ESG Climate Goals Have Destroyed Sri Lanka and Threaten the Netherlands

Sri Lankan Prime Minister Ranil Wickremesinghe declared a state of emergency in his role as acting president after President Gotabaya Rajapaksa fled to the Maldives amid protests over the economic crisis. Sri Lanka has fallen. Last weekend, thousands of protesters stormed the presidential palace, angry and frustrated with the state of the country, bathing in its pool, cooking and grilling in the yard, and even setting fire to part of the presidential residence.

The immediate cause of the chaos in the country is cited as state bankruptcy suffering from the worst financial crisis in decades. Millions of people are struggling to buy food, medicine, and fuel. From June 2021 to June 2022, food prices rose by 80 percent, and last month annual inflation reached nearly 55 percent. Since the beginning of the pandemic, half a million people have fallen into poverty.

If you have never paid attention to the island nation near the southeastern coast of India, you might think that such a state is normal for Sri Lanka, but the truth is that the country had begun to get back on its feet after decades of civil war and authoritarianism only to experience this now. Bankruptcy, the president’s flight, and general chaos, largely attributed to the clever West.

Fairy Tale ESG

The fundamental reason for Sri Lanka’s downfall is that its leaders – starting with former President Maithripala Sirisena and continuing with his successor, the recently ousted Gotabaya Rajapaksa – have fallen under the charm of Western green elites selling organic agriculture and 'ESG', which refers to investments made according to supposedly higher criteria of environmental, social, and governance protection. Sri Lanka, by the way, has an almost perfect ESG score of 98—higher than Sweden (96) and the United States (51).

What does it mean to have such a high ESG score? In short, it means that two million farmers in Sri Lanka were forced to stop using fertilizers and pesticides, destroying the critical agricultural sector. Incidentally, on the ESG S&P index, Exxon Mobil is among the top ten, while Tesla is not on that list.

To be fair, other factors such as lockdowns and the Easter terrorist attack in 2019, which harmed tourism, an industry that usually generates between 3 and 5 billion dollars annually, were also behind the disaster in Sri Lanka. Sri Lanka has also accumulated foreign debt, and China has lent it billions of dollars as part of its Belt and Road Initiative. Due to rising oil prices, transportation costs skyrocketed by 128 percent in less than two months by May.

Among all these problems, the biggest was the ban on chemical fertilizers, which was adopted last year and was key in the country’s efforts to align with ESG.

The Numbers Are Shocking

One-third of agricultural land in Sri Lanka was idle in 2021 due to the ban on chemical fertilizers. More than 90 percent of farmers in Sri Lanka used chemical fertilizers before they were banned. After the ban, an incredible 85 percent experienced crop losses. Rice production fell by 20 percent, and prices surged by 50 percent in just six months. Sri Lanka had to import rice worth 450 million dollars despite being  self-sufficient just a few months earlier. The price of carrots and tomatoes quintupled. All of this had a dramatic impact on more than 15 million people in the country who directly or indirectly depend on agriculture.

Things were even worse for small farmers. In the Rajanganaya region, where most farmers manage plots of two and a half hectares, farmers reported 50 to 60 percent lower yields, which of course affected their incomes, leaving many on the brink of poverty.

Along with rice, tea was also a key factor in the downfall. Before 2021, tea production generated 1.3 billion dollars in annual exports, and tea exports accounted for 71 percent of national food imports before 2021. The fertilizer ban, which began in April 2021, changed everything. Four months after the ban came into effect, the president, realizing that things were not going according to plan, lifted the ban on importing chemical fertilizers—only to reinstate it two days later.

The results were devastating, and tea exports fell to their lowest level in over two decades.

In May 2022, Sri Lanka did not pay 77 million dollars in foreign debt repayments. This may seem like a small amount in the grand scheme of things, but Sri Lanka found it difficult to borrow money due to its defaults. Thus, it devalued its currency, inflation rose by 30 percent, and the government ran out of cash needed to import fuel, food, and medicine.

Herald of Discontent

If current trends in global energy supply continue, Sri Lanka could end up as a harbinger of greater things to come in other parts of the world in the months and years ahead.

Ironically, an analysis of the ESG rankings shows that many nations with the highest ESG scores are precisely those with the greatest risk of hunger. Haiti, for example, has an ESG score of 99, while well-nourished United States is far down the list with just over 58.

Frans Timmermans, Vice President of the European Commission, seems to understand the reality facing his own continent if it runs out of adequate energy supply this coming winter. Last week, Timmermans urged the EU and national leaders to make efforts to improve fossil fuel energy supply in the short term to try to prevent disaster. Timmermans also noted that the failure of European leadership to adequately address the looming winter energy crisis could create such a high level of social and economic disruption that it could cripple the continent’s long-term efforts to meet climate goals. And who needs these climate goals?

Here, they are trying in the Netherlands to do what they did in Sri Lanka, and farmers have revolted and have been protesting for days, if not weeks, in hopes of protecting their production from imposed ESG goals. It should be added that the Netherlands is one of the larger food producers in Europe, so if they fall under pressure, food prices will go even higher.

And food shortages are already evident in many parts of the world, as recently confirmed by the head of the United Nations World Food Program, David Beasley, who said that hundreds of millions in developing countries are at risk of starvation. Beasley stated that a new analysis by his agency shows that ‘a record 345 million acutely hungry people are marching to the brink of starvation.’ This represents a 25 percent increase from 276 million at the beginning of 2022, which is double the 135 million before the pandemic began in early 2020.

A good part of the food shortages is a result of governments prioritizing achieving climate and ESG goals over food production, as vividly illustrated by the situation in Sri Lanka.

The Dutch government, whose ESG rating is 90.7, showed a similar tendency towards ESG over food production last month when it announced plans for a dramatic reduction in nitrogen and ammonia emissions that could force the closure of many agricultural operations.

Wytse Sonnema from the Dutch Agricultural and Horticultural Organization told Sky News Australia that the proposals have sparked a widespread sense of ‘frustration, anger, even despair’ among farmers in the country.

– Imagine being a fifth-generation farmer living on your land, making a living, being part of the local community, and suddenly being told that there is no future for you. There is no future for agriculture, nor for the economic, social, and cultural fabric of the village – said Sonnema.

It all comes down to governments around the world making decisions designed to help meet their often arbitrary climate and ESG goals at the expense of feeding the population. How long this will continue will depend on the populace, farmers, but also the rulers, some of whom may end up just like the President of Sri Lanka.