It is easy to descry companies engaging in activities that drive biodiversity loss, but there is another player that is equally, if not more responsible. Both direct and indirect involvement with corporations’ activities in global food production, mining, fossil fuels and other harmful environmental practices accelerates when provided with the capital to do so.
To that end, according to a report produced by Portfolio Earth, the world’s largest banks invested more than $2.6 trillion in sectors that resulted in biodiversity loss and wildlife destruction in 2019.
The issue here, according to the report’s authors, is banks loaning and funding companies that engage in biodiversity destructive activities without any accountability. These banks lack environmental liability regulations and frameworks that measure the environmental impact of its activities. According to the report’s findings, activities like tourism, infrastructure and the relocation of people - along with mining, fossil fuels, and global food production, together comprise the primary drivers of the current biodiversity crisis.
What is this crisis? Portfolio Earth claims that three-quarters of earth’s land surface and two-thirds of ocean surface has been altered, leaving only 23 percent of land and 13 percent of ocean as wilderness. This is the furthest we have come to pushing environmental boundaries and according to Portfolio Earth, we are facing the consequences.
Portfolio Earth is a collaboration of financial and environmental experts who analyze the financial sector's role in biodiversity destruction and ways of combating this. The report analyzed the financial activities of financial institutions including Bank of America, Citigroup, JP Morgan Chase, Mizuho Financial, Wells Fargo, BNP Paribas, Mitsubishi UFJ Financial, HSBC, SMBC Group and Barclays.
The report’s authors compared investments in sectors: forestry and non-food forest commodities, fossil fuels, tourism, metals and mineral mining, relocation of goods and people, infrastructure, food production and agricultural commodities. Of all financial activity analyzed, 32 percent was related to infrastructure, 25 percent for metal and mineral mining, 20 percent for fossil fuels and 10 percent for food production – and the global food sector, says Portfolio Earth, has the largest impact on biodiversity worldwide.
While bank investments may be diverse, these financial institutions have one thing in common - no systems are in place to measure the impacts of their funding.
The biggest change stressed by authors is to “rewrite” financial rules. This means institutionalizing and standardizing frameworks that financial institutions must navigate when they provide funding and loans to their clients. Such frameworks would hold banks responsible for any environmental harm caused by its activities and allow for its impact measurement. While some banks engage in socially responsible efforts, such efforts are not as sufficient as having environmental liability regulations in place. Portfolio Earth says Brazil is the only country with such regulations on the books.
Along with new regulations, the report’s authors call for transparency and banks to stop funding fossil fuels, overfishing, deforestation and ecosystem destruction. An example of direct funding is the financing of gold mining operations; indirect funding covers the use of gold in other industries, such as the manufacturing of computers and other electronic devices, also has an impact on the environment.
Why is making such a distinction important? The report reveals that 66 percent of funding was related to biodiversity loss activities and 34 percent was investments in companies that indirectly contribute to biodiversity loss. Direct impact investments were higher among banks in Africa and the Asia Pacific Region compared to banks in North America and Europe.
It’s not just the financial sector that requires change. Portfolio Earth calls upon governments to stop protecting banks and enforce financial rules to hold banks accountable for damage caused by their funding. This report has made one thing very clear: The world’s largest banks are propelling wildlife destruction and change is required from the top down.
Image credit: Trevor Cole/Unsplash
Rasha is a freelance journalist with experience in external communications and publicity. She is a Ryerson School of Journalism graduate and has worked on various media and communication campaigns in film, home development and the nonprofit sector. Rasha is passionate about storytelling for impact, whether she focuses on social enterprise, transforming our food system or making the business world more inclusive.