“It is not the man who has too little, but the man who craves more, that is poor.”
“Society cares more for the products it manufactures than for the immemorial ability to affirm the charm of existence.”
—Jane Addams, activist, Nobel laureate 1931
“What is the use of a house if you haven’t got a tolerable planet to put it on?”
—Henry David Thoreau
A generation ago we learned that certain rivers like the Karnali in Nepal were going to be dammed because of the World Bank; that did not make me happy. Superb, secretive tigers roamed the edge of the highest peaks on Earth, the Himalayas. Dams like the Gibe III in Ethiopia and all over the Amazon and Canada and the U.S. were also being bankrolled. The BNDES, Brazil’s National Bank for Economic and Social Development, has also invested money in dams in Peru, Ecuador, Bolivia and Guyana. More than 150 are planned over the next 20 years. Will there even be an Amazon in that time? The hypocrisy of those who are supposedly standing for social and economic development while destroying the greatest forest on Earth is in plain sight. Analysis by Rainforest Action Network in March discovered 35 leading banks were guilty of targeting $2.66 trillion into fossil fuels. We’ve reached the point where this kind of disregard for the planet can no longer continue.
Included in the list of the banks with the greatest disregard for nature are BNP Paribas, Barclays, Bank of America, Wells Fargo and Mizuho Financial, a regular who’s who of environmental desecration.
HSBC, Blackrock and AXA have poured hundreds of millions of dollars into soybean plantations that are ripping apart the most biodiverse landscape on earth in the Amazon. Some 190 signatories have signed up for the Principles for Responsible Banking, including 132 banks who combined have a total portfolio of more than $49 trillion in 49 countries. They comprise a third of the world’s total banking system. This unique initiative launched on September 22, 2019 is meant to provide a framework for society and its vision for Sustainable Development Goals and the Paris Climate Agreement. In truth, banks are backing the largest single deforestation scheme the world has ever known. What else would account for the dismantling of wilderness areas the size of Mexico in the last decade?
What would we do, what could we do, what should humanity do after learning that the largest banks on Earth are bankrolling the ruination of the planet?
Some banks such as Mitsubishi Financial Group (MUFG), Japan’s largest bank, also known as Union Bank in the U.S., is financing more coal plants around the world, particularly in Indonesia, which is the world’s sixth highest greenhouse gas emitter. Last year, MUFG provided $400 million in loans to underwrite major agribusiness operations in Indonesia, including palm oil plantations, all of which abrogates any and all indigenous peoples rights in the process. The fires in Indonesia last year emitted more than 700 million tons of greenhouse gas emissions. Also, in Japan, Sumitomo Forestry has been accused of supplying plywood from illegally logged lumber for the Tokyo Olympics. But Indonesian banks are also to blame, as well as Chinese and Malaysian banks, all supporting non-sustainable palm oil, lumber and rubber plantations. While some banks have started to adopt ESG (environmental, social and governance) they are too slow and too lax considering what is at stake with the Paris Climate Agreement. All in defiance of the UN Principles for Responsible Banking, which might as well have been written on disposable paper. Only three of the largest banks on the planet have signed on. How long can this kind of reckless disregard of the environment continue?
Since the start of the Sustainable Banking Network in 2012, hosted by the International Financial Corporation, many emerging markets are starting to integrate sustainability into their financial frameworks. And while there are vital signatory countries such as Malaysia, Peru and Colombia onboard, Brazil’s ongoing fiasco with its fires leaves much room for compliance. There are 37 member countries who have banking regulators, which integrate sustainability. These include Pakistan, Nepal, Bangladesh, Vietnam, Georgia, Sri Lanka and Paraguay. The question is, given corruption today, who supervises the regulators?
In 2016, a year after the Paris Climate Agreement, the G20 asked the Financial Stability Board to initiate the Taskforce for Climate related Financial Disclosure. But entities like the Banco do Brazil, which give half the loans in the country, have been implicated in doing business with companies that used forced labor. They were also found to be funding illegal deforestation countrywide.
In a time when the world’s climate and pandemic emergency is accelerating worldwide it is becoming clear that financial institutions around the world have an enormous responsibility to adhere to a far stricter moral code. How do governments whose leaders themselves do not believe in climate change enforce greater transparency?
In the West, Deutsche Bank has earmarked $216 billion for sustainable development and assets that include renewable energy and energy efficiency and even green bonds, all which other banks need to consider and act on. Groups such as Pepsi have also started to follow suit issuing $1 billion worth of green bonds. Said CEO of Deutsche Bank Christian Sewing, “We are driven by a very strong conviction to help shape the global change to a sustainable, climate neutral and social economy.”
While it may look great to have environmentally conscious bamboo flooring at particular branch locations of Chase and JP Morgan, the bank continues to be the fossil fuel industry’s biggest lender, according to environmental activist Justin Boyan, who calls Chase the “worst bank in the world.” In the years following the Paris Climate Agreement they have spent $196 billion bankrolling the fossil fuel industry, including ultra deep sea drilling, Arctic drilling and similar ventures around the world. Which is larger than BP’s market value.
While stopthemoneypipeline.com mobilized hundreds of thousands to boycott the banks earlier this year, highlighting videos of Jane Fonda ready to cut up a Chase credit card with heavy duty scissors, it will take more than protests to change direction. Institutional investors, asset managers and even insurance companies need to stop investing in every industry that adds to the carbon economy. Chase, the biggest funder of liquified natural gas, the biggest funder of coal mining, tars sands oil, the biggest Arctic oil gas funder on earth, the biggest funder of fracked oil and gas, the biggest funder of ultra deepwater oil and gas drilling. All resources which must to be left in the ground if the atmosphere is not to implode. The changing reality of climate change, firmly erupted in the form of fires along the entire length of the Pacific Coast and now the biggest fires in Colorado’s history in the last few months, are the greatest reminders of our time — that we have entered a new geologic era.
As the Paulson Institute estimated, $450 billion are appropriated to the agricultural sector every year in practices that harm biodiversity. Paying farms to protect life and biodiversity, including cutting down on pesticides that harm insects, will go a very long way to ensuring that humans eat sustainably. JP Morgan continues to fund oil and coal terminals, tar sands pipelines and exploratory drilling in the Arctic, which has probably now reached the point of no return. But conversely, in the last few years, the bank has pledged $200 billion for wind farms and other renewable energies. Some banks like Boston Common have decided to divest completely from JP Morgan shares, in order to work with banks it felt were being more progressive in their overall management and outlook.
But as of February 2020, JP Morgan decided that it would no longer fund gas extraction in the Arctic or the Arctic National Wildlife Refuge, a move hailed aa a victory by Indigenous and environmental groups. Executives decided to stop investments in companies that made most of their money from coal by 2024 as well as ending oil extraction in the Arctic.
Goldman Sachs made a similar proclamation about not extracting oil from the Arctic, although now that the ice is almost in irreversible meltdown. Decisions that should have come a decade earlier. JP Morgan’s decision came right after Rupert Read of Extinction Rebellion leaked a note from the bank’s economists that suggested that continued investments in oil would lead to climate upheaval. In the report, economists Jessica Murray and David Mackie said that if emissions were not stopped, “global temperature will rise, rainfall patterns will change creating both drought and floods, wildfires will become more frequent and more intense, sea levels will rise, heat related morbidity and mortality will increase, oceans will become more acidic, and storms and cyclones will become more frequent and more intense. And as these changes occur, life will become more difficult for humans, and other species on this planet.”
There are glimmers of hope with groups like the Dutch Central Bank, whose “Indebted to Nature” report identified biodiversity-related risks exceeding 800 billion euros at Dutch Financial
Institutions. Black Rock also recently insisted that Procter and Gamble, the world’s largest consumer group, identify the impacts its company is having on forests.
It is high time that companies and banks become proactive with their loans and investments and act as if our house were on fire, which it is. Funds focusing on socially conscious and environmentally restorative funds total more than $1 trillion and will increase and may outpace business as usual in Europe within a few years. The fact that those in charge of the White House wanted to fast track a rule limiting green investing speaks volumes about the mercenary tactics and priorities of those in charge, in essence liquidating the future from the next generation. It is a rule already opposed by 130 fund management and financial advisory groups. This decision would in essence countermand so called ESG investing, which gives investors the incentive to choose where their money goes, into funds that are environmentally conscious.
Private capital is a large part of the equation for how the Convention on Biological Diversity meets its targets for 2030. The price of not committing funds, will and imagination to saving the planet is the planet itself. We have to decide to put our money where our children, the forests and the wild things are. Or else as Lord Rees, the Astronomer Royal, says, this will be our final century. If we act with conviction, vision and urgency, the rewards for investing in sustainability may buy us time to transform society. The time to invest is now. The rewards for the next generation will be priceless.
“The markets are moved by animal spirits, and not by reason. The importance of money flows from it being a link between the present and the future.”
—John Maynard Keynes
Learn more about Cyril Christo and Marie Wilkinson's work at their website.