Why is the World Bank Group financing profitable polluters like Standard Bank and Eni?

The World Bank Group (WBG) plays a massive role in directing global economic development, and has the potential to support climate mitigation and adaptation by strategically using public funds. Unfortunately, it continues to invest in profitable, polluting companies under the guise of green development. Over the past year, the WBG’s private sector lender, the International Finance Corporation (IFC), committed two notable loans, one to the Standard Bank Group — Africa’s largest bank, with a history of investing in oil and gas projects — and one to Eni — an Italian Oil Giant. While the IFC argues that it is supporting these polluters to invest in the green transition, something we all broadly support, the IFC’s theory of change does not hold water. First, it is unconscionable that precious public money is being spent to subsidize companies that have profit margins in the billions of dollars annually. And fundamentally, unless the IFC’s involvement with these clients is speeding up these companies’ decarbonization timelines, the IFC is in effect lending a stamp of validation to greenwashing activities. 

Standard Bank Group

In December of 2023, the IFC approved a loan of $300 million to the Standard Bank Group.The loan is intended to “support the growth of renewable energy and affordable housing assets of the Standard Bank of South Africa (‘SBSA’) in South Africa.” The IFC has two other loans to Standard Bank on record including the SBSA Sustainable Loan which is similarly aimed at increasing renewable energy and affordable housing in South Africa, and the SBSA Covid Loan, which intended to increase the availability of funding for sectors affected by the COVID-19 crisis. 

Standard Bank has a long history of involvement in environmentally harmful projects across the globe. For example, Standard Bank has been the lead advisor for the East African Crude Oil Pipeline (EACOP) since 2017. The EACOP is a proposed crude oil pipeline which will travel 1,445 kilometers through Uganda and Kenya. In addition to promoting oil extraction, if completed, the pipeline will displace communities and harm critical ecosystems. There has been significant resistance to EACOP from African Civil Society Organizations such as Rise Up Movement and Solidarity Uganda. The movement to stop EACOP has secured pledges from major banks and insurers to not finance the pipeline. Out of the five largest lenders in South Africa, Standard Bank was the only one to support EACOP.

Standard Bank also contributed a loan of USD 485 million to the extremely controversial Mozambique LNG project. And the list goes on: In 2021, Standard Bank loaned USD 50 million to Bunge, a global agribusiness and food company. Bunge is the world’s largest soybean processor and its business operations have been linked to deforestation and indigenous rights violations in Brazil’s Cerrado region. 

Friends of the Earth reached out to the IFC in an attempt to learn more about the nature and terms of its support to Standard Bank for renewable energy in South Africa, but the IFC declined to disclose anything more than the vague details already available on its website. The IFC’s involvement with Standard Bank runs contrary to their stated objective to support development of sustainable and inclusive economic growth. Standard Bank not only finances pollution, but has also increased profits in recent years. According to Reuters, Standard Bank made USD 2.31 billion in profits in 2023, a jump of 27% compared to the year prior. 

Eni

In May of 2024 the IFC announced an investment of $135 million to the Italian company, Eni. Eni is one of the world’s largest oil companies with operations in 60 countries. This loan is intended to “help Eni increase both the production of advanced biofuel feedstock grown in Kenya and processing capacity through the construction of new processing plants.” Not only is the IFC silent on the billions of dollars in profits that Eni is making on harmful oil and gas projects around the world, it is also supporting a false solution to the climate crisis: biofuels. 

Eni has a long history of contributing to greenhouse gas emissions and worsening climate change. According to a report by Greenpeace Italy, “Eni has since its inception in 1953 to the present (2022) produced 12.4 Gb (billion bbl) of crude oil and NGLS (Natural Gas Liquids) and 56.4 Tcf (trillion cubic feet) of natural gas, which, cumulatively resulted in 4,620 MtCo2 from combustion of petroleum products supplied.” Eni is currently working in partnership with ExxonMobil on the development of the Rovuma Liquefied Natural Gas project in Mozambique. The Rovuma LNG project is expected to produce 17,000 tonnes (t) of Liquefied Petroleum Gas per year once completed, substantially increasing Mozambique’s LNG exports. In 2024, Greenpeace Italy and ReCommon filed a climate change lawsuit against Eni, the first in Italy’s history. The organizations accuse Eni of knowingly contributing to climate change and demand that the company takes responsibility for the damages it has caused. 

With regards to the IFC’s investment in Eni, which is part of the implementation of the Italian Government’s Mattei Plan in Kenya, questions have been raised about the company’s plan to scale up biofuels. An investigation by Transportation & Environment found that in Kenya “Eni has failed to reach even a quarter of its 2023 production targets, while, in the Republic of the Congo, Eni’s projects have been languishing at the pilot stage for more than 18 months.” As Eni’s biofuel endeavors lag, it continues to invest in fossil fuels in the region. Eni has appropriated EUR 25 billion for oil and gas exploration and development, and only EUR 3.4 billion for biofuels. Fundamentally, Friends of the Earth is opposed to biofuels because they contribute to air and water pollution, deforestation and ecosystem destruction. Biofuels also worsen climate change because they remove carbon that is stored in soil. Similar to Standard Bank, Eni’s profits are only growing. In 2022, their net profits rose to USD 14.12 billion, the biggest raise in over a decade. In 2023, the company’s gas division earnings hit a record USD 3.44 billion, up 57% compared to the year prior. 

IFC is financing polluters under the guise of sustainability

The World Bank’s decision to fund profitable polluters like Eni and Standard Bank raises questions about their commitment to sustainable economic growth. The fact that money is fungible emphasizes that the World Bank’s funding decisions must be reviewed carefully, ensuring they align with global efforts to address climate change and reduce greenhouse gas emissions. Standard Bank’s history of being involved in environmentally harmful projects and Eni’s long legacy of contributing to greenhouse gas emissions highlight the need for greater transparency and accountability in international finance.