Corruption and climate change: the key to the past and the fight for the future
Dr Ketakandriana Rafitoson
Executive Director of Transparency International Madagascar. Independent Researcher (PhD in Political Science and PhD in Social Sciences for Development). Human Rights Defender at risk. National Coordinator of Publish What You Pay (PWYP) Madagascar.
Member of the International Board of Transparency International and of the Board of Transparency International France, Professor of Finance, Regulation and Supervision at Mines ParisTech and Associate Professor of Finance at Conservatoire National des Arts et Métiers.
Corruption lies at the root of the climate crisis. This article highlights the linkages between the two phenomena in various aspects, starting with a short case study on Madagascar and exploring the evidence drawn from civil society action, available data and recent literature. It clearly sets that without corruption, carbon emissions would have been and would be much lower, as corruption facilitated hydrocarbons’ extraction for more than a century and reduces forests’ ability to absorb carbon. Climate policies are hampered by corruption and climate finance is diverted by corruption. Ultimately, corruption weakens our resilience to climate change, increasing our societies’ vulnerability to it, and therefore threatens human lives, which in turn fuels corruption. This vicious circle implies that fighting for climate justice is fighting against corruption.
In 2019, an investigation conducted by Transparency International – Initiative Madagascar through its MALINA unit exposed the implication of former Member of Parliament, Ludovic Raveloson, into the massive destruction of thousands of hectares of primary forest in the Menabe Antimena area, in favor of growing corn and peanuts for multinational agri-food companies. Using his influence, he would have paid villagers and migrants to transform the wooded area into agriculture fields, and bribed various authorities for ensuring himself a political protection and impunity. In 2020, he was sentenced to three years in prison for intentional assault and battery against a collector of local products and to two years for monopoly, before escaping from jail in trouble circumstances. In 2022, he faced the court again, suspected of attempted murder, death threats and armed robbery.
Madagascar, Paradise Lost ?
The nexus between corruption, environmental degradation and climate change is striking in Madagascar. In January 2021, WWF published an alarming report identifying 24 “deforestation fronts” across the globe, including Madagascar. These are regions with a significant concentration of deforestation “hot spots” and where significant areas of remaining forests are threatened. According to the report, between 2002 and 2019, a total of 1.3 million hectares was burned in Madagascar, and the annual trend is increasing. In 2020, according to the Malagasy Ministry of the Environment and Sustainable Development, 67,351 fire points were located in the forest areas of Madagascar. This is an absolute record compared to the preceding years, with an increase of around 11% between 2019 and 2020.
Among the main drivers of deforestation stand the conversion of forest areas for small-scale agriculture, slash-and-burn agriculture; coal mining and cutting for firewood and charcoal production; uncontrolled fires and bush fires. The linkages between corruption and deforestation are not very clear at first sight, but the case of the Menabe Antimena protected area makes them very obvious.
According to scientists, the entire forest of central Menabe risks to disappear completely before 2050 if the current rate of deforestation continues. This situation, added to other phenomenon, enhance climate risks and their potential impacts. Madagascar currently faces several severe climate risks: increased temperatures, increased precipitation during the rainy season, reduced rainfall in the dry season and increased drought conditions, but mostly increased cyclone intensity. No later than in late February and early March 2023, cyclone Freddy – said to be one of the strongest Level 5 cyclone ever – devastated Eastern and Southern coastal regions of the country, still wounded by previous cyclones. Every cyclone kills numbers of people, generates massive destruction of vital infrastructures and increases the country’s rate of poverty.
In Madagascar, corruption destroys forests which could have absorbed carbon from the atmosphere and corruption weakens the defenses of an impoverished population against cyclones made more frequent and violent by too much carbon in the atmosphere.
What happens in Madagascar happens, to various degrees, on the entire planet.
Corruption lies at the root of the climate crisis
On December 9th last year, shortly before the switch to a Republican majority in the US House of Representatives, the House Oversight and Reform Committee released a new set of documents in its two-year investigation on how big oil companies, until now, have kept increasing carbon emissions while claiming to be involved in the fight against climate change. These companies have been aided in this by their capture of the public mind and decisions through their immense financial power.
There are two ways of explaining why climate is changing, – and changing for the worse. They are complementary, but one is more complete than the other.
For several decades, the Intergovernmental Panel on Climate Change (IPCC) has proven, report after report, that human activity is the main cause of climate deterioration. Since the European and North American industrial revolutions of the 19th century, humans have extracted carbon from the earth and used it, mainly in the form of coal, oil or gas, for transportation, heating or factories, and then released it into the atmosphere. Once in the atmosphere, the carbon began to accumulate and ended up rapidly changing the climate in the late 20th century. There are not enough trees to return the carbon from the atmosphere to the subsoil. Policies to tackle the build-up of carbon in the atmosphere are too slow or ineffective, as are policies to create a new carbon-neutral economy.
This view is accurate and supported by scientific consensus. However, to know what to do in the face of such a bleak outlook, we need a more complete picture.
The global expansion of carbon extraction in the 20th century, in its most common form of hydrocarbons, was mainly enabled by corruption, which was itself nurtured by the massive financial revenues from the new industrial and transport uses that were created. Most forests have been damaged or removed because of corruption. Policies to reduce carbon emissions or to adapt to climate change are rendered ineffective or diverted from their purpose by corruption. Policies to transition to a new economy are themselves threatened by corruption.
Moreover, climate change damages social infrastructures already weakened by corruption, further aggravating lack of water, inequality, loss of livelihood and access to natural resources, poverty, and thus increasing corruption itself, which always feeds on the wounds of society.
As illustrated by the below diagram, saving our societies and human lives from the threats of climate change requires us to fight against corruption. Further details on each component of this reasoning are provided in the following sub-sections.
Corruption at the root of the climate crisis
Without corruption, carbon emissions would have been and would be much lower
From the distant days of Rockefeller’s monopolistic Standard Oil in the United States and throughout the era of the 20th century ‘oil majors’, the history of fossil fuels is inextricably linked to state capture and outright corruption. The creation of the Extractive Industries Transparency Initiative (EITI) twenty years ago, with what may have been genuine company participation in some cases, was in some ways a recognition of this major fact of economic history.
The deplorable saga of Elf Aquitaine, the French oil major, is just one example of how oil extraction in the twentieth century, for many companies, was about owning governments and ignoring the lives and needs of local people. Owning governments: at least the government of the country where the oil was extracted, which had to ensure that extraction took place even if it completely transformed and sometimes devastated an entire region, and to a large extent the French government itself, whose leaders were occasionally funded by Elf and sent military or diplomatic support when Elf needed it. The local populations were often treated no better than those sent to the gold or silver mines of America centuries ago to extract minerals from which they did not at all benefit.
Oil scandals, most often related to alleged state capture by a company, have abounded in recent decades, in Nigeria with Shell, in Libya with Norsk Hydro, those scandals also involving oil field services companies such as Halliburton, in Nigeria again.
The reason why hydrocarbon extraction has been so riddled with corruption is intrinsically linked to the mechanisms at play in climate change. The idea of extracting carbon in Africa and putting it into European cars and then into the atmosphere, and doing so on the massive scale that has been practiced since the mid-20th century, was good neither for the planet nor for the people of most oil-rich territories, in Africa or elsewhere. More often than not, it had to be imposed through the capture of state power, which used force to enable industrial operations that damaged local living conditions. Those who wielded state power were bribed by the immense wealth of the hydrocarbon industry, itself financed by the exponential growth of huge industrial and transportation markets, mostly in northern countries.
In most countries, the legal infrastructure has paradoxically fostered corruption. Underground wealth is owned by the state, which is supposed to use it for the benefit of the population, but in fact this legal framework allowed corrupt political leaders to sell exploitation rights for the highest bribe.
As illustrated by the Elf case, the governments of the oil giants’ home countries were not immune to corruption. Part of the bribes paid in the host countries of the exploitation went back to these governments and helped to ensure a favorable legal environment for the companies.
The pattern that we describe here has remained valid since the beginning of oil extraction. Capture of local law or administration by abusive foreign companies or governments was the rule in the Arabic peninsula from the 1920’s, a rule administered by England, France, the United States and their companies. After State-Owned-Enterprises took over most oil rights in a number of countries, the same methods very often remained in place, maximizing oil profit or simply plundering the resources for the enrichment of the few and to the detriment of the local populations, sometimes to the point of a humanitarian disaster such as in Venezuela.
Unfortunately, this pattern is not something from the past. The strong civil society concerns around the Exxon permits in Guyana, the embezzlement of huge public debt proceeds supposed to be reimbursed through a gas discovery in Mozambique, or the recently exposed links between Total, the French company that absorbed Elf, and the Myanmar generals through an offshore center, confirm the persistence of a very strong relationship between carbon extraction and corruption risks.
Once carbon is in the atmosphere, the only natural way to return it below the earth’s surface is to facilitate its absorption by trees. The problem is that here again, massive corruption has been and is at work to enable massive deforestation, in Madagascar as well as in many other countries around the globe.
Corruption severely reduces carbon absorption by forests
According to FAO’s Global Forest Resources Assessment 2020, 420 million hectares of forest have been lost globally to deforestation since 1990, an area exactly equivalent to that of the entire European Union.
There is now ample evidence that corruption is a major driver of deforestation, for reasons very close to those at play between corruption and oil extraction. Deforestation is very similar to mining. You need to own the rights to a large area and, more often than not, send your products to distant markets. Even more so than in mining, you are significantly altering or even destroying the lives of local people.
Civil society, in Madagascar like in Brazil and in many countries of Africa, Latin America, Asia and Oceania, has documented for decades that corruption thrives in each of those aspects of deforestation. As the political power owns the rights to the subsoil wealth, it is the custodian of the titles to land. These titles can therefore be bought or falsified through bribes. Illegal trade and timber exports are facilitated by corruption in customs, tax and other public services. Finally, violence is exercised against the local populations, which in several countries, such as Peru, also are indigenous populations with long-standing living conditions and informal land rights. Such violence can be exercised by the police and the army, it can also be exercised directly by those interested in deforestation while governmental forces choose not to intervene. In both cases, corruption is coupled with state capture, and human beings are killed.
Killings may also occur as a result of state capture induced by hydrocarbon extraction. We know that excess of carbon in the atmosphere kills. The operations leading to carbon extraction or to the impairment of the forests’ absorption capacities also may kill, and they kill because of corruption.
Since the 1990s and the beginning of global awareness of climate change, attempts have been made to design and implement policies to mitigate change or facilitate adaptation. Unfortunately, these policies are hampered by undue influence.
Climate policies are hampered by undue influence
Last November at the Sharm el-Sheikh Climate Change Conference (COP 27), there were more fossil fuel lobbyists than representatives of the ten nations most suffering from climate change. There were 636 such lobbyists, a 25% increase over COP 26. Still more worryingly, 29 countries had fossil fuel lobbyists within their national delegations, with, for example, 70 fossil fuel lobbyists in the United Arab Emirates delegation and 33 in the Russian delegation.
Research by Influence Map shows that in the three years since the 2015 Paris Agreement, the five largest publicly listed oil and gas majors (ExxonMobil, Royal Dutch Shell, Chevron, BP and Total) have spent over one billion dollars on misleading climate branding and influence.
The figures are impressive and point to a phenomenon vastly confirmed by civil society research in many countries. In Brazil, political capture and misinformation favor fossil fuel power generation. In Germany, an environmental foundation sponsored by a regional government hid its financial ties to Gasprom, the main Russian gas producer. In France, ten years ago, an environment minister was forced out of office because her plans to revise the offshore oil permit policy would have displeased Total. Two years ago, the French financial prosecutor’s office opened an investigation against the CEO of Total, accused of having participated in the decision made by the Board of the best French scientific university, where he sits, to create a Total research center on the campus.
Quietly influencing universities seems to be part of a global strategy for Big Oil, according to the US House of Representatives’ investigation. A BP vice-president explained in an e-mail released by the House committee that the relationships with Princeton, Harvard, Tufts or Columbia were “key parts” of their “long-term relationship-building and outreach to policy makers and influencers in the US and globally”. Such relationship building was not disclosed as such in any official document or lobbying registry.
Despite these extensive lobbying efforts, however, policies are adopted by a number of governments or international organizations. They direct financial flows to climate change mitigation or adaptation projects. Large sums of money are therefore at stake, and with them come large risks of corruption, especially in those climate change-affected countries with weak governance standards and poor rule of law. Without proper safeguards and strong monitoring procedures, climate change mitigation as well as Loss and Damage Funds will be no more than a new Big Business for populist and careless governments, or for unscrupulous companies.
Climate finance is often diverted for private profit
Researchers of the Australian National University recently issued a series of papers assessing the performance of the Australia’s Emissions Reduction Fund (ERF). Their conclusion is that the ERF is an “environmental and taxpayer fraud”, characterized by a “distinct lack of integrity” and a waste of billions of dollars. The ERF issues carbon credits that give financial incentives to organizations supposed to help reduce emissions, but according to the researchers 70 to 80% of the carbon credits issued do not go to projects with a real reduction in carbon emissions. The beneficiaries obtain credits for actions that they would have undertaken anyway, for nonsense projects such as growing forests on lands which will never sustain permanent forests, or for growing trees that are already there.
Inefficiency always feeds fraud, as Europeans know it since the carbon credit fraud which cost 5 billion Euros to the taxpayers.
Forest funds and carbon markets are affected by a lack of integrity which can also be observed in the management of the massive funds that go to the former coal industry regions of Eastern Europe, for example the Czech Republic. By 2030, the European Union will have given the Czech Republic ten billion euros to address the climate crisis, with a focus on the transition from a carbon-dominated economy. Current analysis of the framework adopted for the use of these funds shows that speed of disbursement is clearly prioritized over integrity, opening a wide avenue for corruption and conflicts of interest in a country where several high-profile corruption cases already dominate public life.
The political will to signal fast climate action has fostered the creation of numerous national and/or multilateral funds over the past 15 years, which now spend more than 600 billion dollars a year. Governments and international organizations have been quicker to spend than to organize the governance of spending, providing immense opportunities for those with well-placed connections or who simply abuse the obvious shortcomings of existing disbursement systems.
The multilateral funds urgently need better governance, as the highest risk is that the money disbursed will miss its target of reducing emissions, mainly because the reduction was misrepresented or wrongly measured.
This is all the more concerning as the amounts spent, even at their current size, are notoriously insufficient to respond to the climate emergency. Some mention the need for a multiplication of the effort by a 7-factor. Such a dramatic increase would require the massive mobilization of both public and private finance, coming from a multiplicity of sources. If climate finance is poorly governed today, it is very unlikely that a change of scale will improve the situation unless a global EITI-like structure, dedicated to the governance of climate finance, is put in place, involving civil society organizations, governments and private sector.
The misuse of climate finance is clearly an embezzlement of international funds and it goes beyond that. For some countries barely above sea level, such as Bangladesh or the Maldives, it is life-threatening to the country’s entire population. In those places and in many other countries such as Brazil, Costa Rica, Kenya, Mexico, Nepal or Rwanda, civil society has put in place an active monitoring of the climate finance flows.
Corruption is therefore one of the main causes of climate worsening, with climate policies being hampered by undue influence and climate finance often diverted by fraud or conflicts of interest and influence peddling. Furthermore, corruption increases our societies’ vulnerability to climate change. Societies in countries severely affected by corruption lack the basic infrastructures that would help them survive climate change better. Being considerably weakened by climate change, as a result and in a vicious circle, they are more exposed to corruption.
The vicious circle between climate worsening and corruption
The worsening climate primarily affects the weakest, those who are already victims of pervasive corruption and who, for example, could not afford living outside the areas threatened by annual floods.
It also puts great pressure on essential public infrastructure, such as water supply systems already weakened by corruption. Water management and supply has always been an area of high corruption risk, as is the case in all areas where elected officials award large public contracts to private operators. Political party and campaign financing is often the quid pro quo for the contract, the cost of this political financing increases the prices of the services provided or of the water distributed, and the services themselves are of poor quality, which explains, for example, water shortages.
Rising average temperatures and decreasing rainfall are undermining a system already weakened by corruption, leading to water crises, a dramatic example of which has been seen for years in Venezuela.
Corruption increases the impact of climate change, and in a vicious circle, climate change reinforces corruption. Increasing inequality and poverty, forced migration and the collapse of public infrastructure create a huge space for the abuse of political and financial power to flourish. By progressively destroying politically organized communities or countries, the climate crisis can create a world where the abuse of power, which is corruption, would become the norm of all human relations.
Listening to the silent stakeholders
Local populations in areas of oil extraction or deforestation have always been stakeholders of those operations that impacted their own fate, their stake being perhaps the most important of all. But unlike other stakeholders, such as car owners or buyers of wooden furniture, in many places they are barely listened to, they are silenced, or given only marginal consideration in the context of corporate social responsibility. The reprisals and retaliation against anticorruption or environmental defenders and whistleblowers are increasing around the world, and police forces are often used by companies and governments – in a total collusion – as a powerful tool to silence communities who are only claiming for their rights.
The paradox of many policies aimed at the “just energy transition”, or the transition to a carbon-neutral economy, is that they affect again local populations, often not far from where the oil was or still is extracted, with transition minerals or reforestation projects. Indeed, new and growing markets, mainly around energy production and use, need more critical minerals, such as cobalt or copper, to produce wind turbines, solar panels or batteries for electric vehicles. New mines would have to be opened, as in the past, to supply distant, energy- or transport-intensive markets. Companies wishing to offset their carbon emissions also engage in reforestation programmes, not always in close consultation with local populations which may be forced to turn to new forms of agriculture if they have to abandon their land for reforestation. For instance, Madagascar is not only rich of forests and biodiversity threatened by corruption, it is also rich in transition minerals with mining prospects not necessarily designed to answer the needs of local populations.
For exactly the same reasons as for hydrocarbons and deforestation, the risks of corruption associated with these economic operations are high: economic interests target vast tracts of land, often with their underground riches, in order to supply distant markets. Political power is again at risk of being captured. In some regions, state power or rule of law are very absent and mining is controlled by gangs to which companies subcontract the exploitation, with disastrous consequences on human rights. As highlighted by the Natural Resources Governance Institute (NRGI) in one of its latest reports, mining can potentially benefit Africa’s populations, their environment and the energy transition in a triple-win scheme, but this would not work unless foundations of governance, including strong anticorruption policies, are in place.
It should be noted that the rush for transition minerals and the increasing need for reforestation is due to number of countries’, especially in the global North, reluctance to slowing down their growth or considering degrowth. It is beyond the scope of this article to further comment on this aspect, but there is a general relationship between the amount of corruption associated with economic activities and the sheer size of those activities.
The fight against corruption should be streamlined across the entire climate agenda, from reducing emissions to creating a carbon neutral economy. As climate is a global issue, among the most pressing of our time, this fight cannot be undertaken without strong international and national climate governance that would help fund and regulate climate policies. This means knowing the beneficial owners of each company, ensuring transparency of the income and assets of elected officials, ending impunity for the powerful, restoring rule of law where it no longer exists, enforcing law in a full and effective manner, and increasing the sanctions. This is the whole anticorruption agenda, which should now be coupled to the climate agenda.
Climate change and corruption are two deeply interrelated global issues. The fights for climate justice and against corruption are undertaken by civil society in every country, but a global civil society is also needed in that fight, which means a vibrant international civil society united in a network of national Civil Society Organizations, and committing to jointly address common challenges.
The first international school for anticorruption and forest governance was held last week in Bogota for the countries of the Amazon basin (Brazil, Colombia, Peru and Ecuador) as well as Mexico. Forest governance or climate governance are still new ideas on the international political scene, particularly if we want governments and companies to leave the comfort of beautiful rhetoric and start acting on the scale required. The Amazon Basin’s as well as Madagascar’s agendas are the agenda of all civil societies around the world. It is the agenda of mankind, an agenda for recovering the lost paradises of our planet and creating better societies, – freed from corruption.