• Thursday, July 18, 2024
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Why are public banks bankrolling harm on nature?

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I grew up in Nigeria – a country twice the size of Germany. Its landmass spans different climates, and it brings a huge variety of habitats and ecosystems. Within the same country you can go from semi-arid savannah to rainforest, and from rich flood plains to freshwater swamp forests. Biodiversity provides benefits valued at a staggering $8 billion per annum. Its protection and sustainable use is critical to the economic security of the country. But it also gives Nigeria, and other parts of Africa with similar biodiversity, an indispensable role in tackling climate change, with rainforests, swamp forests and flood plains all acting as carbon sinks.

40% of Nigerians are deemed to be living in poverty, and the links between environmental degradation, climate change and high poverty levels have not gone unrecognised by Nigerian leaders in the past. Despite the knowledge that the state of nature is of critical importance to many Nigerians, it has one of the highest deforestation rates globally, losing approximately 350,000 – 400,000 hectares per year.

By the end of week one of the UN Climate Summit (COP26) last year, it was clear that nature was beginning to lose its consignment to the fringes of climate summits. One of the biggest announcements to come out of COP26 was that 120 world leaders from both forest commodity producers and consumer countries were to end deforestation by 2030 – Nigeria being one of these.

Despite these commitments, public money is causing harm.

By their very nature, development banks (DFIs) exist to boost economies sustainably. It’s not an easy balance to strike. On one hand, the banks should be creating opportunities and jobs in the immediate term by supporting the private sector. On the other, they should be ensuring that what they are funding is compatible with climate goals and the protection and restoration of nature for long term security. These aren’t “nice to haves” pushed by green activists: 45% of the global population live in rural areas of developing countries where income and sustenance are generated from the land. Those living in poverty are relying on institutes like development banks to think of the long-term impacts of how they spend their money. They don’t have the luxury to pick and choose where they gain their income, or where they get their food, but I’m sure they wouldn’t expect the banks that are supposed to be helping them to be destroying what options they do have.

Yet, despite having these people’s futures in their hands, a new report from portfolio.earth has found a complete lack of policies from development banks to prevent the funding of projects that will leave forests, peatlands and oceans in dire states. If you take forests as an example, globally 1.6 billion people depend upon them for their livelihoods; portfolio.earth finds DFIs headquartered in the UK, EU and Asia have no exclusion policies concerning some of the key drivers of biodiversity degradation such as industrial fishing and agriculture, extractives, and plastics to name a few.

Read also: Climate change: Group warns campaigns could hurt Africa’s transport sector

Rather than supporting the people of Nigeria, development banks are letting them down.

Nigeria produces half a million tonnes of poorly managed single-use plastic every year, 40% of which is estimated to end up in the ocean. Indorama Eleme is a plastics and petrochemicals plant in Port Harcourt. Given its size, it’s likely that the company is responsible for a large amount of this pollution. Local people in the area have had grievances with the company since 2017, with limited financial benefits being felt in the area. Whilst most of the world begins to address plastic pollution – putting in place bans and kickstarting new legislative processes – development banks continue to fund Nigeria’s reliance on plastic production for economic prosperity. But what happens to that promise of prosperity when the world finally cuts ties once and for all with polluting plastics? Nigeria will be left with a pollution problem, a dying industry, and a loss of jobs. Yet if you take the UK as an example donor of development finance, they have invested 5 times more in this plastic company in Nigeria than they have in rural agriculture that could directly benefit people.

What is the solution that countries like Nigeria need?

To what extend do DFIs systematically assess how reliant on nature the people they are supposed to be supporting are? If they don’t have a way in which to quantify the long-term risks the projects they are funding pose to vital ecosystem services, then they need one. Only then can exclusion policies and measures be put in place to rule out the worst offending industries. Nature and its value must be mainstreamed into development finance, not just by excluding harmful sectors, but by financially boosting those that provide the triple benefit of addressing poverty, climate, and nature. The value of supporting sustainable agriculture or creating jobs in industries designed to restore peatlands and forests needs to be recognised. Strategies for building up these types of sectors needs to be created.

My hope is that donor countries start to take their roles as shareholders and directors of these banks more seriously. They cannot continue to shell out hundreds of millions of dollars a year with little-to-no oversight of where that money is being spent and what is being destroyed in the process. Particularly whilst they stand on the global stage and tell the world they are working hard to tackle climate change and protect nature. The future of my country, and many others around the world, is in their hands.

Idowu a Nigerian environment activist is Co-Founder of ICCDI Africa