ActionAid Report Exposes Corporate Capture of Public Finance
A recent report by ActionAid has revealed that the Global South is facing a significant financial drain due to public subsidies provided to climate-wrecking industries like fossil fuels and industrial agriculture. These subsidies, amounting to over US$600 billion annually, are diverting resources away from crucial social sectors such as education.
The report, titled “How the Finance Flows: Corporate Capture of Public Finance Fuelling the Climate Crisis in the Global South,” highlights that an average of US$677 billion in public finance is directed towards climate-destructive sectors each year. This amount is sufficient to fund schooling for all sub-Saharan African children 3.5 times over.
The report also emphasizes the stark contrast between public finance for harmful industries and the insufficient climate finance grants from the Global North. Global South countries allocate 40 times more public finance to fossil fuel sectors than to renewable energy, despite needing trillions of dollars to address the growing climate crisis.
The fossil fuel sector alone received an annual average of US$438.6 billion in public subsidies from 2016 to 2023, while industrial agriculture benefited from US$238 billion per year from 2016 to 2021. This corporate capture of public finance by multinational corporations is perpetuating environmental degradation, economic inequality, and social injustice.
ActionAid has called for significant reforms to redirect public finance from fossil fuels to people-led climate solutions, scale up decentralized renewable energy systems, and demand trillions in climate finance from the Global North. These efforts are vital to supporting just transitions in climate-vulnerable countries and ending the destructive financial flows that worsen the climate crisis.