Finance in Common Summits misses opportunity to end fossil fuel finance, but there is a way forward, say CSOs

Press statement

FOR IMMEDIATE RELEASE

12 November 2020

Laurie van der Burg, laurie@priceofoil.org
Alex Doukas, alex@priceofoil.org

Finance in Common Summits misses opportunity to end fossil fuel finance, but there is a way forward, say CSOs
November 12th, 2020 – Today development banks signed a joint declaration at the first global summit of development banks, Finance in Common. Before the summit, the UN Secretary General, youth climate activists, and over 300 civil society organizations all urged development banks to act to end fossil fuel investments. However, the joint declaration only includes a vague commitment to “consider” ways to reduce fossil fuel investments.

Oil Change International, Friends of the Earth France, the Big Shift, Climate Action Network France, Germanwatch, 350.org, Recourse, and Bretton Woods Project responded as follows: 

Laurie van der Burg, Senior Campaigner at Oil Change International:
“Without a concrete commitment to end public finance for fossil fuels this Summit can’t be considered a success for climate action. It’s too late for vague words about phasing out one fossil fuel at a time. Our research shows that the oil, gas, and coal in developed fields and mines that exist now would be enough to blow our carbon budget for 1.5ºC or 2ºC. There is no room for new fossil fuel funding from public development banks.”

“But there are bright spots: banks like the European Investment Bank and Swedfund have already banned oil and gas financing, and President-elect Joe Biden has committed to stop financing dirty energy at home and abroad. The EIB said it is ready to cooperate with others in this area. Between now and the UN climate negotiations, COP26 in Glasgow next year, public finance institutions must act on this call and work together to stop funding fossils.”  

Cécile Marchand, Climate campaigner at Friends of the Earth France:
“As host of the Summit, France cannot be credible if the Parliament approves the government’s proposals to continue subsidizing fossil fuel abroad for at least 15 more years. It is irresponsible and incoherent with its international commitments on climate.”

Sophie Richmond, Big Shift Global Coordinator, CAN International:
“Despite committing to align their finance with the Paris Agreement 5 years ago, it was disappointing that a number of the multilateral development banks did not officially sign onto the joint declaration at Finance in Common. These development banks have a mandate for environmentally sustainable development. If they are serious about Paris alignment this means shifting public money out of fossil fuels now and investing in sustainable, renewable energy to ensure everyone has energy access.”

Chuck Baclagon, 350.org Asia Finance Campaigner:
“While leaders and power brokers in the financial sector meet, in Asia, we are now just beginning to pick up the pieces left by the strongest storm this year, Super Typhoon Goni, in the middle of a pandemic. Public financial institutions are given the responsibility to chart a future that ensures Asia can thrive justly and sustainably, by shifting the financial flows away from fossil fuels to one that prioritizes access to a low-carbon economy and healthcare. They must commit with a clear timeframe to end support for fossil-fuel projects and ensure that the money goes towards building sustainable, healthy, and resilient societies.”

Lucile Dufour, International Policy Adviser at Climate Action Network France:
“Many fine words, but very few concrete commitments. The Finance in Common Summit fell short to demonstrate how public development banks would take the urgent and concrete actions needed to address the intertwined health, climate and biodiversity crises. Much more ambitious commitments, starting by ending all fossil fuel finance, are needed by COP26 if public development banks are serious about aligning their activities with the Paris Agreement’s objectives. This also applies to France, host of the summit: it would be an international disgrace if France adopted the government’s proposal to allow export finance for gas projects for 15 more years, until 2035.”  

Jon Sward, Environment Project Manager, Bretton Woods Project (UK):
“The failure of the World Bank Group to join the Finance in Common Summit’s general declaration as a full signatory raises questions about its credentials as a climate leader among public development banks (PDBs), given the statement’s focus on aligning development finance flows with the aims of the Paris Agreement and accelerating the energy transition. Despite the statement’s positive language in these areas, it stops short of the further, concrete commitments that are needed by PDBs to address the climate crisis. The fact that the World Bank Group did not fully endorse this statement – which aimed to build greater global consensus among PDBs amidst the worsening climate and Covid-19 crises –  casts doubt on the commitment of the World Bank’s management and its board to take the necessary steps to tackle the climate emergency.”   

Petra Kjell, Campaigns Manager, Recourse:
“Finance in Common provided an ideal opportunity for public development banks to stake out a roadmap for meaningful climate action towards COP26 in 2021, as well as raise the bar on other important issues, such as human rights. But a lack of ambition and timebound commitments make the summit’s Joint Declaration next to meaningless. It is particularly disappointing that multilateral development banks, such as the World Bank and Asian Infrastructure Investment Bank, refused to make their engagement official by signing the declaration. The AIIB, as a post-Paris Agreement bank, is yet again failing to live up to its promises to be ‘green’. The next 12 months, building up to the next Summit and COP26, will be critical for rectifying these mistakes.”

Sophie Fuchs, Policy Advisor, Germanwatch:
“Development banks are key actors in the recovery after the Corona crisis. Today, they have failed to commit themselves to binding criteria for a green recovery.

However, the development banks aim to develop strategies and methods to harmonize their financial flows with the Paris Agreement by the UN Climate Summit at the end of next year. They also want to examine ways of reducing their investments in fossil fuels. Progress will have to be assessed then. By the UN Climate Summit in 2021, progressive development banks should lead the way by forming a coalition that no longer finances fossil fuel-related investments.”

The Summit’s outcomes on Paris alignment and fossil fuels
Finance in Common is the first global summit of development banks. Participating development banks signed a joint declaration expressing a commitment to “the transformation of the global economy and societies towards sustainable and resilient development”. 

In the lead up to Finance in Common, the UN Secretary General António Guterres urged development banks to take decisive action to end fossil fuel investments as part of efforts to align with the Paris Agreement. Youth climate activists and civil society organisations from the Global South and the Global North, from human rights, development, climate and gender constituencies echoed this ask with a united voice in op-eds and joint statements signed by over 300 organisations released ahead of the Summit. 

But the Summit failed to deliver decisive action to address the climate crisis. The joint declaration includes a commitment to promote sustainable alternatives to fossil fuel investments and to “consider” ways and means to reduce these, but these are not firm, time-bound commitments. The same goes for the commitments to align activities with the objectives of the Paris agreement.  

In addition, the ADB, IDB, AIIB, NDB and World Bank Group did not sign the statement, although the declaration notes it was signed in their presence. This raises questions about these important multilateral development banks’ willingness to align themselves with a coordinated, global response by public development banks to the joint crises posed by climate change and Covid-19. 

During the Summit, civil society organisations also called out the French government for failing to demonstrate leadership on the topics of its own Summit, as the French parliament is about to discuss a proposal that would allow continued government-backed export finance for gas for another 15 years, which is completely inconsistent with the aims of the Paris Agreement. 

This does not mean that there is no way forward. On a positive note, the president of the European Investment Bank (EIB), Werner Hoyer, said it was “ready to cooperate” with other institutions to end fossil fuel finance. He said: “[Ending fossil fuel finance is] not only wishful thinking, it’s also good economics”. President-elect Joe Biden’s campaign committed top stop financing dirty energy through US public finance institutions. As we move toward the UN climate negotiations in Glasgow next year, this creates an important opportunity for leading public finance institutions to take collective and decisive action to shift financial flows away from dirty energy to instead support a just transition to renewable energy.

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