Global financial system ‘literally underpins the fossil fuel industry’ – Irish climate activist Lorna Gold

State is leading global effort to put in place sustainable finance, says Jennifer Carroll MacNeill

The global financial system is not fit for purpose as it undervalues risk in the face of a “creeping” climate crisis, according to Irish climate activist Lorna Gold.

In an address delivered at the new faith pavilion at Cop28, the chief executive of FaithInvest also accused western governments of channelling essential development aid into climate change projects. FaithInvest is an international, not-for-profit membership organisation for religious groups and faith-based investors.

“The whole financial system literally underpins the fossil fuel industry. It undergirds the sector – in terms of investment, insurance and banking. It systematically undervalues climate risk in all its forms – and inflates the value of carbon heavy stocks and products,” she added.

The collapse of the global financial system after World War 2 was different from what was happening now, she said. “Rather than a short shock ... we are now in a creeping crisis – a rolling crisis where the international financial system is not serving the needs of the majority of people and the planet.


“But don’t be fooled – there is the same urgent need to reform and address the international financial system to account properly for the climate, nature and inequality crises we now face,” added Ms Gold, who is chair of the Laudata Si’ movement, which is an umbrella group for Catholic organisations combating climate change.

There was a good news story; after 30 years of trying, the Cop has finally agreed to a “loss and damage” fund recognising “historic responsibilities”, she said.

There is was enormous ecological debt to be paid but it was adding to a plethora of funds at different levels of capitalisation – and operational effectiveness. “All of these funds, which now add up to several billion, should enable significant help to those on the front lines of climate injustice.”

Alongside this public money, flows of private finance and blended finance were being channelled into climate action, she said, with a plethora of initiatives in the financial world to try to start the process of alignment of private capital with the Paris Agreement.

But that was where good news pretty much ends, Ms Gold said. “There is an increase in the money going to climate finance – but a comparable decline in official development assistance, “and a real sense that western Governments are largely displacing money that was earmarked for aid to climate action”.

On what exactly counts as “climate finance”, she said the term was so broad and obscure “it can pretty much mean anything we want it to mean”.

“This is becoming increasingly problematic – from the perspective of accountability, from the human rights perspective, and from so many other reasons too. One man’s ‘climate solution’ it seems is another’s ‘climate problem’. We are now risking a new form of climate colonialism – where the financial debt of tackling climate change is placed on the shoulders of the most vulnerable countries.”

Wonderful work was being done by faith communities and institutions across the world implementing climate action and advocating for a fossil fuel non-proliferation treaty. But this needed to increase and multiply, especially by leveraging their role within the financial markets as big investors.

With faith-consistent investment, she noted the question always came back to “whether all this is possible and still to make a profit on the markets”.

“Pensions need to be paid, investment profits pay for lots of good missionary work etc. There are of course real trade-offs but solutions can always be found – particularly with a realistic time horizon and proper signalling to investment managers of the desire to change. The market will respond to values-driven demand,” Ms Gold said.

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Minister of State for Finance Jennifer Carroll MacNeill, who was in Dubai to attend a finance ministers’ meeting and to mark gender day, said Ireland was playing a leading role in generating sustainable finance in a global context.

“You cannot talk about climate action without talking about how it is financed. State actors have a strong role to play but it cannot work without the deployment of significant private capital,” she said.

At a Cop28 meeting of finance ministers, she gave the example of how a 2017 investment by the Ireland Strategic Investment Fund in Greencoat Renewables had become a pan European renewable energy portfolio of €10.5 billion of wind and solar assets under management.

“This leveraging of public finance by private actors is one example of how this can work well, but it is not limited to this. We need to ask all holders of private capital also – what are you doing and how will it impact. The finance focus at COP is an important reflection of the political focus to deliver this,” she told The Irish Times.

Sustainable finance, she said, could simply be explained as: “is your pension going into the energy for the future or the energy of the past?”

Amid climate and geopolitical insecurity, she said insurance could also be a big player in helping to deploying capital applied to risk mitigation – cutting emissions – and adaptation to prepare for inevitable consequences from global warming.

Ms Carroll MacNeill said companies faced many pressures. “You see, too, companies doing what we think are the right things, and then maybe there’s a retrenchment under investor pressure ... There has to be a different way of thinking about use of capital,” she added.

Increasingly the private sector wanted to support sustainability, “but it’s about making sure it’s happening quickly and happening in the right ways”.

The Minister also met two ministers in the UAE Government, Reem Al Hashimy and Mariam Al Mheri, on Cop28 issues and anti-money laundering strategies. She also had a number of bilateral meetings with European colleagues seeking support for Ireland’s application to host the seat of the EU’s new anti-money laundering authority.