For a long time, banks and private sectors have resisted acknowledging their harmful climate impact but preferred focusing almost entirely on climate risk. The current wave of “net-zero 2050” commitments however presents a tacit acknowledgement by banks that they too are major emitters and need to zero their financed emissions by 2050 at the latest.
In the recently released fossil fuel finance report 2021, over 60 commercial and investment banks have been evaluated to be among the world’s major drivers of climate chaos. Their single biggest contribution to climate change is their financing of fossil fuels projects which have continued to accelerate long-term global impacts.
The report details case studies where banks and private sectors financing have resulted in harmful impacts on communities around the world and the urgency to start cut in emissions immediately.
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Pressure is mounting on these banks to immediately end support for fossil expansion, and commit to the date by which their fossil financing will reach zero as they had promised in the 2019 UN Climate Summit in New York City.
During the summit, banks made new commitments to disclose the Carbon emissions of their investment and loan portfolios, adhere to the new Principles for Responsible Banking and more. This has however not been the case as banks have continued with the fossil fuel financing business as usual.
They have invested a total of $3.8 trillion into fossil fuels from 2016-2020. Despite the global drop in fossil fuel demand and production in 2020 due to the Covid-19 pandemic, 2020 levels remained higher than in 2016.
Taking into consideration these latest statistics, the overall fossil fuel financing is heading in the wrong direction and every major emitter must align its emissions trajectory to the Paris Agreement’s aim of “making finance flows consistent with a pathway towards low greenhouse emissions.”
This includes both local and global investment firms such as Kenya Climate Ventures (KCV). KCV, an impact investment firm in Kenya is playing a pivotal role in financing the transition to a low-carbon, sustainable future.
Having invested in 17 new clean-tech projects with the support of their funding partners, the firm seeks to accelerate the development of climate-smart solutions, taking into consideration the harmful long-term global impact of certain projects.
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For instance, the firm has invested in Kings Biofuel, a startup company based in Kenol, Muranga that manufactures non-carbonized, environmentally friendly biomass briquettes from renewable sources of waste materials.
To achieve the ambition of SDG seven (Solutions for affordable and clean energy), the startup is guaranteeing access to affordable, reliable and modern energy, as well as improving energy efficiency.
With the help of KCV, the company commits to cut global greenhouse gas emissions and believes that while intensity commitments may be a stepping-stone to absolute emissions commitments, they are not a substitute.