FINANCE TRANSFORMATION

Finance sector is “crowd-funding catastrophe”, say researchers

A new report highlights the role of investors who play a significant role in stabilising crucial tipping elements such as the Amazon rainforest. If pushed too far, they can destabilise earth’s climate and exacerbate global warming. Photo: Amazonia Real/Wikimedia

Investors are driving Earth perilously close to tipping points in the Amazon rainforest, on the great ice sheets, coral reefs and the Atlantic circulation

Story highlights

  • The report, Economy and Finance for a Just Future on a Thriving Planet, was launched in connection with the summit
  • It highlights the role of investors who play a significant role in stabilising crucial tipping elements such as the Amazon rainforest
  • It also calls on governments and financial institutions to more forcefully phaseout subsidies

“The world’s largest investors are crowd-funding a dangerous climate future,” says Victor Galaz, the lead author of a major report published for the Stockholm+50 summit (2-3 June 2022).

The report, Economy and Finance for a Just Future on a Thriving Planet, was commissioned by the Swedish Ministry of Environment as an independent contribution to the Stockholm+50.

“Investors are driving Earth perilously close to tipping points in the Amazon rainforest, on the great ice sheets, coral reefs and the Atlantic circulation,” warns Galaz, deputy director of the Stockholm Resilience Centre.

A simplified biosphere

The risks are heightened because Earth’s resilience has reduced as a result of agriculture expansion and other human activities with some of the biggest impacts seen in the last 50 years. This has led to a profound simplification of the biosphere and increased fragility for both people and planet, say the report’s authors.

Synthesizing recent research, the report summarizes the scale of human impact. Human activities have directly altered at least 70% of the planet’s land surface, approximately 85% of its wetland area and over 66% of the ocean.

Over 96% of Earth’s mammal biomass is now accounted for by people (36%) and our livestock (60%) – with less than 4% made up by wild animals.

The destructive impact on the Amazon rainforest from Beef and Soy production that is high on the global agenda, is in fact underpinned by financial flows from all over the world, some of it channeled through tax havens.

Financial giants

“It is possible to redirect capital and change economic indicators to enhance the resilience of the planet, and reduce risk of crossing dangerous tipping points,” says centre researcher David Collste, researcher and co-lead author of the report.

The report highlights the role of sleeping financial giants. These are investors who play a significant role in stabilising crucial tipping elements such as the Amazon rainforest. If pushed too far, they can destabilise earth’s climate and exacerbate global warming.

On current trends by 2028, the biggest institutional investors Blackrock, State Street and Vanguard could have a combined voting stake in the S&P 500 firms of over 34% by 2028, and over 40% by 2038.

The report also calls on governments and financial institutions to more forcefully phaseout subsidies and investments to activities that are pushing ecosystems towards tipping points.

Economy and Finance for a Just Future on a Thriving Planet

Published: 2022-06-02