By now, the leading causes of biodiversity loss, deforestation, pollution, urbanisation, and climate change are widely understood. So too, are the industries that are primarily responsible for this – agriculture, food production, mining, tourism, and fossil fuels. However, far less widely known is the banking sector’s role in secretively financing these industries. Banks are keen to publicise their involvement in environmentally sustainable initiatives and emphasise their green credentials. Despite this, banks provided more than £1.9 trillion to industries that are the primary drivers of biodiversity destruction in 2019 alone.

Portfolio Earth’s recent report “Bankrolling Extinction”, examined the investments of 50 major banks worldwide and found they have collectively invested approximately $1.25 trillion into industries that cause direct biodiversity loss, and $0.65 trillion into industries that contribute to indirect biodiversity loss. These investments ranged from $1.3 billion to over $210 billion between banks.

“Ultimately, these banks must urgently question their priorities – profit or planet?”

Biodiversity is defined as the variety of biological life on Earth and has immense value for the continuing function of Earth’s ecosystems. However, species loss is currently occurring at 100 to 10,000 times the background extinction rate, fuelling the biodiversity crisis. In fact, the UN warns that one million species are at risk of extinction due to human activities. Animal and plant species perform many vital functions, including regulating global temperature and moisture levels. Therefore, unchecked biodiversity loss could have disastrous implications for global climate change.

Banks have a symbiotic relationship with the capitalist system – neither one would survive without the other. Environmental activists such as George Monbiot are increasingly declaring the current capitalist system to be fundamentally incompatible with responsible planetary stewardship. As active generators of biodiversity loss, banks have a responsibility to diversify their investments and reduce their environmental impact. Indeed, none of the banks investigated by the report had adequate systems in place to specifically measure their investment choices’ impact on biodiversity.

In the past, environmentally sustainable investment alternatives may have been less lucrative than investing in mining or fossil fuel companies. However, as alternative renewable energy sources become increasingly popular and fossil fuels less used, sustainable investments will become a financial necessity as well as an ethical and environmental one.

“Sustainable investments will become a financial necessity as well as an ethical and environmental one”

The report urges banks to change their practices to avert a catastrophic climate crisis and instead work to aid the global achievement of the Paris Climate Agreement and the UN’s Development Goal 15, focused on preserving biodiversity. The banking industry has made some effort to change its practices, including the recently launched “Finance for Biodiversity Banking pledge”. This has seen a group of banks and financial institutions pledge to assess the environmental impact of their investments. However, the report emphasises that this scheme is only the beginning of change, and banks must make further, far more drastic reforms to avoid a future biodiversity crisis.

If banks do not voluntarily alter their behaviour, government policies will be crucial in forcing them to shoulder responsibility. However, banks control immense capital flows and are key players in facilitating economic growth within the countries they operate. Therefore, the financial sector has immense lobbying power, and as national governments benefit from a thriving banking industry, they may be unwilling to regulate the activities of banks too harshly. Consumer choice can also leverage change in the policies of traditional banks. Shunning the banking giants in favour of ethical banking alternatives, although smaller and less well-known, could provide the impetus required for the industry to begin reform.

Although major banks worldwide have irresponsible and damaging investment policies, the most damaging are overwhelmingly clustered within a few geographic regions. Of the 50 highly environmentally damaging banks included in the report, those located in North America, Europe, and the Asia-Pacific region are responsible for 38.7%, 36%, and 24.7% of the total financial investments linked to biodiversity loss respectively. In comparison, the banks located within South America and Africa are responsible for just 0.4% and 0.1%. Therefore, the banks and governments of North America, Europe, and the Asia-Pacific region have a particular moral responsibility to implement urgent change, especially considering the fact that most biodiversity loss disproportionately impacts low-income countries in the Global South.

Banks are actively and knowingly exacerbating the biodiversity crisis. Ultimately, these banks must urgently question their priorities – profit or planet?