The UN secretary general António Guterres did not mince his words when he spoke about the climate crisis this summer. “The era of global warming has ended,” he said. “The era of global boiling has arrived.”
His comments came as record high temperatures made headline news around the world, with parts of Europe, North America and Asia engulfed by raging wildfires. Millions of people in the Global South – the term given to the nations of the world that have a relatively low level of economic and industrial development – have been suffering due to the extreme effects of the climate and biodiversity crisis for years, a crisis that is especially profound and devastating on the poverty levels of women.
As the climate emergency escalates, fossil fuels and industrial agriculture – the two industries that are the largest contributors to climate change – continue to expand and thrive. A new report from ActionAid published on Monday reveals that bank financing provided to the fossil fuel industry in the Global South reached an estimated €2.98 trillion ($3.2 trillion) in the seven years since the Paris Agreement on climate change was adopted. Bank financing provided to the largest industrial agriculture companies operating in the Global South amounted to €320 billion ($370 billion) over the same period.
These figures are staggering and expose the absurdity that banks are channelling more money into fuelling climate change. This money dwarfs the support to countries ravaged by the impact of the climate crisis. Meanwhile, the solutions needed to address the climate crisis remain woefully underfunded.
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In the face of catastrophic levels of chaos, death and destruction caused by climate change there are uncomfortable truths for Ireland.
ActionAid Ireland’s research shows that a number of large international institutional investors with subsidiaries registered here held a mind-blowing €5.7 billion ($6.2 billion) in bonds and shares in fossil fuels and agribusiness in the Global South over a five-year period.
In effect, this means that Ireland functions as a channel for global institutional investors to make maximum profits from their fossil fuel and agribusiness investments in the Global South.
Our research shows that the highest value of investments attributable to fossil fuels in the Global South through Ireland was in large international oil and gas companies. Highest on the list was Exxon Mobil €1 billion ($1.1 billion), followed by Shell €503 million ($550 million) and Chevron €428 million ($468 million).
One reason Ireland is enabling fossil fuel and agribusiness investment is due to the fact we are heavily dependent on foreign direct investment. Our corporation tax regime helps multinational companies avoid tax in countries of the Global South by funnelling profits out and into low-tax Ireland, at a devastating price for the world’s poor. This is money that could be used on public services, or in financing climate transitions and adaptions in poor countries.
The Irish tax regime has been widely criticised for its negative impact on the poverty levels in the Global South, and for its lack of coherence with Irish Aid development and poverty objectives. Most recently, the UN Committee on the Rights of the Child called on Ireland to ensure that Irish tax policies are not undermining the ability of other countries to raise revenue to address poverty experienced by children.
Do we really want an economy partially built on the destruction of the planet, that values foreign direct investment above all else, with the people of the Global South paying the highest price?
At a time of unprecedented climate breakdown, Government policies that facilitate the ongoing flow of money through the State to sustain and exacerbate the climate crisis must be questioned. Are these policies fundamentally at odds with Ireland’s obligations to reduce global emissions under the Paris Climate Agreement?
And does the Irish economic model and reliance on foreign direct investment also undermine important – but insufficient – commitments on climate financing, official development aid and domestic climate targets?
The fact that Ireland is a funnel for billions of fossil fuel investments flowing to the Global South also sits at odds with our Fossil Fuel Divestment Act. This was a landmark achievement by climate activists when it was passed in 2018, making us a global pioneer in divesting public money from fossil fuel assets.
While ground-breaking at the time, in 2023 serious limitations are evident in the Act. It is principally concerned with fossil fuel exploration (undertakings) as opposed to all fossil fuel use, essentially allowing for investment in fossil fuel activities. In relation to fossil fuel exploration, the Act excludes “indirect” investments, exchange traded funds and hedge funds, undermining the spirit of the legislation.
The billions flowing through Ireland are not regulated by the Act. Investments in companies that depend on fossil fuels, such as agribusiness and agrichemical companies, are not prohibited by the Act, thereby allowing for the continued financing of environmentally damaging activities.
Time is running out. As the crisis deepens, our response must change.
[ UN chief tells fossil fuel firms: stop trying to ‘knee-cap’ climate progressOpens in new window ]
The climate science clearly shows that our window of opportunity for keeping global warming under the key threshold of 1.5 degrees is closing fast. Climate change is bringing hunger, poverty, terror and grief to millions of people. We need to address as a matter of urgency limitations in important commitments we have made already, including the Act.
But we also need to address the elephant in the room – Ireland’s economic model. Do we really want an economy partially built on the destruction of the planet, that values foreign direct investment above all else, with the people of the Global South paying the highest price?
The bottom line is that fossil fuels must be phased out to avert climate catastrophe. As Guterres also said this summer: “We are hurtling towards disaster, eyes wide open. It is time to wake up and step up.”
Karol Balfe is chief executive of ActionAid Ireland