FMO takes a step towards divesting from fossil fuels
The Dutch development bank FMO has published a statement about fossil fuels to take steps in climate action. Both ENDS and partners are pleased that FMO is finally taking a stand regarding fossil fuels, but in our opinion it could be more ambitious. In order to really contribute to sustainability and equality, it is essential that development banks stop investing in harmful fossil projects.
FMO's sustainability policy consists of various position statements. The statement about fossil fuels is now open for consultation. Both ENDS considers it important that FMO issues a strong statement to show how the Netherlands is taking up a leading role in the phasing out of fossil fuels. With this statement, FMO could go further than just excluding most fossil projects, and publish her vision on the role development banks can play in a just energy transition.
Gas is also a fossil fuel
As far as Both ENDS and partners are concerned, FMO is not ambitious enough in its statement when it comes to phasing out investments in fossil fuels.
For example, FMO does not explain clearly enough why they see gas as a transition fuel, in which (very exceptional) cases FMO is considering investments in gas, and how FMO defines that there are no alternatives. In the end, gas is also a fossil fuel.
FMO spends part of its budget through so-called Financial Intermediaries: banks and other financial institutions that then use that budget for investments. FMO excludes investments through these intermediaries from the new fossil fuel policy, so that FMO's budget - for the biggest part Dutch taxpayers' money - can still be spent on fossil fuel projects, such as oil pipelines or coal-fired power stations.
In addition, we would like to see FMO commit to the Paris Climate Agreement in the statement, and design a clear timeline and monitoring system of its own policy, so that the bank can be held accountable for achieving its goals.
More resources for bottom-up projects
Stopping fossil fuel projects would not only be good for the climate and the environment, but also make more resources available for bottom-up and off-grid energy projects in which communities have a say. In this way, the money from FMO actually improves the living conditions of the people who need it most.
Strengthening FMO's fossil policy
Our input on the statement is a response to a consultation with FMO. It is common for development banks to share their amended or new policies in draft version so that external stakeholders, including civil society, can provide input.
Both ENDS completed the consultation together with other organizations from our network. We also encouraged our partners to provide their own input. We will now continue discussions with FMO to further improve their fossil fuel statement, which is already a first step in the right direction.
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