Legitimate Investors Are Financing Environmental Crime
Financial institutions often invest in nature-dependent sectors, the profitability of which can be increased through environmental crimes. While the investments may technically be legal, if the returns are derived from criminal activity, they amount to laundered money – and regulators should treat them accordingly.
AMSTERDAM – One of the most profitable global criminal enterprises is one you might not expect. It is crimes like illegal fishing and logging, waste trafficking, and trade in wildlife. And the financial sector is reaping huge rewards from these assaults against the natural environment on which we depend.
It is difficult to overstate the damage environmental crimes cause. By destroying ecosystems and depleting natural assets, such crimes destroy livelihoods, undermine governing institutions, and impede our ability to address climate change.
As a new report by Finance for Biodiversity (F4B) points out, such crimes generate up to $280 billion each year, decreasing tax revenues by some $30 billion per year, with poorer, environmentally rich countries losing the most. Financial institutions sustain the incentive – often unwittingly – by investing in enterprises that benefit from such crimes. Through the profits made from these investments, these institutions effectively launder the proceeds of environmental crime.