Science

Big banks financing planet destruction according to new study

Deforestation
Source: unknown (Via: Pxfuel)
Big banks like HSBC and Barclays are directly financing the decimation of the environment according to new study by Greenpeace.

By Rowenna Hoskin | Science Editor

Some of the world’s largest banks have been criticised by a new study called the Bankrolling Extinction for providing more than $2.6 trillion (£1.9tn) of financing linked to the destruction of the planet’s ecosystem in the last year alone. 

50 of the world’s top investment banks, including HSBC, Barclays, Bank of America, Citigroup and JP Morgan Chase, have provided their services to sectors that are directly contributing to mass extinctions and biodiversity loss. 

The sectors include food, forestry, mining, fossil fuels, infrastructure, tourism and transport and logistics sectors – all of which are identified as drivers of biodiversity loss by Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), the UN’s  scientific body on nature. 

Financial institutions are incapable of monitoring their climate impacts due to the limited number of policies that are in place to protect ecosystems when providing loans or other services. 

A new initiative, portfolio.earth which is led by finance, economics and environmental experts to better understand the role of the finance industry in the destruction of the natural world, is behind the study. 

Experts have successfully linked $2.6tn of loans and underwriting services as being linked to mass extinctions by matching services provided by investment banks to sectors identified by the UN as the primary drivers of biodiversity loss in 2019. 

Sir Robert Watson, former chair of IPBES, said that the task of saving the planet must fall on the shoulders of the world’s finance industry. However, the vast majority of banks remain unaware of their impacts on the environment. “Bank by bank, the report authors found a cavalier ignorance of – or indifference to – the implications, with the vast majority unaware of their biodiversity impacts, or associated balance sheet risks,” he said. “In short, this report is a frightening statement of the status quo.” 

Changing this mentality is a first priority to drive change, he added. 

Although the $2.6tn is not necessarily entirely spent on environment-destroying projects, the report said that banks do not have the necessary systems in place to monitor the projects they fund for environmental harm. 

When contacted by the Guardian, Mizuho Financial and SMBC did not respond for comment. Bank of America, Citigroup, JP Morgan Chase, HSBC and Barclays declined to comment. BNP Paribas also declined to comment saying that it was not able to check the accuracy of the report’s findings. 

The portfolio.earth initiative has called on banks to improve and reform their policies. They must change the disclosure system and the way in which they assess possible environmental damage the financial services are supporting. 

Governments have been encouraged to hold banks liable for any damage their activities might cause, following the example of a Brazilian resolution that made credit for rural projects to be dependent on whether or not lenders could prove that they have complied with environmental laws. 

An increasing number of investment banks have implemented restrictions on projects  to do with coal, Arctic oil and gas and tar sands extraction due to pressure from environmental campaigners and investors since the 2016 Paris climate agreement. However, an analysis by Rainforest Action Network in March found that 35 of the world’s leading banks had contributed more than £2.2tn into fossil fuels since the international agreement was signed to reduce gas emissions – they have not asserted themselves within the goals of the agreement. 

“A global sustainable economy sits at the centre of humanity’s much needed transformation to meet the climate and ecological crises. And at the centre of that sit the banks and the finance institutions whose investments power development around the globe,” says Professor Kai Chan of the Institute of Resources, Environment and Sustainability at the University of British Columbia and leading author of the IPBES report. 

“Imagine a world in which projects can only raise capital when they have demonstrated that they will contribute meaningfully and positively to restoring the planet’s bounty and a safe climate for all? That’s the future this report envisions and builds toward.” 

It is evident that something must change, the financial aid that banks provide environmentally damaging projects is astronomical considering the fact that, globally, we are trying to reduce gas emissions. In order to do this we must keep our trees and coral reefs as they are natural carbon extractors – deforestation and oil extraction are not the answer. Banks must change the way that they check the creditors for adherence to environmental guidelines. They must finance in accordance to the dogma of a green planet; after all, it is the only one we have.  

Science and Technology Rowenna Hoskin

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