Transform systems to avert future humanitarian disasters like in East Africa

Right now, 20 million citizens from Kenya, Somalia, and Ethiopia in East Africa are facing severe hunger due to cumulative effects of different shocks, notably climate change; internal conflicts; the war in Ukraine’s detrimental impact on food and fuel accessibility; the socio-economic effects of the COVID-19 pandemic; and destructive desert locusts.

Communities, and particularly women, girls, and young people, face a combination of skyrocketing food prices, erratic weather patterns for agriculture, protracted conflict, public sector cuts, and debt. A recent ActionAid survey found that, faced with soaring food and fuel prices, women are faced with unimaginable choices, such as taking their children out of school to be able to afford to provide at least one meal a day for their families.

This comes in the context of an unfair debt crisis that means governments in East Africa are also faced with unimaginable choices. Countries in East Africa are spending on average 36% of tax revenue on repaying debt, which means governments have less money to invest in public services, such as health, education, emergency preparedness and response. Additionally, underinvestment in public education is undermining the development, human rights and future of young people.

This unfair and unjust debt burden limits socio-economic growth and development. ActionAid research from 2020 showed how Kenya was spending more than three times as much on external debt repayments than on health.

Unbelievably, across the globe, the International Monetary Fund (IMF) is advising governments to introduce more austerity measures, despite evidence that this harms or undermines economic recovery, pushing more people into poverty. This is particularly devastating for East Africa. Unstable economies mean that governments spend less on public services (that are just recovering from the impact of the covid-19 pandemic), including social safety nets. This is unacceptable and is hurting local communities, particularly women and young people.

Ireland can use its influence at the IMF to counter the austerity policies and cuts to public spending currently being imposed across Africa. The IMF has been pushing for austerity, either as loan conditions or as coercive advice, amongst countries that are reeling from the negative economic effects of the Covid-19 pandemic. Public sector spending cuts increase poverty and inequality and drive more hunger on the continent, as well as undermining progress on health, education, gender and other Sustainable Development Goals.

The continent of Africa loses over US$50 billion annually to illicit financial flows, according to one report from the African Union and the United Nations Economic Commission for Africa. Drivers of illicit financial flows include harmful tax practices by multinational corporations, overly generous tax incentives, corruption, and criminal activities. Ireland must ensure that its own tax system does not allow multinational corporations and others to avoid paying tax in Africa. A new and more robust spillover analysis of our tax system is required, as well as addressing known tax avoidance mechanisms such as the “Single Malt” highlighted last year by Christian Aid.

This crisis in debt is compounded by the climate crisis, with East Africa experiencing one of the most severe droughts in memory. Countries, like those in East Africa, with low levels of carbon emissions, are on the frontline of climate change and are facing unprecedented levels of hunger.

Underpinning this is the reality that the current food system is degrading our soil, leaving us more vulnerable to climate change and damaging the planet. Chemical fertilisers, a key component of industrialised farming systems, require large amounts of fossil fuels for their production and contribute to greenhouse gas emissions. We need policies that invest in smallholder farmers, both here and in our overseas aid programmes, with a special attention to the needs and contribution of women farmers who produce around 70% of Africa’s food and a large-scale adoption of agroecology. Agroecological farming approaches, which use natural and locally available materials to build soil fertility and soil organic matter offer real benefits to farmers, healthy food to citizens, reduce greenhouse gas emissions, reduce soil and water pollution, and increase the sustainability of food systems.

Political responses must focus on transforming global economic and food systems- and Ireland must be part of this.

Ireland must act now, not just with much needed funding for those currently on the brink of starvation, but by looking at our policies and practices more broadly to see where we can use our influence to seek this transformation. Ireland also needs to act now to lower its carbon emissions, ensure adequate funding for loss and damage in the poorest counties and also prepare for the impact that changing weather patterns will have around the globe and here in Ireland. We need to transform our global food and agricultural systems to protect food prices, promote food sovereignty and sustain the planet.

We currently have an active appeal for the East Africa Food Crisis, learn more.

Image caption: Nimco Mohamud Ali, 21, at her home in a village where she lives with her children in Somaliland. Photographer Credit: Khadija Farah/ActionAid

Protesters holding End Fossil Fuels banner at a climate demonstration, advocating for renewable energy solutions.

Protestors at COP 28 in Dubai. Photo: Konrad Skotnicki.

Climate protest with diverse crowd holding signs about environmental action in a city square.

Belfast Climate Change March, 2019. Photo: Trócaire.

The Profit Driving the Crisis

Despite their overwhelming contribution to global emissions, fossil fuel companies continue to attract significant financial backing—driven by their enduring profitability. This is starkly illustrated by the case of ExxonMobil, the top fossil fuel investment held by asset managers based in Ireland. In 2023, ExxonMobil reported €33.63 billion ($36 billion) in profit. That is almost twice the GDP of Botswana (€18.1 billion) and nearly three times Namibia’s GDP (€11.5 billion).

Ireland plays a hugely disproportionate role in facilitating investments into fossil fuel companies like ExxonMobil. In 2023, the investments made into fossil fuel companies by investment managers based in Ireland generated an estimated 72.5 million tons of CO2e. This is more than the CO2e emissions for the entire country of Ireland—and more than ten times that generated by Sierra Leone.

The Global Human Impact

The climate crisis is here, now, and it is causing disproportionate harm in the Global South. In Bangladesh, rising sea levels and increasingly severe cyclones are displacing coastal communities, with projections indicating that 17% of the entire country could be underwater by 2050. The legally binding Paris Agreement on climate change explicitly acknowledges the importance of tackling private finance. Its three overarching goals are: keeping below 1.5C of warming; increasing adaptation and making finance flows consistent with low emissions and resilience.

This gives a clear mandate for action:  both tax reform and corporate regulation are needed to tackle financial flows, and both nationally in Ireland and at EU level, ‘polluter pays’ taxes are lacking and regulation of the financial sector remains weak and fragmented. While EU regulation exists, it is designed more to nudge investors toward more sustainable investment practices by increasing transparency and reporting levels than to enforce strict standards. And it is moving in the wrong direction: the recently passed EU Corporate Sustainability Due Diligence Directive excluded investments; and now the EU Commission’s Omnibus legislative proposal threatens to undo the limited gains made on climate plans, as well as blocking future attempts for stronger action at national level.

The Risk of Inaction

Fossil fuel investment is too profitable to remain weakly regulated. If Ireland continues with its current strategy of encouraging FDI at all costs, and relying on weak EU regulation, we are headed for catastrophe. The Inter-governmental Panel on Climate Change has repeatedly warned that every fraction of a degree beyond 1.5°C brings irreversible consequences: collapsed ice sheets, vanishing coral reefs, and extreme weather events that will make vast regions of the planet uninhabitable. And yet, companies are developing oil and gas fields that could push global warming beyond 2°C.

Our research found that 91% of the investments made into fossil fuel companies by investment managers based in Ireland were to companies that have plans for fossil fuel expansion like these. Ireland cannot afford inaction on this issue.

About This Research

The figures in this report regarding investment from Ireland are based on new research commissioned by ActionAid Ireland and Trócaire. In the paper, we uncover the scale of fossil fuel investment through Ireland, who the investors are, and in which fossil fuel companies they are investing.  We analyse the current regulatory framework and explain why it is inadequate—and moving in the wrong direction. And we make specific recommendations for change, which are summarised below.

Summary of Recommendations

Regulate the private financial sector
Ireland must end its outsized role as an enabler of destructive fossil fuel investment. Ireland should introduce a strong gender-responsive national human rights and environmental due diligence framework which includes the regulation of investors with respect to human rights and the environment and climate. The transposition of the EU Corporate Sustainability Due Diligence Directive could achieve this if downstream activities are included and the Omnibus proposal is rejected. Ireland should prohibit investments in fossil fuel expansion and require investors to implement climate transition plans consistent with a 1.5°C climate limit.

Endorse the Fossil Fuel Non-Proliferation Treaty
Ireland should endorse developing a Fossil Fuel Non-Proliferation Treaty to curb fossil fuel expansion and commit to a fair and funded phase out of fossil fuels.

Support tax justice
Ireland should support bold and fair new global tax rules through the UN Framework Convention on Tax, should adopt all OECD BEPS measures, and should conduct an updated and comprehensive spillover analysis of its tax policy. Ireland should take coordinated action globally, at the EU level and domestically to introduce a range of new taxes to mobilise finance needed for climate justice, based on ‘polluter pays’ and social equity principles such as wealth taxes for the highest earners, climate damages tax on investors, fossil fuel production taxes and levies on aviation and shipping.

Finance a just transition
Ireland must also meet its fair share climate finance obligations under Article 9.1 of the Paris Agreement, and pay our ecological debt to the Global South. Ireland should support conditionality-free debt cancellation for countries on the front lines of the climate crisis, commit to a new UN Framework Convention on Sovereign Debt, moving debt negotiations from the IMF to the UN, and to a debt workout mechanism that is fully representative and fair.

Further reading