HUMAN WRONGS WATCH

24 November 2022 (openDemocracy)* — A fund set up using British overseas aid cash still holds at least 20 investments in fossil fuel companies, two years after it pledged to stop backing dirty energy.

Records analysed by openDemocracy reveal the investments by British International Investment (BII) – which is wholly owned by the UK’s Foreign, Commonwealth and Development Office – are worth tens of millions of pounds.

BII was set up to channel aid money and its own assets into development projects in emerging economies around the world.

In 2020, amid criticism from green campaigners, it promised to end support for fossil fuel projects, saying a new climate change strategy would “shape every single investment decision we make moving forward”. The government last year doubled down on its claim that BII’s funds would be used to “fight climate change”.

Yet the publicly-owned body still holds active investments in fossil fuel companies in several African countries including Nigeria, Guinea, Benin, and Egypt, the host of COP27. The companies either produce fossil fuels directly or service the sectors.

Many of these investments were made after the UK signed the Paris Agreement in 2015, pledging to keep global warming at or below 1.5C before 2030.

Green Party MP Caroline Lucas said in response to our findings: “The fact that our government is using taxpayers’ money to fund climate destruction in this way is beyond scandalous, even more so during a cost of living crisis.

“The only way we are going to avoid the very worst impacts of a climate emergency is to keep new fossil fuel reserves in the ground for good. Urgent questions must be asked as to how on earth these climate-wrecking investments are justified.”

BII’s indirect investments include a stake in Dangote Industries, a business conglomerate that owns Dangote Cement. This firm operates the “largest coal mining” initiative in Nigeria and has been described as Africa’s leading cement producer.

Owned by Africa’s richest man, Aliko Dangote, the company has been accused of causing serious environmental damage.

In 2019, a report commissioned by the climate organisation 350.org alleged Dangote Cement had failed to conduct environmental impact assessments before carrying out mining work, as required under Nigerian law. It also raised concerns that the company’s mining activities had led to the contamination of soil and drinking water for local communities, while respiratory diseases had also reportedly increased.

BII cash was invested through a third-party fund in Dangote Industries in December 2019 – the same year 350.org released its findings. (BII says it first put its cash into the third-party fund back in 2012.)

Elsewhere, BII also holds an active investment in Carbon Holdings, a petrochemicals company based in Egypt. The funding came after Carbon Holdings had announced plans to build the Tahrir Petrochemicals Complex, which is expected to be the “largest petrochemicals complex” in the Middle East.

BII’s latest records also indicate that the body has invested $39m (£32.2m) in Te Power to build a power plant in Guinea that uses so-called Heavy Fuel Oil (HFO). Climate campaigners have described HFO as the “world’s dirtiest and most polluting” type of marine fuel, while its use in the Arctic has been banned by the UN.

Roc Sandford, a spokesperson for Ocean Rebellion, a campaign group that raises awareness about the climate impact of shipping, said it was “outrageous” that the government’s overseas investment bank still supports projects using HFOs.

“Using taxpayers’ cash to accelerate climate and nature collapse is totally out of order,” he said.

BII has defended its investment in Te Power, saying it would “provide much needed baseload power to a country which experiences regular outages”.

Responding to openDemocracy, a spokesperson for the organisation said that its fossil fuel investments “do not reflect BII’s current priorities or mandate”.

“British International Investment is one of the world’s largest providers of climate finance to many of the countries that are most vulnerable to the impacts of the climate emergency. Since 2018, BII has made $1.7bn [£1.4bn] of climate finance investments.

“BII introduced a fossil fuels policy in 2020 that prohibits direct investment, or indirect investment through third party funds, in nearly all fossil fuel related companies. There remains a small number of legacy fossil fuel investments within the portfolio that would not be pursued today.”

BII was unable to say whether it had divested from any fossil fuel investments since introducing the climate policy.

Update, 24 November 2022: This article was amended to clarify that BII’s investment in Dangote Industries was through a third party.

*SOURCE: openDemocracy. Go to ORIGINAL.

2022 Human Wrongs Watch