The world’s fifty largest banks invested a cumulative US$2.6 trillion (£2tn) in firms at the forefront of global biodiversity loss in 2019 alone, according to a new report by Portfolio Earth. On average, each financial institution invested US$52bn in fossil fuel, mining, infrastructure and agricultural firms.
The report, entitled Bankrolling Extinction, linked corporate financing to businesses whose operations directly and indirectly drive biodiversity loss. Direct biodiversity loss encompasses companies whose business-as-usual corporate practices place them in conflict with the natural world. Indirect biodiversity loss describes firms which inherit biodiversity destruction through of their supply chains.
The investment banks found to have invested the most in biodiversity-threatening activities were Bank of America, Citigroup, JP Morgan Chase, Mizuho Financial, Wells Fargo, BNP Paribas, Mitsubishi UFJ Financial, HSBC, SMBC Group, and Barclays.
As the corporate world tends towards a concentration of wealth in the world’s wealthiest companies, an ever-smaller number of transnational firms can orchestrate humanity’s interactions with, and impacts on, the biosphere. The report alleges the same consolidation phenomenon has captured investment banks, thus concentrating decision-making power over threatened landscapes into a shrinking number of boardrooms.
According to the report, the financial services industry is unable to monitor its investments’ impacts on nature. In order to transcend these shortcomings, it calls for firms to align their lending behaviour with conservation policy objectives and disclose their balance sheets’ effects on biodiversity. Additionally, it recommends introducing new liabilities for companies which destroy ecosystems, and for citizens to be given rights to biodiversity that banks must treat as a fiduciary duty.
‘Portfolio.earth’ describes itself as “a collective of individuals working with others to take on the finance industry’s role in contributing to the destruction of nature.” The report has created ripples in the biodiversity conservation and environmental policy communities.
Writing a response in The Guardian, Sir Robert Watson, former chair of IPBES and the IPCC (the UN’s scientific bodies for biodiversity and climate change, respectively) described the report as “a frightening statement of the status quo,” and noted that as-yet unimplemented policies capable of reversing these trends are readily available to regulators.
Logging, hunting, fishing and farming represent the leading causes of contemporary biodiversity loss; the growing number of plants and animals threatened with extinction, now thought to be 1 million species, is occurring with the rapidity and intensity of a mass extinction event.
The effects of the growth-driven capitalism on biodiversity have also been cast into public view following the release of Sir David Attenborough’s “witness statement” documentary, A Life On Our Planet, which sharply criticised the destruction of biodiversity for profit and called for global rewilding projects to restore lost habitats. The UN has marked 2021-30 as a Decade of Ecosystem Restoration. To many, including numerous indigenous communities, the natural world holds deep intrinsic, cultural and heritage values. Others raise ethical concerns stemming from the reality that human activities knowingly push species into extinction.
Biodiversity loss is widely considered to represent an existential risk to humanity. Deforestation and overfishing present food security concerns to the world’s most vulnerable societies; these vulnerabilities are magnified by the effects of climate change. Habitat destruction and fragmentation is also deeply implicated in instigating the COVID-19 pandemic (and its associated crippling economic downturn), as the novel coronavirus is a zoonotic disease which originated in human-wildlife conflict.
While big banks have started to turn towards sustainability, these changes are largely voluntary, often opaque and driven by leaders in finance rather than standardised regulatory developments. Consequently, banks can set their own definitions of sustainable investing, leaving ecosystems to the mercy of their employees’ environmental sensitivities. Despite the rise of ESG (Environmental, Social and Governance) investing and “natural capital” approaches to finance, many big banks and funds are accused of overselling their sustainability credentials in a practice termed “greenwashing” by industry insiders.
For their part, global governments spent $4.7 trillion subsidising fossil fuels (6% of global GDP) in 2015. World leaders also missed all of the 2020 deadlines for the Aichi Targets, which aimed to limit biodiversity loss.