With the opening of COP29 on 11 November in Baku, Azerbaijan, which will focus mainly on climate finance, the role of banks in the green transition they say they support is being highlighted by some NGOs. Participants must adopt a new global target to replace one set in 2009, which called for rich countries to mobilize $100 billion (92 billion euros) in annual aid for developing countries.
In the relationship published on the eve of the opening of this one COP29long Recover finance has carefully examined the transactions of 20 large European banks since 2021 and finds almost 1,000 transactions with majors such as TotalEnergies, Shell or BP.
If banks say they support these large oil and gas companies to assist them in their transition, their financing will mainly activities related to fossil fuels and in particular to new LNG terminal projects. The solution is simple and is called “corporate” financing, which is equivalent to financing the company that develops the project and not the infrastructure. It is through this subterfuge that the banks claim not to participate in any projects directly related to hydrocarbons, even though they are involved in a series of “carbon bombs”, these mega fossil fuel extraction projects.
Financial institutions defend themselves by saying that fossil fuels continue to play an important role in the global energy mix, with growing demand, an argument that is also regularly made by energy producers.
Increased risk for global finance
However, this financing also poses a risk to the financial sector itself. The Bank of France itself published a relationship denouncing the consequences on the markets or even on credit. Because global warming, which generates large-scale and more frequent meteorological phenomena, as we have recently seen in Spain, also destabilizes local economic fabrics and can weaken the financial system through assets whose value can deteriorate very quickly. The financial sector therefore has every interest in fully engaging in this transition, otherwise it will face a very harsh reaction.
Very generous contributions
These rich countries have spent six times more on fossil fuel subsidies in twelve years than they committed to financing internationally climate change to support the most vulnerable countries. This is what the NGO ONE states in a study : Money spent each year by advanced economies on fossil fuel subsidies would cover nearly half of the international public financing gap to meet the climate finance needs of developing economies. With the notable exclusion of China…
THE’Azerbaijanwhich will host COP29 this year, is the worst country in this sense; again according to this study, the country has distinguished itself in the last twelve years with 1,800 times more subsidies for fossil fuels than climate finance.
Interview Between Time.news Editor and Climate Finance Expert
Time.news Editor: Good afternoon, and welcome to Time.news. Today, we have an insightful discussion lined up as we approach COP29 in Baku. Joining us is Dr. Elena Mirov, an expert in climate finance and sustainability. Dr. Mirov, thank you for being here today.
Dr. Elena Mirov: Thank you for having me! It’s great to be here, especially with COP29 right around the corner.
Time.news Editor: Let’s dive right in. COP29 is set to focus heavily on climate finance. We’ve learned that there is a new global target expected to emerge to replace the 2009 goal of mobilizing $100 billion annually for developing countries. What do you think this new target should encompass?
Dr. Elena Mirov: The new target should be more than just numbers; it needs to encompass clear, actionable commitments. It’s essential that the funding explicitly transitions towards renewable energy, sustainable infrastructure, and climate resilience projects in developing countries. The ambitious goal must reflect the urgency of our climate crisis.
Time.news Editor: Speaking of urgency, recent reports highlight some troubling behavior from major European banks. Despite claims of support for the green transition, they are still heavily financing fossil fuel projects. Can you explain this paradox?
Dr. Elena Mirov: Absolutely. This is a significant issue. While many banks vocalize their support for a green transition, their financial actions often contradict those statements. The report you mentioned detailed almost 1,000 transactions with major oil and gas companies, indicating that banks are focusing on corporate financing for fossil fuel projects—essentially a way to loop around direct investment. Instead of investing in renewable infrastructure, they support the companies perpetuating the fossil fuel industry.
Time.news Editor: It’s concerning that banks are using “corporate financing” as a loophole. How do you think this impacts the credibility of banks in the climate finance space?
Dr. Elena Mirov: It severely undermines their credibility. The global financial community is at a crossroads, and continued heavy investment in fossil fuels poses significant financial risks, not to mention environmental dangers. When banks promote themselves as green while essentially funding “carbon bombs” — those large-scale extraction projects — their integrity is called into question. This lack of accountability can have fallout that extends beyond just reputation; it can lead to regulatory risks and market instability.
Time.news Editor: You mentioned regulatory risks. What responsibility do you see regulatory bodies having in this context?
Dr. Elena Mirov: Regulators must step in to ensure transparency and accountability in financial dealings related to climate impact. Implementing stricter guidelines on climate-related financial disclosures and enforcing penalties for misleading claims can help align financial motivations with climate goals. Additionally, promoting incentives for banks to invest in sustainable projects could foster a genuine transition toward greener financing.
Time.news Editor: That sounds like a necessary move. As we approach COP29, what message do you hope participants take away regarding the role of finance in addressing climate change?
Dr. Elena Mirov: I hope that delegates recognize the critical need for genuine transformation in financial markets. Climate finance should not simply be about numbers but about real-world impact. They must commit to a framework that prioritizes nurturing sustainable development and facilitates a shift away from fossil fuels. This COP must not just be a platform for discussion, but a launchpad for actionable, transformative initiatives.
Time.news Editor: Thank you, Dr. Mirov. Your insights provide clarity on a complex issue that’s vital as we move forward. We appreciate your time today and look forward to seeing how COP29 evolves!
Dr. Elena Mirov: Thank you for having me! It’s been a pleasure discussing these critical issues, and I share your anticipation for COP29.