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End to foreign investment in fossil industry is a big win

Last Monday, the caretaker government, under great social pressure, announced that it would join a group of countries that have pledged to stop investing in foreign fossil energy projects after all. Great news, because it illustrates both the importance of social pressure and is a significant step towards a world without fossil industry.

Dutch public support for fossil enterprises currently focuses mainly on export support through insurance. These export credit insurances are, in theory, the perfect opportunity for the government to promote sustainable development in vulnerable countries: Through export credit insurance, the Dutch government can support companies that want to invest in countries where the risks of doing business are higher than here, for instance due to political instability or bankruptcies of local partners. Because the financial risks are very high in some areas, commercial credit insurers do not dare to support these projects. This makes this the ideal opportunity for the Netherlands to fully invest in sustainable projects that benefit both the climate and economic growth of countries.

Unfortunately, in practice, the exact opposite is revealed: research by Both Ends found that in 2019, more than 60% of all annual export credit insurance went to the fossil industry. This amounts to €1.5 billion, more than all the money the Dutch government spends on financing international climate action. With this support, we not only continued to contribute to the huge climate impact of these projects, but also made vulnerable countries dependent on an economy that will eventually become unsustainable.

Important role of civil society

The move to join the group of countries that will stop providing this support is therefore a very big victory. This may also be largely credited to civil society. In recent years, organisations such as Both Ends and Friends of the Earth have campaigned unrelentingly for this. Foundation Max van der Stoel has also worked with them to increase political support for this issue. It is therefore encouraging to see that the hard work of civil society organisations pays off and can bring about this kind of change.

Of course, this decision is only the beginning: It is now important for the Netherlands to scale up its commitment to fighting climate change as soon as possible, including by committing to international climate targets, but also by increasing the budget for international climate aid. Let this pledge to stop foreign investment in the fossil industry not already be the culmination, but only the beginning of the route towards a cleaner world.