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November 14, 2015

NGOs Urge Green Climate Fund to Deny Accreditation to Scandal-Plagued Banks
    by Robert Kropp

HSBC and Crédit Agricole finance environmentally destructive projects and rank at the bottom of major banks in implementing the UN Guiding Principles on Business and Human Rights. Second in a two-part series. -- The recent press release by the Green Climate Fund (GCF) sounded a positive note in announcing the first eight investments in climate-related projects in developing nations. Approving the investments, GCF stated, marks “the end of its launch phase and kick-starting the flow of climate finance through the Fund to developing countries.”

However, the amount of all eight investments by the Fund totaled only $168 million; and furthermore,
recent reports reveal that at present, the Fund has less than $6 billion at its disposal. The agreements hammered out during past climate negotiations require developed nations to contribute, by 2020, $100 billion a year to climate mitigation and adaptation projects in developing nations.

One way in which the funds deployed by GCF are leveraged is through its relationships with private sector institutions. Financial institutions seeking accreditation by the Fund are assessed for their “ability to manage environmental and social risks that may arise at the project level.”

It is not only the overall financial condition of the Fund that is currently under close scrutiny. More than 120 nongovernmental organizations (NGOs) recently
urged GCF to reject the applications for accreditation from HSBC and Crédit Agricole, whose records on environmental and social sustainability are problematic at best. Furthermore, HSBC “allowed Latin American drug cartels to launder hundreds of millions of dollars,” and has been implicated in “serious criminal activity such as arms and diamond trafficking and misappropriation of state assets,” as well.

“Creating new business for big banks with poor human rights records and large fossil fuel portfolios undermines the very purpose of the Fund,” said Karen Orenstein of statement signatory Friends of the Earth.

The gap between the stated environmental and social aspirations of banks and their actual performance have been well-documented for several years by
BankTrack, the noted Dutch NGO whose research into the activities of HSBC and Crédit Agricole provide essential research to the positions outlined by the NGO signatories. Its 2014 report, Banking on Coal, both HSBC and Crédit Agricole were included among the world's top 20 coal banks.

“Commercial banks must stop bankrolling climate change by ending support for new coal extraction and delivery projects, as well as for new coal-fired power plants,” the report states; also, “Banks must finally calculate and disclose the financed emissions associated with their loans, investments and other financial services.”

Also, a 2014
benchmarking by BankTrack of banks' compliance with the Guiding Principles on Business and Human Rights—which was endorsed by the UN Human Rights Council in 2011—ranks the performance of both banks as among the worst in the industry sector.

Furthermore, in addition to the money-laundering charges that HSBC paid nearly $2 billion to settle, both banks have been accused of manipulating Libor and Euribor benchmark interest rates.

“The accreditation of HSBC and Crédit Agricole would run counter to the GCF’s intent to be a game-changing institution with country ownership at its core,” the NGOs stated. “In turn, the GCF Board’s rejection of their applications would be a strong mark in favor of maintaining the integrity of the Fund.”

“Accepting HSBC and Crédit Agricole as partners at the Green Climate Fund will only confirm the suspicions of many governments and civil society organizations about the role of the private sector in financing the new Paris deal,” Tim Gore of signatory Oxfam said. “Public funds must be used to support local communities in developing countries, not to subsidize big banks.”

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