Financial entities have part of the responsibility for the destruction of our planet. How? Because they are the ones that make funds available to infrastructure development companies, resource extraction companies, and food production and distribution companies that, on many occasions, accelerate the degradation of natural habitats.
There are many of us who have our savings, pension funds or investments in banks. We deposit our money in financial institutions to keep it or make it profitable, but what happens to that money once it is in the bank usually escapes our hands.
On many occasions, banks are the ones who provide the necessary capital to other companies to build infrastructure, extract raw materials or create and distribute material goods; sectors that have an impact on the environment and that contribute to the destruction of natural environments.
To expose the role of the financial sector in the degradation of nature, the organization Portfolio.earth published two reports: one focused on the loss of biodiversity and the other on plastic pollution. In them, they analyzed the investments of 50 of the largest banks in the world or that operate in areas of high biological diversity: 20 Europeans, 18 from Asia Pacific, eight in North America and two in both South America and Africa.
Millions of dollars in sectors that contribute to the loss of biodiversity
The reports reveal that, during 2019, financial institutions invested more than 2.6 trillion dollars – which is equivalent to Canada’s GDP – in sectors that, according to scientists and governments, are direct drivers of the loss of biodiversity in the world.
In addition, they invested or gave loans of 790 million dollars a day to companies that are involved in the production or distribution of plastic, which is one of the biggest pollutants in the oceans and a danger to marine fauna.
New from Portfolio Earth – Bankrolling Plastics
Over past 4 yrs banks provided loans of more than $ 1.7 tn to plastics supply chain.
Major impact possible if even a small number of banks made lending contingent on plastic pollution-reducing policies.https://t.co/K0KxPxfgUI
– Finance for Biodiversity (@ F4BInitiative) January 7, 2021
66% of these investments are related to activities that are direct causes of biodiversity loss (mining, logging or fishing), while 34% are related to activities that, indirectly, are drivers of this loss, such as increasing the demand for products that need raw materials (cell phones or small appliances). And they do all this under the complicit gaze of the regulators, who protect them from any liability.
32% of all loans and insurance provided were invested in the infrastructure sector, 25% in mining and metal extraction and 20% in the fossil fuel sector. The two Latin American banks analyzed, both located in Brazil, invested more in the sectors of food production and agricultural services (considered the one that has the greatest impact on global biological diversity) and the management of forests and non-food forest products.
In North America, investment was more focused on the transport of goods and people, as well as tourism, where the European banks analyzed also invested equally.
Robin Smale: “We want banks to be more transparent”
In an interview with France 24, Robin Smale, a member of the “Finance 4 Biodiversity Initiative” and one of the collaborators in the creation of both reports, mentioned some of the recommendations they make to financial entities: “We want all financial institutions to be more transparent about what they are doing, evaluating the impact they are having so they understand where and how much damage is being done. “
“In addition, we believe that it is appropriate for the investor to be included as part of the supply chain so that, (…) if someone does something ‘bad’ and cuts down an area of forest or pollutes a lake, it is not only the The corporation that is responsible is involved, but also the financial institution that gave them the money. This would make financial institutions much more cautious about who they give the money to, “he adds.
The only country in the world that also holds investors or lenders liable is Brazil. However, the enforcement of that law leaves much to be desired.
Civil society pushes for change
The popular environmental movement and the pressure on entities and governments by scientists is increasing the number of countries and companies that are committing to achieve carbon neutrality in the coming years.
Several financial entities are also joining in not producing more CO2 emissions than they are capable of absorbing, an unprecedented trend in a sector that just a few years ago showed no interest in the health of the planet.
But according to Smale, “at the moment they are not being asked responsibility (to financial institutions) and they do not feel responsible either. So we are talking about a huge cultural change within the financial community. It is a change in its purpose: to just to earn money, to play a very positive role in the world. And this is going to be a big change, not only in private banks but also in development banks, which are financed by governments. “
For Smale it is profitable to invest and be responsible with the environment, but where it is not profitable, it is the job of governments to make it so. It is they who have to give the incentives or propose laws and regulations that make it profitable to invest in the most planet-friendly option.
And we have the power to decide in which banks or savings banks or pension funds we invest our savings. In this link You can see if your bank is involved in sectors that are harmful to the environment.