While representatives from across the globe are gathering in Madrid to discuss how to curb global emissions and overcome the climate crisis, Saudi Arabia is offering the largest sale of fossil fuel stocks the world has ever seen. 

Underwriting this IPO are several banks, among them the top global banks JPMorgan Chase, Morgan Stanley, HSBC, Citigroup, Credit Suisse, and the Bank of America. HSBC, as an example, claims to be making pledges to tackle climate change and support sustainable growth in developed countries, while keeping funding the expansion of fossil fuels in Asia.

Saudi Aramco’s IPO is the biggest one time infusion of capital into the fossil fuel industry and it comes amid yet another alert from the scientific community that there is already a huge gap between countries’ planned production of coal, oil and gas, and the goals set under the Paris Agreement to limit warming to 1.5°C. The UN Environment Programme (UNEP) says we need to get on track, and we need it immediately. But buying Aramco’s assets is a significant step backwards, not forward.

Those banks who support the Saudi Aramco IPO are directly supporting oil production, just at a time when they must support the energy transition away from fossil fuels. Coal, oil, and gas are by far the largest contributor to global climate change, accounting for over 75% of global greenhouse gas emissions and nearly 90% of all carbon dioxide emissions.

As the world’s largest emitter of CO2 and the biggest single contributor to the global climate crisis, it’s crystal clear that a large proportion of Aramco’s oil reserves can’t be burned if we want a liveable planet. And therefore, these shares are filled with serious financial and reputational risks.

The era of fossil fuels has gone and investing markets are shifting globally. Investing in coal, oil and gas nowadays represents a huge risk – to the planet, to local communities, to corporations’ brands, and ultimately to their bottom line. With the devastating climate impacts we are witnessing across the globe, investors are beginning to wake up to the role they choose to play in accelerating or mitigating it.

In the same way, the divestment movement continues to grow, serving as a key tool in moving the world economy away from fossil fuels and towards renewable energy. Over 1110 institutions with more than USD $11 trillion in assets, including some of the world’s largest pension and endowment funds, have already committed to stay away from some form of fossil fuels — and ultimately also from this IPO. 

This movement is modeling what governments need to be doing: withdrawing funds from the problem and investing in solution. People and markets all over the globe are increasingly demanding a just transition to 100% renewable energy systems that can lead us to a more equitable and sustainable future, and investments should be directed towards that.

Entire communities and the ecosystems they depend on are being impacted on a daily basis across all regions, and we have a sharp choice to make: it’s either the polluters or the people, there is no middle way.

Supporting Aramco’s IPO means financing the perpetuation of the climate crisis and also facilitating the profiteering of a regime with a history of egregious human rights abuses. From the airstrikes on civilians in Yemen, to the murder of Saudi journalist Jamal Khashoggi, the arbitrary arrests, trials, and convictions of peaceful dissidents and activists, and other continued discriminatory acts against women and religious minorities, just to name a few.

As the economic pillar of a totalitarian and oppressive regime, Saudi Aramco is also expected to maintain the growth in fossil fuel production between now and 2030, the period in which experts have warned that climate action is crucial to prevent the worst impacts of global warming.

But unlike its IPO, this plan is not restricted to Saudi Arabia. Among other things, the money coming from Aramco’s IPO will be invested in oil and gas expansion in developing countries such as South Africa and India. The argument is that these new projects will “ensure energy security and economic growth”, when in fact increasing investments on fossil fuels will only intensify poverty and social inequalities in countries that already struggle to overcome those. 

These ambitious plans only show a complete disregard for social and climate justice. And the banks who are supporting and profiting from the sale of these assets will be consenting to this: allowing the largest polluter in the globe to make billions from warming our planet, endanger thousands of lives all over the world  and further impoverishing the poorest. 

This is the moment where we need to choose sides. And there is one thing we know for sure: if governments, banks and big private or state-owned corporations such as Saudi Aramco want to keep digging the grave of mankind, we will not be the ones buying the shovels.

 

Yossi Cadan is Global Finance Campaign Manager at 350.org

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