Stop backing fossil fuels, UN chief Guterres warns development banks

World Bank had invested $12bn in fossil fuels projects since the 2015 Paris Agreement to combat climate change.

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Stop backing fossil fuels projects, the United Nations Secretary urged development banks that fund fossil fuels projects and greenhouse gases that leads to climate change. Representational image.

Stop backing fossil fuels projects, the United Nations Secretary-General Antonio Guterres urged development banks after a report found the World Bank had invested $12bn in the sector since the 2015 Paris Agreement to combat climate change.

Environmental campaigners have for years tried to prevent the oil, coal and natural gas industries from producing dangerous levels of the greenhouse gases that cause climate change by persuading commercial banks to stop lending them money.

But the world’s state-backed development banks are also facing growing calls to starve the industry of finance. Because, the support of these banks is often crucial in determining whether projects in developing countries go ahead.

Guterres urged the finance ministers and economic policymakers from dozens of countries to ensure development banks end fossil fuel investments. Instead they should boost renewable energy, he said.

“We need speed, scale, and decisive leadership,” Guterres said in a video message to a virtual meeting of the group.

Earlier, a report of Berlin-based environmental group Urgewald, written by Heike Mainhardt, a senior adviser to the group, said that the World Bank had invested more than $12bn in fossil fuels since the Paris accord, $10.5bn of which was direct finance for new projects.

That put the World Bank far ahead of other development banks in supporting the fossil fuel sector, said Heike Mainhardt.

World produces more fossil fuels

With the world already on track to produce far more fossil fuels than would be compatible with temperature goals agreed in Paris, the report questioned why the World Bank would back increased oil and natural gas production in countries such as Mexico, Brazil and Mozambique.

However, the World Bank said the report gave a “distorted and unsubstantiated view.” It had committed nearly $9.4bn to finance renewable energy and energy efficiency in developing countries from 2015-19.

The bank said the report ignored its mandate to help approximately 789million people in Africa and Asia, living without electricity.

Mainhardt said the bank’s support for fossil fuels was hindering a transition to cleaner energy.

“It’s so misleading for them to act like they are a champion of the climate. But they really are such a huge part of the problem,” Mainhardt told the Reuters news agency. “Because the WB gives billions in public assistance, distorting the market for fossil fuels, it slows down the energy transition.”

Investor pressure

Meanwhile, investors managing about $20trillion in assets called on the heaviest corporate emitters of greenhouse gases to set science-based targets on the way to net-zero carbon emissions by mid-century.

About 137 investors urged 1,800 companies responsible for a quarter of global emissions to act, coordinated by non-profit group CDP.

Nearly 2,000 companies are responsible for 13.5 gigatonnes of emissions, according to environmental pressure group CDP. While more companies are pledging their support for the 2015 Paris agreement.

Emily Kreps, global director of capital markets at CDP said “Climate change presents material risks to investments. And companies failing to set targets grounded in science risk losing out – and causing greater damage to the world economy.”

The companies affected together annually contribute 13.5 gigatonnes of emissions directly and indirectly tied to their operations. It is equivalent to 25 percent of the world’s total, CDP said.

Specifically, the investors said they wanted companies to set targets through the Science-Based Targets Initiative.

More than 1,000 companies have already set science-based targets. Of which approximately 300 have targets in line with the 1.5 degrees goal.

“Companies that do not set science-based targets risk being surprised by increased costs or lost business. That could result from the increasing focus on climate change by society and regulators,” said Ted Maloney.

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