In the midst of the chaotic unpredictability of 2020, many institutions have found themselves tearing up the rule book and acting in ways that would have been previously unthinkable. Best laid plans have fallen by the wayside, and new approaches have had to be worked out spontaneously.
Central banks are a prime example. The European Central Bank (ECB), Bank of England, US Federal Reserve and others have been pumping almost unimaginable amounts of money into the economy to prevent economic collapse. Some of that money will have done a great deal of good. Some of it though, has gone to industries that are driving us all to destruction. By choosing to back fossil fuel companies and other high polluting sectors, central banks are fuelling one major crisis while trying to fix another.
Despite leading figures such as the ECB’s Christine Lagarde repeatedly speaking out about the need for central banks to do more to help address climate breakdown, research has shown asset purchase programmes are biased towards high polluting sectors such as the fossil fuel industry. Polluters like Total and Shell are direct beneficiaries of Lagarde’s Covid recovery funding – it is likely that more than €100 billion of ECB money will go to the most polluting sectors and finance their destructive projects around the world.
Given the need for an urgent response in the spring of this year, it is perhaps unsurprising that some bad decisions were made then. What is harder to accept is that those same mistakes are still being made now, when there has been ample time – and widespread public pressure – to correct the course.
On 10 December, the governing council of the ECB is expected to agree to another significant increase in its Covid response programme. Without new climate-related stipulations attached to this upcoming round of recovery funding, billions more euros will end up in the coffers of companies who are fuelling the climate crisis and have a track record of trampling over the human rights of communities that stand in their way.
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Companies such as the French oil giant Total, the corporation behind the East Africa Crude Oil Pipeline. This mega-project is intended to pump oil from Uganda to a port in Tanzania, where it will be shipped around the world to be burned. If completed, the pipeline will run for nearly 1400km through national parks, nature reserves and farmland, wrecking fragile ecosystems and destroying people’s land and livelihoods. It will force communities out of their homes and open up pristine national forests to drilling operations. As a result, Total is currently embroiled in court facing accusations of widespread human rights abuses.
Shell is another beneficiary of the ECB’s Covid response programme. Fracking may be banned in most of Europe but Shell is heavily involved in fracking the world’s second-largest shale oil deposit in Vaca Muerta, Argentina. This is wrecking the lives and livelihoods of farmers across the region, and threatens the ancestral lands of the indigenous Mapuche communities. European public money is making this possible, and more than 160,000 European citizens are calling on the ECB to make sure it stops.
This month marks the five year anniversary of the signing of the Paris Agreement on climate change and despite a lot of talk and empty promises, world leaders have failed to take the urgent action needed to tackle the climate crisis. Central banks can’t solve this problem on their own, but they have a key role to play, and the ECB has a chance to show real leadership when they announce the next phase of their Covid response programme.
The choice is clear. Will Christine Lagarde use her power to help rebuild economies that are more just, more sustainable and more resilient, or will she double down on previous mistakes, once again benefiting Europe’s most dangerous companies at the expense of some of the world’s most marginalised communities and the future of our planet?
Nick Bryer is a campaigner for 350.org based in the UK, working to end finance flows to fossil fuels and to accelerate the transition to a just and sustainable future.