Belgium (Brussels Morning Newspaper), The numbers are in. 2023 was officially the hottest year ever recorded. That won’t come as a surprise to Europeans who experienced last summer’s fires, smoke, or extreme heat.
Our global environmental emergency goes beyond soaring temperatures. Scientist experts recently found that six of Earth’s nine “planetary boundaries” — limits beyond which natural systems may not survive — have been crossed. According to the scientists, this suggests that “Earth is now well outside of the safe operating space for humanity.”
This should be all the impetus the European Union needs to fast-track decisive action to protect nature. To be sure, the EU and its member states have committed to address climate change and the biodiversity crisis through international agreements like the Paris Climate Agreement and the Kunming-Montreal Global Biodiversity Framework.
But to date, policy actions to implement these agreements are often inadequate and fail to address one of the big elephants in the room: a finance system, much of which is centered in Europe, which continues to drive climate change and the destruction of biodiversity across the globe. New rules must stop financial flows to both activities.
For decades, European banks and investors have bankrolled ecological devastation worldwide, amassing fortunes while accelerating extinction and habitat destruction. As forests from Canada to the Amazon burn and rivers run red with toxic discharge, bankers pay lip service to ideas that would safeguard biodiversity. But so far, their actions have been wholly inadequate.
Each year, public and private entities invest $7 trillion — equivalent to roughly 7 percent of global GDP — in activities that have a negative impact on nature, according to a recent report from the United Nations Environment Programme. A large part of this money comes from Europe.
The impact of losing wild pollinators, marine fisheries, and timber from tropical forests — just a fraction of ecosystem services — could reduce global GDP by an estimated $2.7 trillion annually by 2030. Bankers will no longer be able to make money on a dead planet.
On paper, governments have shown some will to stop the carnage. At the 2022 United Nations Biodiversity Conference, nearly 200 nations adopted the Kunming-Montreal Global Biodiversity Framework — a watershed commitment to protect ecosystems and halt and reverse the loss of biodiversity worldwide.
Yet most signatories — including EU members — have failed to implement meaningful reforms that stop the destruction and effectively protect and restore natural habitats. Promises without action will not save the one million species facing extinction worldwide.
But where others have failed to act, the European Union has an opportunity to lead by being one of the first governments to stop financial institutions from financing environmental destruction. European citizens are demanding this. A landmark 1,193,652 submissions to the EU’s public consultation on deforestation were handed over to the European Commission in December 2020. Europeans demand a strong law to protect the world’s forests and the rights of people who depend on them.
The EU Regulation on deforestation-free products (EUDR), which became law in 2023, is a first step in addressing the EU’s contribution to forest destruction. It prohibits the import, sale or export of “commodities and products associated with deforestation and forest degradation.” But that is not enough. European money still funds nature destruction elsewhere. Crucially, the current regulation covers only physical products, not finance linked to ecosystem destruction, and there is no EU regulation to prevent financial institutions from bankrolling nature destroyers.
The finance industry’s half-hearted voluntary sustainability initiatives have been ineffective at halting the flow of cash to major polluters. From 2016 to 2020, banks and other financial institutions pumped $3.8 trillion into fossil fuel companies, despite commitments to do better. During that time, 33 of the world’s 60 largest banks increased investments in the sector.
According to research from Action Aid, “banks have provided 20 times more financing to fossil fuels and industrial agriculture activities in the Global South than Global North governments have provided as climate finance to countries on the front lines of the climate crisis.” Both fossil fuel development and industrial agriculture contribute to deforestation and pollution, which drive biodiversity loss.
The time has come for legal guardrails and regulatory teeth. If the European Union becomes one of the first jurisdictions to regulate these dangerous financial flows, it could set off a domino effect of accountability. Banks are not entitled to unchecked freedom. Society has granted them the extraordinary privilege of managing other people’s money. That doesn’t permit them to infringe on communities’ rights to clean air, clean water, and a livable planet.
Nature is not an economic asset waiting to be exploited, but a shared inheritance belonging to all — a public good. Laws that preserve existing biodiversity and restore damaged habitats protect the essential natural systems that underpin economic prosperity and public health. They secure the long-term interests of all Europeans, not least by preserving our flora and fauna and the natural areas where they thrive.
To ensure this system continues to work for generations to come, financial institutions must halt any further financial flows to companies involved in activities harmful to ecosystem integrity and biodiversity and phase out existing relationships with companies who fail to align their business strategies with the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework. Such a commitment will help protect us all from the ravages of collapsing ecosystems.
Failure to intervene would further erode Brussels lawmakers’ credibility after years of impressive rhetoric but inadequate action. Europe cannot credibly claim to be effectively tackling climate change when its own financial system is fueling the climate crisis through investments in fossil fuels and biodiversity destruction.
The challenges ahead are monumental, but the potential outcome is a world where economic activities sustain, rather than destroy, Earth’s life-giving systems.
In the past, the European Union has been a leader in using regulation to prevent financial crises. Now it needs to address the crisis unfolding in nature. By acting decisively today, Brussels can avert catastrophic ecological damage tomorrow.
Opinions expressed in the op-ed section are solely those of the individual author and do not represent the official stance of our newspaper. We believe in providing a platform for a wide range of voices and perspectives, even those that may challenge or differ from our own. As always, we remain committed to providing our readers with high-quality, fair, and balanced journalism. Thank you for your continued support.Sincerely, The Brussels Morning Team
