German giant’s financing of global coal projects prompts environmentalists to question UN fund’s integrity
A UN piggy bank to help poor countries deal with climate change partnered with a leading coal funder on Thursday, sparking an outcry from green groups.
At a meeting in its South Korean headquarters, the Green Climate Fund approved Deutsche Bank and 12 other financial entities to receive and distribute cash.
Germany’s leading investment bank is the world’s tenth largest backer of coal, with €15 billion invested in the industry from 2005 to 2014, according to the BankTrack network.
Over 20 campaign groups said they were “tremendously discouraged and disappointed” in a joint statement, adding that the fund was at “real risk of losing credibility”.Download the FULL CSO statement
They argued Deutsche Bank’s support for coal was at odds with the green fund’s carbon-cutting objectives. And raised concerns over its ”very poor” record on human rights monitoring and failure to crack down on money laundering.
Brandon Wu, senior policy analyst at ActionAid USA and one of two civil society “active observers” on the GCF Board, was one of the signatories of the statement.
He said: “The Green Climate Fund is supposed to be a fund for climate action in developing countries, with a particular focus on the poorest and most vulnerable.
“For it to partner with one of the largest private-sector coal financiers in the world – and one embroiled in multiple scandals around market manipulation and money laundering – is so far from this vision and mandate that it boggles the mind.”
The GCF declined to respond to the criticisms.
A Deutsche Bank statement said: “The group is highly committed to the GCF’s goal to promote and finance a paradigm shift towards a low-emission economy and climate resilient development pathways.”
In their assessment of Deutsche Bank’s application, officials said it “fully meets the requirements of the Fund’s basic fiduciary standards”.
Announcing the outcome of this week’s meeting, the fund’s chief Hela Cheikhrouhou said in a statement: “We are building a vibrant network of partners – which is evidence of a rising demand for an active GCF.”
Abyd Karmali, climate finance expert at Bank of America Merrill Lynch, tweeted in a personal capacity to support the decision.
“No credibility loss for #GCFund,” he said. “#climatefinance will scale via financial intermediaries that access mainstream investors”.
The thirteen partners named on Thursday takes the total to 20. Previously approved intermediaries include Rwanda’s ministry of natural resources and the Inter-American Development Bank, a branch of the World Bank.
Nearly 100 are working towards accreditation.
The $10 billion facility, capitalized during last year mainly by developed countries, is seen as a key tool in the fight against climate change.
Half of the cash is to help the world’s poor adapt to the impacts of climate change, for example with drought-resistant crops.
The other half is to go to green developing economies through projects like wind farms and bus rapid transit schemes.
But to the dismay of environmentalists, the board has not ruled out finance to coal, the most carbon-intensive fuel.
Scientists estimate more than 80% of coal stocks must stay unburned to limit global warming to 2C – the international goal.
by: Alex Pashley for RTCC
Editor’s Note: Apart from national climate change-related funds, iCSC is closely monitoring developments in the Green Climate Fund and is a signatory to the civil society statement referred to by the Responding to Climate Change (RTCC) story below criticising the Fund’s recent decisions.
This article was re-posted from RTCC, last updated on July 09, 2015. The featured image used, the Deutsche Bank Headquarters, was downloaded from www.mds-l.com.