Export credits face Russia sanctions AND the Paris Agreement

(ECA Watch, Ottawa, 29 March 2022) As governments struggle to find fossil fuel supplies to offset dependence on imports from Russia, and transnational oil firms reap huge profits from higher oil prices and look for more through new projects and pipelines, and families around the world face not only higher gas prices to fill the family car or local buses but also higher food costs driven by dependence on fossil fuel dependent agriculture and manufacturing chains, Export Credit Agencies confront the big contradictions between pressures to not finance global warming and Western political expectations of livestyles and infrastructures dependent on fossil fuels. This month's What's New looks at ECA cuts to fossil fuel projects and ECA support for Russian projects and the war in Ukraine. Requests for ECA investments in Mozambique and East African pipelines face African demands instead for renewable energy projects and rejection of African complicity in looming global warming. For years ECA Watch has documented the billions of ECA investments in fossil fuels. One investment industry source estimates that the cumulative total volume of sustainable export finance deals in the five years to the end of 2021 was [only] $109 billion across 353 deals. They noted that about 20% of export finance deals ($28.6 Billion) through 2021 were classified as sustainable, i.e. 80%, or $143 billion, weren't. And on top of that, the European Securities and Marketing Authority (ESMA) has warned that the definition of sustainable export finance (for example measurement of CO2 emissions) can be subject to greenwashing. In fact one commercial research company in February removed 1,200 so called environment, social and governance (ESG) funds, with a combined $1.4 trillion in assets, from its European sustainable investment lists, after tightening its criteria on ESG tagging, as it believed those funds were not delivering on their stated ESG [Environmental, Social and (Corporate) Governance] goals. The slack monitoring of the "gentlemans' agreement" of the OECD "common approaches" definitions and environmental standards for official ECAs is well known, with the result that pressures are mounting for the Councel of the European Union to act to enforce ECA compliance with the Paris Agreement, since the OECD "disciplines have not been sufficiently modernized" and the OECD Arrangement is "not keeping up with the pace demanded by both changing economic and climate environments".