By Bryan Bixcul (Maya Tz’utujil, CS Staff)
In my native language, Tz’utujil, as in many other Indigenous languages, there is no direct translation for “ecosystem” or “biodiversity.” Instead, we use the compound noun, “Ruuwaach Uleew,” to refer to Mother Earth, to everything that exists, living and nonliving. Indigenous Peoples worldwide have been engaging in ecosystem management and biodiversity conservation since time immemorial. Although we may call it by different names and understand it through different lenses, we do this through our Traditional Ecological Knowledge. Traditional Ecological Knowledge is experiential knowledge developed over millennia based on the intimate relationship with the web of life. It can be found in hunting and agricultural practices, land management, wildlife management, sustainable water use, agriculture-related engineering, architecture, medicinal uses of native plants, traditional fire management, management of invasive species, and so much more.
Robin Wall Kimmerer (Citizen Potawatomi Nation), author of “Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge, and the Teachings of Plants,” beautifully articulates the source of Traditional Ecological Knowledge. She writes, "Indigenous knowledge systems are grounded in relationships, in seeing humans as family, as part of the larger circle of life, and in understanding the responsibilities that come with belonging to this family."
To say that Indigenous Peoples have contributed significantly, through their Traditional Ecological Knowledge, to the present body of knowledge possessed by scientists in the fields of ethnobotany, ethnopharmacology, medicine, agriculture and agroecology, forestry, food technology, wildlife conservation, architecture, and more is an understatement. Many may think Traditional Knowledge is a thing of the past, something outdated, but nothing is further from the truth. Traditional Knowledge is very much present in everyday life; it is empirical, area-based, and constantly verified. Moreover, Indigenous Peoples worldwide continue to create knowledge, produce innovation, and develop practices that interact brilliantly with the environment in a way that creates sustainable solutions to the multiple challenges we face.
Through accumulated generations of observations and knowledge about their local ecosystems and wildlife, Indigenous Peoples have developed an understanding of migratory patterns, animal behavior, natural indicators, and phenology. Such knowledge is invaluable in biodiversity management and can contribute to developing effective strategies for conservation and climate change adaptation and mitigation. It is no coincidence that 80 percent of the world’s remaining biodiversity is found in Indigenous territories. Some in the conservation sphere want us to believe that conservation is separate from people, but highly biodiverse areas are intensively managed by Indigenous Peoples. The connection between biodiversity and Indigenous Peoples is evident, and so is the need to protect Indigenous rights as one of the most effective strategies for biodiversity conservation.
The first Earth Day, a watershed moment for western environmentalism in the U.S., was held in 1970, but global biodiversity has declined significantly since then. According to the World Wildlife Fund Living Planet Report 2022, the Living Planet Index indicates an average decline of 69 percent in monitored vertebrate species populations since 1970. This dramatic decline in biodiversity can be attributed to several factors. In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) identified five direct drivers of biodiversity loss, namely: changes in land and sea use, direct exploitation of organisms, climate change, pollution, and invasive species. Additionally, it identified two indirect drivers: people’s disconnect with nature and the lack of value and importance placed on nature.
Some of the key factors directly responsible for biodiversity loss include agribusiness, forestry and logging companies, the fishing industry, mining and extractive industries, urban development, and climate change contributors. A comprehensive strategy to combat biodiversity loss should target these actors as well as their enablers—banks and financial institutions. The financing of these sectors is causing great harm to biodiversity. Through their portfolios of loans and investments, banks are making decisions that are directly impacting the estimated 8.7 million species living on the planet. They are also making decisions that impact the whole of society, including Indigenous Peoples, in ways that threaten rights and livelihoods. For example, ASN Bank, purportedly one of the most ethical banks in the world, published a report that estimated its biodiversity footprint in 2020 to be 516 square kilometers. This is approximately the size of the Spanish island of Ibiza. For comparison, ASN Bank is not even on the top 50 list of biggest banks in the world.
According to a 2023 report by the United Nations Environment Programme, “State of Finance for Nature: The Big Nature Turnaround – Repurposing $7 trillion to combat nature loss,” in 2022, private finance flows to activities with direct negative impacts on nature were estimated to be at least $5 trillion. These nature-negative finance flows spanned most economic sectors, with the construction and engineering, electric utilities and independent power producers, real estate operations, oil and gas, and food and tobacco industries receiving the most financing. Notably, these sectors accounted for 43 percent of nature-negative financial flows but represented only 16 percent of total private investment flows, indicating that targeting these industries could significantly mitigate negative impacts on biodiversity and climate. These estimates likely underestimate the full scope of nature-negative finance flows as they focus only on direct impacts, excluding indirect impacts from supply chain and finance sector activities.
The same report noted that industrial activities, which have high nature-negative impacts, received $1.4 trillion, thereby contributing to air and soil pollution and the clearing of natural habitats. The metals and mining industry received investments of $224 billion a year with substantial nature-negative impacts, including degradation and fragmentation of habitats. Additionally, it found that $517 billion continues to flow to oil, gas, and coal production, which have negative impacts on climate, nature, and people, including on human health.
While the overall impact of financial institutions on biodiversity is vast and complex, it becomes more tangible when examining specific cases of banks funding projects that directly harm ecosystems. By looking at concrete examples, we can better understand the critical role that financial decisions play in either supporting or undermining biodiversity conservation. Here are a few illustrative cases where bank financing has had a detrimental impact on biodiversity:
Deforestation in Brazil
Major banks like Banco do Brasil and Bradesco finance the beef and soy industries in Brazil, sectors that are major drivers of tropical deforestation. These activities not only lead to biodiversity loss but also infringe on the rights of Indigenous communities who depend on these forests for their livelihoods. According to the Banking on Biodiversity Collapse 2023 Report, banks provided at least $307 billion in credit to sectors whose activities cause deforestation, driving the majority of tropical deforestation.
Palm Oil and Pulp and Paper Industries
Banks such as JPMorgan Chase, Bank of America, and Citigroup are significant financiers of the palm oil and pulp and paper sectors, which are notorious for causing deforestation in tropical regions. These industries are linked to extensive environmental and social harms, including violations of Indigenous land rights.
Mining for Transition Minerals in South Africa
A report by the Business & Human Rights Resource Centre revealed that mining for transition minerals in South Africa is happening without adequately addressing human rights and environmental concerns. The increased demand for minerals like lithium and cobalt, essential for the energy transition, has led to significant threats to local communities, including water scarcity and exploitation. The research focused on four mines; Gamsberg, a zinc mine jointly owned by India-based Vedanta Resources, Exxaro Resources of South Africa, and ESOP (Employee Stock Ownership Plan); Assmang, a manganese mine owned by Assore Limited and African Rainbow Minerals; Mokala Manganese, owned by Ntsimbintle Holdings, a broad-based Black Economic Empowerment company led by businessman Saki Macozoma and Glencore PLC (through its wholly owned subsidiaries); and Kalahari Basin Mines, which is owned by South32 Ltd. and Anglo American Plc. The biggest creditors financing these mining companies are Bank of America, Barclays, BNP Paribas, Citigroup, Crédit Suisse, Deutsche Bank, JP Morgan Chase, Mizuho, Standard Chartered, and UBS. It should be noted that although these institutions have financial ties with mining companies, they may not be directly funding specific mining projects within the country.
Equator Principles
The Equator Principles are a set of voluntary guidelines adopted by financial institutions to manage environmental and social risks in project financing. Over 130 financial institutions in 38 countries have adopted the Equator Principles. The adopters represent a significant portion of the global project finance market, but this does not encompass all banks worldwide. Some of the largest and most influential banks that have adopted the Equator Principles include Citigroup, HSBC, JPMorgan Chase, Deutsche Bank, and Standard Chartered.
Currently, the Equator Principles qualify the Free, Prior and Informed Consent (FPIC) requirement with the following subtext: “There is no universally accepted definition of FPIC. Based on good faith negotiation between the client and affected Indigenous communities, FPIC builds on and expands the process of Informed Consultation and Participation, ensures the meaningful participation of Indigenous Peoples in decision-making, and focuses on achieving agreement. FPIC does not require unanimity, does not confer veto rights to individuals or sub-groups, and does not require the client to agree to aspects not under their control.” In its current form, the Equator Principles allow for banks to interpret it to mean that projects can still go ahead even if the affected Indigenous community has not consented, rendering FPIC essentially meaningless. However, FPIC, as it is established in the UN Declaration on the Rights of Indigenous Peoples, enshrines Indigenous Peoples’ right to give or withhold consent to projects impacting their lands and territories. Given this, the Equator Principles do not do enough to protect Indigenous Peoples' rights and biodiversity.
The Equator Principles require banks to conduct due diligence on specific projects to assess risks and ensure compliance with environmental and social standards. However, their coverage is limited to project finance, which involves financing specific infrastructure or industrial projects such as power plants, mines, or factories. This narrow focus means that the Equator Principles do not extend to corporate finance, where banks provide general financial support to companies for their overall operations. Consequently, corporate finance can support multiple high-risk projects, such as mining, without scrutinizing how the company operates across all its activities. This gap allows significant environmental and human rights abuses to potentially go unaddressed if the financial backing comes through corporate loans rather than project-specific funding.
Many banks boast of having adopted the Equator Principles, but the truth is that they don’t do enough to uphold Indigenous rights and protect biodiversity. If they did, we would have already seen significant improvement in how financial institutions impact biodiversity.
Taskforce for Nature-Related Financial Disclosures (TNFD)
The Taskforce for Nature-Related Financial Disclosures is a voluntary reporting scheme on nature related risks, promoted by the private sector. Similarly to the Equator Principles, the TNFD doesn’t do enough to protect Indigenous rights and biodiversity. It allows for self-reporting, so companies and financial institutions get to choose what they want to report, and it doesn’t allow for a grievance mechanism, so communities don’t have a way of starting a complaint when violations have occurred.
We need transparency in the disclosures of how companies and financial institutions report their impacts on biodiversity and how they integrate human rights due diligence in their operations. The TNFD is nothing more than the private sector's efforts to institutionalize their avoidance of human rights and biodiversity responsibilities.
What needs to change?
- Most banks in the world do not have a policy to scope for and report on the Indigenous Rights Risk of the companies that they finance—either at the corporate or project level––or in their own investments.
- An Indigenous Rights Risk policy would allow banks to know or transmit to their shareholders, management, and customers the potential material, reputational, and legal risk that is assumed when projects harm Indigenous communities or violate the rights of Indigenous Peoples. Indigenous Rights Risk due diligence must:
- 1. Scope for and integrate Indigenous Peoples’ right to self-determination and their right to Free, Prior and Informed Consent; and
- 2. Identify all impacted or potentially impacted Indigenous Peoples, invite their participation in project development, address their concerns, and uphold their priorities.
- Without policy that upholds Indigenous Peoples' rights to the minimum standards articulated in the UN Declaration on the Rights of Indigenous Peoples, and without operationalizing the right to Free, Prior and Informed Consent as defined by impacted Indigenous Peoples, risk and harm are twofold:
- For Indigenous Peoples, this translates to conflict, human rights violations, desecration of sacred places, pollution of life-sustaining resources, violence against Indigenous women and children from an influx of temporary workers; and in extreme, but not uncommon, occurrences, the murder of Indigenous human rights defenders, among other harms.
- For the finance industry, this translates to unmitigated material risk. When banks finance companies that fail to secure FPIC and fail due diligence on Indigenous rights, the company and its investors are exposed to financial, legal, and regulatory risk due to operational delays, lawsuits, and regulatory restrictions, among others. A company may end up losing hundreds of millions of dollars on operational delays, regulatory restrictions, remediation costs, and lawsuits—all preventable losses if a company carries out the required Indigenous Rights Risk due diligence. For example, on December 15, 2023, the Inter-American Court of Human Rights ordered the State of Guatemala to suspend and not extend the license to the Fenix Nickel Mine Project, a mine owned by Swiss-based Solway Investment Group operating in a biodiversity hotspot in Maya Q’eqchi territories, because the mine failed to obtain Indigenous communities' consent before operations began. According to their website, since 2011, Solway has invested around $650 million on the project. This showcases the huge risks that projects and their financial backers face when they fail to respect the rights of Indigenous Peoples.
To eliminate risks and respect Indigenous partners, banks must ensure their policies explicitly reference Indigenous Peoples and FPIC and require all financed companies to maintain similar standards. This should complement existing human rights and sustainability policies, adhering to FPIC processes defined by Indigenous communities. Mechanisms should be established to monitor FPIC commitments, assess ongoing risks, and report to shareholders. Additionally, banks must implement redress mechanisms for rights violations and assess Indigenous Rights Risk in both general corporate and project finance. Emphasizing self-determination, banks should recognize that some Indigenous Peoples may say “No,” “Yes,” or “Yes with conditions” to project development on their lands. The objective of the FPIC process is not always to negotiate a “Yes” outcome, and FPIC should not just be used as a mechanism to legitimize commercial activities. Banks and companies should be prepared for all these scenarios. Furthermore, consent is not fixed or a one-off process. It is iterative and can be withdrawn or reconsidered at any time if the proposed activities change or if new information relevant to the proposed activity emerges.
One initiative that brings a real solution to the table is the Banks and Biodiversity Initiative, which aims to hold banks accountable for their impacts on biodiversity and critical ecosystems and advocates that banks adopt their proposed ‘No-Go’ areas to categorically prohibit financing of harmful activities in or near biodiversity hotspots. It is led by a steering committee of civil society organizations, including BankTrack, Bank Information Center, Friends of the Earth US, and Rivers without Boundaries. There are eight proposed No-Go areas. Area number 7 is the Lands and Territories of Indigenous Peoples where FPIC has not been obtained from communities.
It is estimated that around 55 percent of the global gross domestic product ($58 trillion USD) is moderately or highly dependent on nature. However, the reality is that all of the world’s economic activity is in some way dependent on nature. Yet, banks and companies continue to finance activities that harm biodiversity and ignore urgent calls to action. Banks should not have the right to make decisions that impact all life on Earth. We call on banks to modify their behavior and make the necessary changes to protect biodiversity and the rights of Indigenous Peoples.
Top photo: Keepers of the Earth Fund Grant Partner, Asociacion Jardín Botánico Las Delicias in Colombia
