As global temperatures continue to rise to unprecedented levels, and natural disasters become more frequent and destructive, funding for organisations working to mitigate the climate emergency has remained stagnant. Recent Global Witness analysis shows that major oil giant Shell alone made more than £31bn in excess profits over the last year – three times the amount of all philanthropic giving to climate-focused organisations worldwide.
To explore the key role of tax justice to finance climate justice, the Global Alliance for Tax Justice (GATJ) team interviewed Klelia Guerrero*, tax justice specialist for the Latin American Network on Economic and Social Justice (Latindadd), during the Global Days of Action for Tax Justice in the Extractive Industry 2022. Check it out:
Could you briefly explain what climate finance is and how it relates to the extractive industry?
Climate finance refers to “local, national or transnational financing —drawn from public, private or alternative sources of financing— that seeks to support mitigation and adaptation actions that will address climate change”, according to the United Nations Framework Convention on Climate Change (UNFCCC). In other words, it includes the financial efforts made by anyone, at any level, scope or industry, to counterbalance the advancements and impacts of climate change.
The extractive industry is clearly linked to climate change, as its operation —far from what it is said on paper— includes the accelerated consumption of natural resources and the degradation of the environment, continuing to threaten sustainable development. In this sense, the extractive industry must be accountable for such impacts and should be an important contributor to climate financing. Especially when such an operation has brought out historically huge income and profits to the sector.
What are the main challenges in climate finance, especially in the global South?
One of the main challenges for tackling climate change is that the actors making decisions around behaviours/activities that exacerbate it are not the ones facing its results/impacts. The extractive industry is also an example of this. Most of the multinational operators within the global south do not have to deal with water, soil and air pollution caused by their companies in their everyday lives; they do not see their livelihoods shortened by the decrease of fish in the rivers and the detrimental other forms of life that are food sources for native communities. Thus, there is a clear role for governments and international instances to link up the externalities of industries’ operations to their generators. Environmental taxes are only one form —and only one element— for doing it.
Another challenge that must be raised is the actual capacity of governments and control bodies to assess the impacts of industries’ operations. It is impossible for them to enforce sanctions or to impose remedial actions when there is no clarity on how such operations have impacted the environment. This brings us back to the role of climate finance not only for mitigation and adaptation measures but also for capacity building within these bodies, and that is particularly true in the global South.
What is the importance of tax justice to tackle climate change?
Tax justice seeks to guarantee the resources that governments need —and have rights to— so that they can fulfil their duties of correcting the aforementioned externalities and protecting the most vulnerable ones. For the fight against climate change, as well as mitigation and adaptation actions this is trascendental, as taxes, tribute and tariffs are powerful tools to disincentivize particularly detrimental actions and to transfer back such externalities that are posing a disproportionately bigger burden to the poorest and most vulnerable communities.
How can we ensure women, girls and communities benefit from the just energy transition?
Our planet is suffering from the individualism and greed of our current systems. One of the ways in which we need to improve them is making sure that we start to value products and services with all they have behind, including environmental and care services, and not limiting such value to productive terms. Women, girls and communities are, by far, the greatest responsible of providing for them, but have not been recognised by contemporary forms of transactions. Again, there is a role for governments and international bodies to make sure this work is retributed by the forms that are profiting from them. At the same time, international.funds should assess how much governments and industries are moving towards this recognition to incentivise through better conditions to those actors that are doing their part. Finally, I’d suggest that we also, as civil society, continue the appropriation of this fight, continue to push these demands forward and share with our close ones the importance of evolving within these terms as a society.
What inspires you to work with both economic and climate justice movements?
I grew up in a small town within the Ecuadorian mountains. I have seen and shared the needs and issues that face small farmers and traditional agriculture due to the introduction of mining and other extractive industries in that town. I have felt myself the shortage of opportunities that being of rural origins tends to imply. As a result, I want to give back to those still choosing to be part of that side of the equation, even when it comes with multiple vulnerabilities or the lack of other chances to choose from. I also feel it is a task for our generation to fight the battle of climate change with all we have on our hands, so that it is not the last one we deal with as humanity.
* Klelia Guerrero is a tax justice specialist for the Latin American Network on Economic and Social Justice (Latindadd). Proud Latin and Ecuadorian, she holds a Master in Economics from the London School of Economics and Political Sciences (UK). Guerrero is enthusiastic about research and project management; she is a promoter of sustainability, mainly from civil society mobilisations and educative platforms. Passionate about building sustainable realities, not despite the context but honouring it.