Action Aid International has unveiled a pioneering report addressing the intersection of finance flows and the climate crisis. Titled “Corporate Capture of Public Finance Fueling the Climate Crisis in the Global South,” the report investigates how public funds are utilized in the Global South.
It reveals that the very industries responsible for the climate crisis and the detriment of local communities are effectively extracting significant public finance from governments in the region.
This research was conducted in collaboration with the independent research organization Profundo.
Notably, the report highlights that multinational corporations, such as the fossil fuel giant Shell and agribusiness leader Bayer (parent company of Monsanto), are among those reaping the benefits of these subsidies.
The report underscores AAI’s continuous efforts by illustrating how public finance in developing countries, including Uganda, is being channeled into sectors that intensify the climate crisis, such as fossil fuels and industrial agriculture.
At the report’s launch during a press conference at Action Aid International Uganda’s (AAIU) headquarters in Kansanga, Kampala, Country Director, Xavier Ejoy stated that AAIU has been a leader in advocating for policy changes to tackle the climate crisis in Uganda.
He mentioned their contribution to the creation of Uganda’s first National Agro-ecology Strategy, which aims to foster sustainable farming practices that bolster food security, promote environmental conservation, and ultimately decrease greenhouse gas emissions.
In addition, AAIU, in collaboration with partners and the broader civil society, has been advocating for the Climate Change Act, which integrates a financial strategy to ensure that resources are effectively allocated for climate action.
Ejoyi pointed out that AAIU is dedicated to advancing clean energy technologies and agro-ecological practices at the grassroots level, aiming to create climate-resilient communities while reducing the country’s dependence on fossil fuels and industrial agriculture.
Together with its partners, AAIU is also advocating for the swift implementation of the Loss and Damage Fund, a financial tool intended to address the unavoidable and irreversible effects of climate change.
In 2023, AAIU and its partners conducted a thorough assessment of Uganda’s preparedness to adopt Loss and Damage mechanisms.
The findings of this study are essential for understanding the nation’s readiness to confront climate change impacts, highlighting the need for effective financial strategies to support affected populations.
Furthermore, AAIU has launched the “Fund Our Future” campaign, which seeks to promote increased investment in climate-resilient infrastructure and community-led solutions to climate challenges.
Findings
The report highlights that the fossil fuel and industrial agriculture sectors, which contribute significantly to climate change, are extracting over US$600 billion in public subsidies annually from countries already affected by climate impacts. These climate-harming industries in the Global South are benefiting from subsidies averaging US$677 billion each year, a sum sufficient to fund education for all children in sub-Saharan Africa more than three times.
Furthermore, the report points out that climate finance grants from the Global North to climate-impacted nations remain grossly inadequate for facilitating necessary climate actions and transitions.
In fact, these grants represent only 1/20th of the public financing allocated to fossil fuels and industrial agriculture in the Global South.
Consequently, renewable energy initiatives in the Global South receive 40 times less public funding compared to the fossil fuel sector.
Grace Munduru, Head of Programs and Fundraising AAIU, emphasized that while trillions of dollars in climate finance from the Global North are essential to effectively tackle the intertwined climate and development crises, governments in the Global South must also prioritize their limited resources to genuinely meet the needs of their populations through sustainable food and energy solutions.
The report underscores that, from 2016, when the Paris Agreement was signed, to 2023, the fossil fuel sector has received an alarming average of US$438.6 billion annually in public subsidies across Global South countries.
What is it for Uganda?
Munduru stressed the findings highlight the urgent need for action in Uganda to shift public finance towards sustainable development pathways.
She pointed out that, despite advancements made through the formulation of the National Agro-ecology Strategy and the climate change financing strategy, there remains a significant shortfall in funding for climate initiatives.
She noted that by advocating for clean energy technologies and agro-ecology, AAIU has showcased practical solutions that can be expanded with sufficient support.
The report reiterates the call for public finance allocations to facilitate just transitions from fossil fuels and industrial agriculture to community-driven climate solutions.
This encompasses investments in agro ecological practices and renewable energy systems that improve food security and energy access.
It also advocates for the scaling up of decentralized renewable energy systems to enhance energy access, along with gender-responsive agricultural extension services that provide training in agro-ecology and adaptation.
Munduru underscored the necessity for wealthy nations to honor their commitments to provide sustainable, grant-based climate finance to support countries in the Global South, such as Uganda.
This includes reaching an ambitious new climate finance goal at COP29 that accurately reflects the magnitude of the challenge.
To regulate the banking and finance sectors, AAIU stressed the importance of implementing standards that uphold human rights and social and environmental frameworks.
She noted the urgent need to reform international financial institutions that are driving climate-vulnerable countries into a cycle of debt.
