and The Horn of Africa has caused severe drought and unprecedented hunger. Women and children, who are 14 times more likely to die from climate disasters than men, are facing the greatest distress.