- 09.10.2023
- Ecological justice
- Array
- A new report, published today by Recourse and allies, condemns the “porous” Joint MDB Principles for Paris alignment which are continuing to allow public finance to fund fossil fuels.
- Slipping Through the Net analyses the IFC’s approach to mitigating climate risk via its financial intermediaries and how this will be impacted by Paris alignment methodologies.
- Case studies from Indonesia, Sri Lanka, the Philippines, China and Vietnam demonstrate how, despite attempts to reduce coal investments in recent years, the IFC is still funding new coal power and LNG via its financial sector clients.
- Crucially, these projects could still be financed in future, despite the introduction of Paris alignment methodologies.
- The report follows the publication, last week, of a separate report detailing 68GW of coal power capacity being funded by the IFC’s portfolio of financial intermediaries.
A new report, published by Recourse and allies, today, details how the International Finance Corporation (the IFC – the World Bank’s private lending arm) is continuing to fund coal power and fossil gas projects. Crucially, the report argues, these projects could still be financed in future, despite the introduction of Paris alignment methodologies.
Slipping Through the Net critiques the IFC’s approach to ‘ringfencing’, using targeted loans to support specific sectors such as SMEs and climate-friendly projects, arguing that this approach has been unsuccessful in preventing finance leaking to coal projects and stopping harms to affected communities.
“By embarking on this ‘ringfencing’ approach, the IFC is not encouraging its clients to shift away from coal finance or reducing the risk to affected communities by ensuring coal projects won’t go ahead – it is simply ringfencing itself from the responsibility of having material exposure to such projects.” Daniel Willis, Finance Campaign Manager, Recourse
The report also highlights several key loopholes in the Joint MDB methodology for Paris alignment, which the IFC is using in lieu of producing its own methodology, which will continue to allow funding for coal and fossil gas. These include:
- Support for oil and fossil gas continuing to be allowed.
- No clear exclusion for captive coal power, which is set to expand by 13GW in Indonesia alone in the coming decade as facilities are demanded to support the production of critical minerals.
- The failure to apply exclusions to underwriting, a financial instrument that accounts for one third of global fossil fuel finance.
- A lack of clarity on how the IFC, either through its Green Equity Approach or the ‘counterparty approach’ outlined in the Paris alignment methodology, will engage existing clients in an effort to introduce portfolio-wide coal exclusion policies.
“Not including captive coal power within the IFC’s definition of coal-related projects is a huge and deadly oversight, especially at a time when the demand for smelters powered by captive coal is rapidly increasing.” Daniel Willis, Finance Campaign Manager, Recourse
ENDS
Recourse are currently in Marrakech for the WB/IMF Annual Meetings. For further questions regarding this report or for interview/comment requests, please contact Daniel Willis, +447595054391 (WhatsApp/Signal)
Share
