Abstract

Excerpted From: James Thuo Gathii, Financing Climate Change Through a Racial Capitalism Lens, 41 Wisconsin International Law Journal 521 (Summer, 2024) (152 Footnotes) (Full Document)

In November 2023, the Kenyan government evicted the Ogiek--an Indigenous community--from its ancestral land in the Mau Forest--the largest closed canopy forest ecosystem in the country. The forest rangers used axes, hammers, and fire to bring and burn down over four hundred houses belonging to the Ogiek peoples. The Ogiek are now living in “absolute fear” that the government is set to destroy their community. The government did this even though the African Court on Human and Peoples' Rights, in a 2017 landmark decision, ordered the Kenyan government not to evict the Ogiek people. The court held they had a right to live on their land and to be consulted if the government decided to undertake any projects in the forest.

The Kenyan government has justified the ongoing evictions as necessary to prevent illegal logging and unlawful encroachment on the forest. Environmental groups revealed that one of the primary reasons for the ongoing evictions is that the Kenyan government signed an agreement with a foreign investor to use the Mau Forest to buy carbon credits. For government officials, then, the Mau Forest where Indigenous people live became an investment--Middle Eastern investors will pay the Kenyan government in exchange for opportunities to offset carbon emissions from their petroleum extraction activities. The forced eviction of the Ogiek community is just one example of African communities' dispossession of their lands to make way for carbon-credit investors. These evictions are also further evidence of the commodification and commercialization of nature on the false premise that this will resolve the climate crisis. In the meantime, by accelerating the growth of carbon markets, African governments are effectively legitimizing continued emissions, especially by oil-producing states in the Middle East. Kenya's aggressive entry into the carbon market industry is reflected by the coming into force in September 2023 the Climate Change (Amendment) Act, 2023. The law, already being lauded as a “bold step towards carbon markets” by industry players, puts in place a framework for the creation, participation, and regulation of carbon markets in Kenya.

The race to monetize forests in the carbon offset market is therefore fueling land dispossession from those least responsible for the climate crisis. My major claim in this Essay is that the carbon-credit market illustrates how management of the climate crisis has been handed over to private capital with its profit-oriented goals, by offering possibilities to turn public assets like forests and renewable energy into asset classes that can be traded without benefiting the communities that have long depended on them. In this case, the asset classes are valuable ecosystems such as forests. These ecosystem system resources are being used to procure new sovereign loans or as collateral against sovereign debt restructurings for unrepayable prior sovereign debt obligations.

The backdrop against which Africa's valuable ecosystems are being used in private markets--and in the sovereign debt market in particular--is important. Private creditors, who are being urged to increase investments in climate action, already hold a high portion of Africa's unsustainable debt and are typically unwilling to participate in debt-restructuring efforts or offer debt relief. It is in this context that African countries are being harangued into issuing climate-related sovereign bonds such as green, blue, sustainable, and sustainability-linked bonds.

To elaborate on these themes, this Essay proceeds as follows. Part I focuses on how African forests and other biodiversity assets have become the springboard for a new global financial industry--the climate-finance industry. Part II links this new profit avenue to the global financial and debt architecture. In doing, I show how the commodification of nature is further disenfranchising the lives and livelihoods of those who live within or near these biodiversity assets. This part of the Essay also shows the historical continuities of the current moment with other prior moments of racialized extraction.

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This Essay has made three claims. First, that linking sovereign lending to address the disruptive consequences of climate change is a new, lucrative profit avenue for private lenders. Instead of Global North countries that bear the highest responsibility for the climate crisis, the peoples of the Global South are bearing both the worst consequences of the climate crisis as well as short end of the stick in solutions being offered, such as carbon credits. It is the Global North's abdication of the legal and moral responsibility for the climate crisis that has provided private capital the opportunity to make the climate crisis its newest business opportunity. The climate crisis has therefore created an opportunity for capitalism to yet again reinvent itself in its long-standing agenda of commodifying, commercializing, and marketing nature. Under this model of addressing the climate crisis, the assumption seems to be that ESG portfolio managers will lead the way in addressing the kinds of massive changes needed to stop global warming--yet, even the most optimistic observers acknowledge that “capitalism won't deliver the energy transition fast enough market.” Governments of the Global North have not only declined to accept their legal and moral responsibility for causing the climate crisis, but they have also declined to accept their responsibility to provide climate reparations. Further, governments of the Global North and private creditors have declined to pursue debt cancellations--even in the middle of the COVID-19 pandemic--for the most heavily indebted countries, demonstrating once again that, within a capitalist system, such obvious solutions are unavailable to the least off, especially if they are Brown and Black people from the Global South.

The second claim I made in this Essay is that linking sovereign lending to address the adverse consequences of climate change consolidates the role of the Bretton Woods institutions in the governance of the global economy as well as the power of these institutions over the poorest countries of the world. This linkage will further postpone the kind of fundamental reforms of the global debt and financial architecture needed to tame the extractive nature of the global financial system that profits from the sovereign debt crisis of indebted countries in the Global South.

Third, the linkage between sovereign lending and climate induced natural disasters such as floods, droughts, and storms entrenches the racialized and extractive nature of the global debt and financial architecture. Climate finance is not only commercializing and commodifying nature and biodiversity, but it is also sidelining the importance of tighter environmental regulations while harming and expelling communities that dwell in rich biodiversity regions, like forests, that are being commodified. Climate finance will therefore benefit the owners of capital while harming millions of communities in the Global South who depend on these valuable ecosystems for their livelihoods and survival. From this perspective then, racial capitalism is a good lens to think about this relationship between sovereign debt and climate justice because it helps to illustrate how the linkage between sovereign lending and the disruptive consequences of climate change entrenches the racialized nature of the global debt and financial architecture. It is through this lens that the systemic and historic oppression of poor and vulnerable primarily non-White populations within the global capitalist order of sovereign debt becomes visible. Racial capitalism connects the present moment to the continuing afterlife of prior moments of subjugation, like Indigenous genocide, slavery, and colonialism.

Wing-Tat Lee Chair of International Law and Professor of Law, Loyola University Chicago School of Law.