Greenhouse gas emissions continue to rise and the average global temperature rises year by year. However, the rise of the global denialist movement, combined with pressure from sectors such as the oil industry, whose businesses are being hurt, is slowing the energy transition and climate change mitigation: they deny scientific evidence, falsify reports or outright lie. But they also corrupt governments, obstruct policies, and seek to stop measures promoted by various financial entities.
The re-election of Donald Trump to the White House has further entrenched this trend of denial, leading the world’s major power to call for a halt to funding the fight against climate change, deeming it a non-existent problem.
Not only far-right politicians have jumped on this bandwagon, but also economic lobby groups and financial funds, which until recently promised to lead change. Well, the decisions that are made now are subject to other reasons and follow the logic of political economy: actors, interests and power.
Authoritarians don’t like this
The practice of professional and critical journalism is an essential pillar of democracy. This is why it bothers those who believe they are the bearers of the truth.
Big promises that were not fulfilled with financial money
Recently, the financial sector has shown signs of a new trend and provided us with promises. But it finally became clear that what really drives him is work. For this reason, the moral discourse presented in recent meetings and annual reports has begun to fade in the face of pressure exerted by authority.
BlackRock, one of the world’s leading investment funds, was part of the initial enthusiasm. In his 2018 annual letter to investors, CEO Larry Fink highlighted the need to move forward with a more responsible outlook and the urgent need to act against climate change. With more than $11.6 trillion in assets under management, this fund’s decisions significantly impact the investment strategies of many companies around the world.
In those years, as young people took to the streets of the world’s major capitals to mobilize against the inaction of key leaders, a group of companies and investment funds launched a new coalition: Climate Action 100+. Next, the various members committed to making their pollution level transparent and reducing the carbon footprint of their operations.
In April 2021, a group of more than 450 global companies launched the Zero Emissions Finance Alliance (Gfanz) in Glasgow. The presidency of the coalition was shared: there was Michael Bloomberg and the Prime Minister of Canada, Mark Carney, the latter coming from the financial sector and the former head of the Bank of England. This was in the context of a speech he delivered in that entity, in September 2015, in which the Canadian financier summarized the system’s flaws in one phrase: “the tragedy of the horizon,” that is, how short-term decisions ignore the risks of the future.
Under the auspices of the United Nations, the Zero Emissions Banking Alliance (NZBA), a group of around 98 banks from 39 different countries, representing 43% of the system’s global assets, was also launched in 2021. This entity, originally led by Mark Carney himself, sought to align banking with sustainability and the fight against climate change.
A dangerous change, of course. But current events show how opinions can be modified when responsibilities require it or pressure imposes it.
Shortly after becoming Prime Minister of Canada – a major per capita emitter, with the extractive industry having a significant weight in the economy – Mark Carney forgot about the tragedies. He immediately began validating new investments in bitumen deposits, new pipelines, and developing an aggressive export policy, in exchange for oil companies’ promises of carbon capture. It is a major change in the personality of a person who has declared the need to accommodate future risks in decisions made in the financial sector.
The same thing happened with BlackRock’s promises, which it decided to leave aside. This has been demonstrated in a new message that highlights the inappropriateness of falling into Wokism and the need to redirect their investments where they generate the greatest returns. In his annual letter this year, Larry Fink encourages the expansion of energy production while omitting any reference to the climate problem or corporate responsibility, aspects he has previously strongly advocated.
Faced with the current political situation, major financial entities are beginning to change their minds as well. This is clearly demonstrated by the recent departure of several global banks – particularly those originating in the US and Canada – from the NZBA, which is already transforming the entity’s original mandate. At the same time, complaints are growing about the role global banks play in financing so-called “carbon bombs,” where investment projects in coal, oil or fossil gas are known to have the potential to emit more than a gigaton of carbon dioxide, spreading across the entire planet.
Finally, weakness was also observed among the Gfanz group of global companies (Glasgow Financial Alliance for Net Zero). The departure of some of its members, such as JPMorgan Chase, Morgan Stanley, Bank of America, or, more recently, HSBC, has caused the entity to relax its regulations and seek to attract multilateral development banks, in order to increase its availability of funds. The Climate Action Coalition 100+ has noted similar problems, with the departure of several North American members.
What happened to the commitment of developed countries?
Despite the rhetoric, the funds pledged by developed countries have been far less than they repeatedly promised, and even farther than covering the needs of those suffering most from the effects of climate change. Suffice it to remember the promise made by developed countries to mobilize $100 billion annually, which was agreed upon in the Intergovernmental Committee to Combat Climate Change by 2020 for the benefit of developing countries, a goal that has not yet been achieved.
Following the pandemic, in 2021 environmental negotiators, political leaders and government representatives renewed their commitment to financing. More recently, in 2024, the United Nations Climate Change Conference (COP29) revived hopes by tripling the target: developed countries committed to providing $300 billion annually for mitigation and adaptation investments.
New promises also emerged at this year’s Seville conference, which focused on the issue of sovereign debt and the growing sustainability challenges faced by many developing countries. However, the US decision to withdraw from this type of initiative has a huge impact, as does stopping funding for the fight against climate change.
In fact, even if the stated commitments were implemented, the amounts would still be insufficient for developing countries. The debt crisis facing the most vulnerable countries – those that bear the least responsibility for the buildup of greenhouse gases but are most vulnerable to their impacts – requires rethinking financing, expanding funds, and increasing donations.
In this context, it is necessary to take into account the sectors to which funding is directed. For example, if most of the capital is directed to the oil sector, the recipient country will increase its risks, both in the financial sphere and in the process of climate change mitigation. In this context, global banks and investment funds – the main intermediary channels to emerging and developing economies – will not only reduce the ambition of their climate commitments, but will continue to finance carbon-intensive projects in multiple regions of the planet.
* Associate researcher at the Center for State and Society Studies – CES (Buenos Aires). Author of Global Inclusion in Latin America, Energy Transition and Sustainable Development, Cambridge University Press, 2020.