‘A transition in thinking and action’. That is what Mark Carney, governor of the Bank of England, says is underway in the financial sector, as it faces up to climate change. But how much action exactly? And is it enough? 

Central banks have started to fret over the potential impact of climate change and the low-carbon transition on the financial system. The crux of the issue is that volatile weather and taxes on pollution share one important feature: they take monetary value away from the private sector. 

In the jargon, floods, storms and the like are known as ‘physical risk’, while changes in value due to technological innovation and climate policy are ‘transition risk’. If either happens on a grand scale – and the nature of climate change is that if the transition doesn’t materialise, the weather will – financial stability will evaporate.

Disclosing risk

The ‘transition in thinking’ to which the governor refers is taking place in the boardrooms of regulators and finance firms, and amounts to a gradual realisation of these facts. 

The action is more varied. The governor was speaking at the inaugural International Climate Risk Conference for Supervisors in Amsterdam, organised by a network of central banks that have recently decided to show leadership on the issue of global warming. It is still in its infancy and officials see themselves as still at the stage of ‘exchanging views and best practices’. 

Meanwhile, governmental policies and initiatives are continuing to take shape. The World Bank counts 67 jurisdictions, representing half of the global economy, that are putting a price on carbon, soon to be joined by China’s nascent emissions trading scheme. The private sector, too, is slowly grinding into motion.

The word of the moment is ‘disclosure’. A growing number of financial organisations and investment firms have made clear their support for more information about which climate risks companies are exposed to and what they plan to do about it. Banks and insurers are checking their vulnerabilities to an escalation in climate risk. 

Of course, every financier’s favourite development is the explosion of the market in ‘green finance’. This is an explosion in relative terms: while the total value of green bonds worldwide, for instance, has soared to $900 billion from less than a third that number 5 years ago, banks in the UK alone still make billions of pounds of loans to fossil fuel companies each year.

It is simply untrue that growing green will do the trick on its own. Renewables are more than a nice ‘growth opportunity’ – they need to entirely supplant carbon-based fuels in the energy mix.  

Trillions still needed

The fact remains that the sums of investment required to achieve decarbonisation are vast, and the gap between what’s needed and reality is unlikely to be filled any time soon. The hope among the global elite is that the lords of private finance will open the taps and channel funds where the need is most urgent. 

Renewable energy and clean transport still require trillions of dollars in investment to create the systems that will serve a world committed to less than 2 degrees Celsius in global warming. For some, investment means biting the bullet and preparing for the worst.

More and more communities and businesses desperately need resilient infrastructure, especially in coastal cities facing off against slowly rising sea levels. And it bears repeating that there are many island communities for which the 2 degree threshold itself is already beyond the pale. 

Optimists might point to carbon capture and storage, which promises – presumably to the delight of the fossil fuel industry – the chance to extract CO2 from the atmosphere. Yet this is no carte blanche to polluters. To keep below the 2 degree limit, the world needs to be burning less carbon each year from 2020 onward.

So if oil, gas, and coal companies keep digging fossil fuels out the ground, one of two things will happen. Either the world shoots past the 2 degree mark – and there are alarming reports that this is exactly what the oil companies have in mind – or millions of tons of fossil fuels will go unburned.

By some estimates, 80 percent of declared proven fossil fuel reserves, which are already on the books of major companies, are unburnable if we’re to keep below 2 degrees.  

The future of the planet deserves better than an eleventh-hour gamble on technology like carbon capture and storage. Political leaders need to be bolder. The notion that politics is the art of the possible and that the market will fix a colossal externality of its own making is a rather feeble response to the prospect of widespread catastrophe.

Reforming the mandate

In our latest report, Positive Money turns the spotlight back on the Bank of England. To its credit, the Bank is a leader among central banks on climate issues, with Mr Carney serving as an effective ambassador.

But the officials at Threadneedle Street see their role only as managing the financial fallout, and resist calls to help spur decarbonisation. That’s a fair reflection of the mandate they’ve been set by government: to deliver price stability and safeguard the financial system.

Those goals will become impossible to achieve if we fail to keep the climate under control. In a changing world, politicians should consider changing the goals, through reform of the mandate. 

Our report outlines several ways central bank policies could be adapted to have a better environmental impact. Smarter regulation would disincentivise fossil fuel lending and raise green finance.

The intention is not to pass the buck from democratic governments. Quite the opposite: there is wide scope for fiscal and monetary policymakers to cooperate, as they should have done during the financial crisis, to level public money at the green investment gap.

To preserve accountability, specific choices over allocation of those funds would be left to democratic decision makers.   

Some worry that over-mighty central banks are on the verge of overcapacity. Our critics argue that the legitimacy of monetary institutions, already under strain, would crumble if they adopted policies that favoured green industries.

The point of arguing for mandate reform, then, is to skirt round these objections; the point is to make green action legitimate. Central banks helped bail out commercial banks in 2008. Ten years on, we need a central bank ready for a climate bailout. 

This Author

Rob Macquarie is an economist at Positive Money and author of A Green Bank of England: Central Banking for a Low-Carbon Economy. Further reading on this debate can be found here and here.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

Violent dust and lightning storms have torn through the plains of northern India –  including the capital city of New Delhi – and have left more than a trail of death and devastation in their wake.

The weather that has till now claimed 143 lives and maimed hundreds others, many in house collapses, presages a desertifying India that is fast losing some 30,000 hectares of arable land a year, gravely threatening food security for its teeming millions.

This country of 1.28 billion is bracing itself for further such onslaughts that are already being forecast. With lives shattered, families scattered, homes demolished, trees and electricity poles flattened, and water sources contaminated by the swirling dust, authorities are hard pressed to extend relief to men and material quickly enough.

Progressively drier

The unseasonal storms have afflicted over 100 million who have not only lost their family members, but also their cattle and crops.

While farmlands were clogged by precipitating dust or swept away by torrential rains, entire districts plunged into darkness as falling electricity poles snapped power cables. Fires broke out in other places, and lives and livelihood crumpled all around.

Climate change has been increasingly baking much of the Indo-Gangetic, or North Indian, Plains, at 45 degrees Celsius and above in summer, while causing deluges during the four months of monsoon from June.

This land mass is made up of alluvial soil constituted of clay, silt and sand deposited by the mighty Ganges and Brahmaputra rivers that drain the region, yielding half of the country’s foodgrains.

The plains get progressively drier toward the west where they culminate in the That – also called the Great Indian Desert – which covers an expanse of 200,000 square kilometres that abuts Pakistan.

Inappropriate agriculture

Thar was a lush terrain millennia ago, until sand and silt particles lifted by strong winds from the alluvial sediments got deposited in the region.

An official study undertaken at the behest of the Ministry of Environment, Forests & Climate Change (MoEF&CC) finds that 96.4 million hectares (mhas) – nearly 30 per cent of India’s land area of 328.72 mhas (3.29 million sq km) – are now degraded or face desertification.

“Population pressure has resulted in over exploitation of land for cultivation, grazing, water resources and deforestation, leading to degradation of drylands,” says the report, prepared by the Indian Space Research Organisation (ISRO) and 19 other institutes after analysing satellite images.

Drawing attention to the increased pace of land degradation – broadly defined as loss of agricultural productivity – the study reveals that 26 of India’s 29 states have been registering rising desertification over the past decade, with more than 50 per cent of land in five of them under desertification.

A tenth of all desertification has been caused by the loss of soil cover, largely driven by rainfall and surface runoff. Fertile lands are becoming fallow also because of drought, or inappropriate agriculture.

Farm distress

Any impact on agriculture – whether through drought, flooding, or other natural or manmade calamity – can be particularly ruinous for India, which, despite its sheen of a rampaging economy, is predominantly agrarian, with 55 per cent of its population dependent on farming as the principal source of work and income security.

As one of the world’s largest agrarian economies, India’s farm sector contributes 17.32 per cent to the GDP. Over half of India’s total land area is arable, but productivity is pitiful owing to fractured and marginal land holdings, imperfect market conditions and lack of backward and forward linkages that stunt farm incomes.

India’s social situation is unique, leagues apart from the commercial and automated farm factories of the developed world, with 60 per cent of India’s 253 million farmers holding an average 0.4 hectare each and another 20 per cent, 1.4 hectare each.

There are 116 million farms in the country and cropped area is shrinking instead of expanding, desertification being a major cause. Since 1995-96, the average size land-holding has decreased from 1.4 hectares to 1.15 hectares, translating into a loss of 30,000 hectares of cultivable land each year. The population in this period has swelled by over 300 million.

Farm distress is consequently glaring, with an estimated 200,000 farmers having committed suicide since 1997, an average of upwards of 10,000 every year. This high mortality has resulted primarily from loan defaults, especially in times of crop failure, decreasing profitability, water scarcity, depleting soil health, land fragmentation, inappropriate seeds and inadequate credit.

Political neglect

Despite emerging from the disgrace of food deficiency to an era of self-sufficiency, India has around the same proportion – 24 per cent – of undernourished people as it did two decades ago. That is because food sufficiency itself is a myth, with much of India’s poor unable to afford a proper meal.

Over 260 million men, women and children are undernourished, subsisting on 260 kilocalories per day, when the minimum dietary energy requirement is for 1,770 and the global average, 2,240.

Forty-three per cent of children below five in India suffer from malnutrition, in contrast to seven per cent for China. Malnutrition besides accounts for nearly half the child deaths in India, the prevalence of underweight children almost twice that in Sub-Saharan Africa.

The Washington-based International Food Policy Research Institute ranked India 100th among 119 countries in its Global Hunger Index 2017. The country’s position was poorer even than its impoverished neighbours like Nepal (72), Myanmar (77), Bangladesh (88) and Sri Lanka (84). China ranked 29, and even North Korea, at 93, and Iraq, at 78, fared better.

Agriculture is clearly one sector to have fared poorly owing to political neglect, despite farmers constituting an enormous nationwide vote-bank. Though its role remains critical in the Indian context, agriculture has seen its share in GDP decline from 29.76 to 17.32 per cent over the past 20 years.

Foreign producers

Evidently, the government is anxious to expand the weightage of the services industry – the “new economy” – in the overall GDP. Services enjoys a 54 per cent share in the GDP and clocked 8.3 per cent growth in 2017-18, while agriculture grew at a rate of 2.1 per cent. Moreover, while India’s exports of farm products were worth $30 billion that year, software exports recorded revenues of $167 billion.

As desertification progresses and smothers the croplands, India will need to increasingly import its food requirements.

The long term impact of this on commodity markets worldwide can well be significant. In January 2016, India made its first purchases of corn in 16 years and it has also been increasing purchases of other products, such as lentils and oilmeals, as production falls short.

In the two years between 2014-15 and 2016-17, India’s import bill for cereals, including wheat, rice and maize, surged a staggering 6,623 per cent, and its agrarian imports in 2015-16 alone cost the country $21 billion.

While these imports are resorted to for checking domestic food inflation, it aggravates the condition of the Indian farmers who see them as benefiting foreign producers at the cost of the locals.

Combating desertification

India is a signatory to the United Nations Convention on Combating Desertification (UNCCD) that was adopted in 1994 – two years after the Rio Earth Summit – to become a legally binding international agreement linking environment and development to sustainable land management.

India has since prepared its National Action Programme on this issue and has committed to combat desertification and land degradation and achieve land degradation neutral status by 2030. MoEF&CC is the nodal Ministry for executing this.

Alarmingly, it does not have a specific policy or legislative framework for combating desertification as such, and has no coherent plan to reverse this process or its impact.

This Author

Sarosh Bana is executive editor of Business India.

This series is about general systems theory, which explores the common principles on which all systems work.  The point is to cure our alienation from the environment, by bringing social systems more into sync with natural ones; and also to bring us into harmony with ourselves, learning to function and think like the natural systems which we in fact are.

A major theme is the link between ecological sustainability and social emancipation.  Historically, the exploitation of people – class, gender, ethnicity etc. – has been associated with the control, by dominant groups, of nature and its resources.  

Thus, the ecological cause is inseparable from redressing these injustices.  The sustainability transition will be so radical, it can only be a movement of society as a whole, not of elites.  The energies – expressed as human capacity – unleashed by destroying oppressive systems can then be substituted for fossil fuels, while new social institutions (commons, peer-to-peer) mirror those of nature, expressing an emergent order greater than the sum of its parts.

Ecological economist

In this article, we address an important concept in environmental debates: the notion of ‘Limits’.  Industrial/capitalist society is on a trajectory threatening to destroy the ecology, and our place within it.  This signifies an incompatibility between two systems.

While destructive growth should be halted, we need to be less limited in our capacity to envisage and implement alternatives! But historically, the notion of limits has often been used to curtail the very creativity and imagination we need to escape our predicament.

A landmark in environmentalism was the 1972 publication, Limits to Growth.  Though later updated, notably in 2004, the original is still highly significant as an historic document.  

Although one of its authors, Donella Meadows, was to later to become an important systems thinker, the original document was in some respects weak on understanding systemic features, notably the bad climate feedbacks, as well as the benign feedbacks which counteract exponential growth (for example, the rate of population growth tends to fall with rising development).

Even so, the original Limits had great merits.  It explicitly calls for halting accumulation (thus correctly hinting that capitalism is to blame), and makes a wonderful point, quoting ecological economist Herman Daly, that: “The problem of relative shares can no longer be avoided by appeals to growth”.  In other words, in a finite world, we’ll have share! 

Radical and new

The way I’d interpret this systemically, is that a physical ‘limits’ situation is actually optimistic: it prods us to unshackle our creativity, and rethink societal structures, including the (re)discovery of old/new solutions to sharing (commons, peer-to-peer).  In an equitable setup, self-organisation generates a ‘free energy’ more than compensating for material restrictions. 

In fact, such a concept had been anticipated long ago.  Thinkers of the the radical era (late 18th– early 19th century) of the Enlightenment, French Revolution and Utopian socialism, had an intuitive grasp of the social application of complexity theory: get rid of parasitic rulers, and we’ll unleash capacity!

This argument terrified the ruling classes, who responded by promoting a fatalistic and restrictive interpretation of ‘limits’, notably Thomas Malthus’ theories.  

There’s a misconception in much environmental literature that capitalism has always trumpeted limitless growth.  In fact nothing could be less true: Malthusian limits formed a crucial prop of ruling-class ideology.  As the 19th century wore on, this acquired a pseudo-scientific form in which classism was intertwined with racism: namely, ‘social-Darwinism’.

Darwin’s immense achievement was to open the way, for the first time, to seeing nature as a true self-organising system. But because his insight was so radical and new, formulating it was not easy.  Striving for a metaphor for natural selection, Darwin hit upon Malthus’ economic theories.  

Dire legacy

This unfortunately set the scene for an interpretation of nature derived from ultra-conservative social doctrines, which in turn feeds back into the social sphere; thus, universal competition is made to seem ‘natural’, as the essential regulating property of all systems.

This had two bad impacts: it distorted the potential of Darwin’s own theory; and had terrible implications for society.

The ill-effect within biology was to overestimate conflict as a driver of evolution, at the expense of symbiosis: the result, as Brian Goodwin explained, is to  neglect the complexities which produce emergent order, the holistic nature of organisms.

The ill-effect within society was to open the way to racial theories of selection, which inspired colonial genocides, and subsequently Hitler.  

Working in University College London, I’m specially conscious of this dire legacy, encapsulated in so-called ‘eugenics’, the pseudo-science of breeding a master race.  

Extraction predicament

A secret conference on eugenics held in UCL was recently exposed, but actually this should have come as no surprise: Francis Galton, Darwin’s cousin, endowed a professorial chair in eugenics at UCL in 1911; its first occupant was  Karl Pearson, who still has a UCL building named after him.  This is a legacy which needs to be confronted.

Pearson’s work was among Hitler’s favourite reading. But actually the foundation for nazism was the whole colonial project: if resources are scarce, the white master race should grab them … and hone their supremacy in the process.

In fact, the unrestricted growth ideology which the Limits was critiquing only fully emerged after World War II, when Malthusianism was temporarily pushed onto the back burner.  The theories of US economist Walt Rostow absurdly claimed the whole world could undertake US-style growth simultaneously.

But even Rostow didn’t really believe this: as a leading member of the inner circle of US foreign policy, he was a key advocate of the Vietnam War, itself premised on the ‘domino theory’ which aimed to ensure that scarce resources would remain forever in the hands of the West/North.

The postwar order thus remained extractive, premised on grabbing resources from nature and the global South.  Such an understanding is central to the 1970s writings of Walter Rodney, which I would see as a key component in a truly anti-racist systems theory; even today,  Ghana’s president rightly highlights extraction as the basis of the South’s predicament.

Indigenous approaches

At the very moment of the original Limits, Southern states were collaborating in an attempt to implement a New International Economic Order (NIEO), which would redress extractivism by raising commodity prices.  The North managed to smash this, but an interesting argument can be made  for reviving the NIEO today.

The Limits to Growth, despite its many strengths and good intentions, was basically oblivious to this context.

That’s why the South was understandably suspicious: the Limits discourse seemed to say, OK let’s freeze things where they are, with the North developed and the rest of the world in perpetual servitude.

So it’s necessary consciously to purge the ‘limits’ idea from its colonial/racist baggage.  Yes, the environment poses strict limits.  

But in fact it’s the global South which can be the standard-bearer for a new economy premised on sharing.  After all, such a solution presupposes stewardship with respect to the ecosystem, which is still a living tradition in indigenous approaches. 

This Author

Dr Robert Biel teaches political ecology at University College London and is the author of The New Imperialism and The Entropy of Capitalism. He specialises in international political economy, systems theory, sustainable development and urban agriculture.

Britain is eager to paint itself as a green finance leader in the post-Brexit world. But the government’s reluctance to push for stock market reform means that beneath The City’s green veneer lies some dirty business.

Theresa May told the world in January that she wanted “the Britain of the future to be a truly Global Britain, which is a force for good in the world. Steadfast in upholding our values – not least our fierce commitment to protecting the natural environment.”

Read DeSmog UK’s full series, Empire Oil: London’s Dirty Secret

But London’s junior stock exchange, the Alternative Investment Market (AIM), continues to be mired in scandals, criticised for a lack of transparency that can encourages a “casino” approach to exploiting natural resources in some of the world’s most unstable regions.

Polluting operations

A major new investigation published by DeSmog UK shows that until policymakers address AIM’s “light touch” regulation, the government’s pledge to be a post-Brexit environmental and corporate accountability leader will remain little more than an aspiration.

The investigation identified a hub of a dozen companies based around Mayfair, drilling for oil in Africa, and making use of tax-havens in British overseas territories and crown dependencies such as the British Virgin Islands, the Cayman Islands and Jersey.

Many of these companies raise funds through selling shares on AIM. And AIM’s regulatory system and the current laws around transparency in offshore tax havens make it something of a “wild west” for traders operating in frontier markets.

DeSmog UK’s new series, Empire Oil: London’s Dirty Secret, exposes how AIM’s government-endorsed “light touch regulation” and complex offshore company structures create an opaque corporate environment, in which conflicts of interest have been shown to thrive.

At the heart of the issue are nominee advisors, known as ‘nomads’. Nomads are private companies tasked with AIM’s regulatory oversight but can also work as brokers for the same companies they regulate –  potentially creating serious conflicts of interest. The nomad system creates a close-knit network of companies and advisors, who take advantage of AIM’s light regulation to set up polluting operations in some of the world’s most unstable regions.

Nigerian oil

DeSmog UK does not present any evidence of illegal behaviour. 

Sirius Petroleum is a case study in how extractive companies operate on AIM. In the summer of 2008 – as the price of oil peaked to a record high – a polar explorer and a group of City bankers decided to turn a former gaming company into an oil and gas investment company targeting one of Africa’s most unstable corners: Nigeria.

Investors were told the new business would find an oil asset in the shallow waters of the Niger Delta with the help of a local prince, partner with a company to extract the oil, and sell it on to an oil major for a profit. To fund this new venture, Sirius Petroleum was listed on AIM, to raise funds by floating shares.

Behind the scheme was millionaire Andrew Regan and his Cayman Islands-registered investment vehicle Corvus Capital. Together with a group of established City operators, Regan reportedly made a fortune on AIM, buying into shell companies and transforming them into lucrative ventures. Sirius appears to be another example of this strategy.

A decade after Sirius was formed (and at time of writing), not a drop of oil has yet been produced, with shareholders – including high street banks and pensions funds such as HSBC, Barclays and Hargreaves Lansdown – still waiting for the promised returns on their investments.

Licensing issues, aborted deals and lengthy funding negotiations were cited by Sirius to explain some of the delays over the development of its oil asset, while thanking shareholders for their “patience”.

Sirius Petroleum did not respond to repeated request to comment on DeSmog UK’s story.

Vested interests

Some progress is being made on wider transparency reforms.

The government was defeated in the UK Parliament earlier this month when MPs voted through a new amendment to the sanctions and anti-money laundering bill which would require 14 British overseas territories to publish registers of beneficial ownership by 2020 or face having them imposed.

And last year, AIM called for submissions around proposed changes to its admission rules. AIM’s discussion paper included “consideration of further supervisory powers and sanctions to ensure consistency of standards across the market”.

Responding to AIM, NGO Rights and Accountability in Development (Raid) called for “urgent action to halt the laundering of assets” and warned that the light regulation system needed to be scrapped in order to stop London attracting “dirty money”.  

Raid’s submission, seen by DeSmog UK, stated: “It is highly doubtful that self-regulation, relying on private firms with vested interests as gatekeepers and designed to be ‘light touch’ will ever eliminate or even significantly reduce the use of AIM to launder assets and dirty money through London.”

With MPs and Lords working on the new anti-money laundering bill, Raid’s director Anneke Van Woudenberg said, “the mood in the UK was changing” over tax havens’ and secrecy laws that allow dirty money to be moved around.  “AIM needs to respond to these concerns as much as any other British entity.”

These Authors 

Chloe Farand is an investigative reporter who has been published in the Guardian, Independent, i, and New Statesman – twitter: @chloefarand. Mat Hope is editor of DeSmog UK – twitter: @matjhope.

Earlier this month the European Commission announced its budget for climate action post-2020. Although one of the top priorities for future EU funding, climate action can only count on a meagre five percent increase from its current budget.

Investing in an increasingly carbon-neutral and climate resilient economy has been defined by the European Commission as one of the EU’s key priorities in the coming decades to ensure a more sustainable and climate resilient world.

With a current EU budget of 20 percent going to climate action related programmes for the period 2014 – 2020, the funds allocated to the European Union’s post-2020 climate agenda are set to scale up to a quarter the total budget.

Defining climate finance

From 2020 onwards the Paris Agreement will kick into gear, regulating the way in which countries reduce their emissions, finance climate action and implement adaptation measures to climate change.

The rules governing the Paris Agreement – the so-called ‘Paris rulebook’ – are being shaped in the 2018 UN climate talks, in time to be put into effect by 2020. How well countries can stick to the climate rules that Paris is laying out for them, largely depends on the budget they allocate to taking climate action.

With this in mind, the European Commission has proposed its post-2020 EU budget, in which it allocated 25 percent to climate action programmes, to be implemented horizontally in all different sectors.

This five percent increase compared to the current climate spending results in a total of €320 billion for climate action during the period 2021 – 2027.

Ulrik Lenaerts, co-chair of the EU strategy expert group on global climate change negotiations said: “The actual budget the EU allocates to climate action is of course the basis for our response to climate change, but even more importantly is what strategy and rules are behind spending this money, which is what is currently being discussed in the UN Climate talks.

“It is a relatively easy decision to designate a large part of the EU budget to climate action when is has not been clearly defined what climate finance means.”

Untapped potential

The green potential of the current EU budget is still largely untapped, with only seven percent of funding in 2014-2020 allocated towards energy efficiency, renewable energy and SMART electric projects.

Meeting the current 20 percent target is proving difficult. A senior Commission official even told the European Parliament last week that climate expenditure for the current period is expected to come in just below 19 percent.

“To bring European economies closer to the Paris Agreement, the post-2020 EU budget must spend at least 40 percent on the decarbonisation of energy, industry and mobility systems, and ensure not one cent will benefit fossil fuel-related activities and infrastructure,” adds Markus Trilling, finance and subsidies policy coordinator at Climate Action Network Europe.

“In the upcoming budget discussions, member states must support French president Emmanuel Macron’s plea for a 40 percent share of the next EU budget to be dedicated to climate action and the ecological transition.”

Further EU budget talks in late May and June on future funding for agriculture, research and security will be shaping the eventual allocation of the EU’s budget to climate.

This Author

Arthur Wyns ia a freelance journalist.