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“Green Finance” Promises to Save the Planet. It’s Doing the Opposite

Every firestorm, hurricane, and flood gives investors an opportunity to make more money

Rolando Zumba, a gentle fifty-nine-year-old, wept through an Associated Press interview as he described the displacement of his people and their traditional lands to make way for a giant carbon offset project. His own ability to hunt disappeared when rangers in Peru’s Cordillera Azul National Park—a spectacular 13,500-kilometre sweep of Amazon rainforest, mountains, and waterfalls—confiscated his hunting rifles. The act ended self-sufficiency for his Kichwa tribe on its ancestral land, ensuring poverty and hunger for his people.

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In a December 2022 exposé, the news agency reported that this project was flawed from the beginning. The carbon credit program was set up in 2008 to “offset” the carbon footprint of Shell and TotalEnergies, which purchased blocks of the park, allowing them to claim more than 28 million “credits,” meaning they were theoretically offsetting that much CO2. The project brought in so much money, it covered around 90 percent of the operating expenses of the park and was supposed to be used for forest protection and reforestation. But the AP exposé found that not only did the companies exaggerate the credits earned, tree cover loss in the park also dramatically increased due to increased deforestation.

The market approach to nature is now deeply entrenched in many governments and international institutions, and trading in nature’s “assets” is a huge business. Most people around the world know little or nothing about this fast-moving development. But its reach is astounding.

The financialization of nature is modelled on the same economic logic that promotes investments that attempt to profit from the fluctuations in the market value of assets. Nature-based finance zeroes in on climate change and other environmental crises. Every firestorm, hurricane, and flood presents an opportunity for experts in risk forecasting to advise on the cleanup and recovery technologies that will be needed. And governments give large tax breaks and other incentives to the corporations, banks, and asset management companies that use “green” funds to underwrite such businesses.

Green finance is part of the doctrine of neoliberal capitalism, which holds that the market can resolve almost all social, economic, and political problems, including the climate crisis, better than governments.

In many ways, well-meaning public opinion is stoking this development. The private sector has been the beneficiary of an increasingly informed global public demanding that something be done to confront the climate and other environmental crises. There is a deep desire on the part of many individuals and institutional investors, such as pension funds, university endowments, and nonprofits, to invest ethically, with a strong emphasis on protecting nature and promoting nature-friendly technology. Four in five Canadians “of all political stripes” want stronger government action to protect forests and wildlife, for instance. So it is no surprise that the same individuals and institutions asking their governments to step up will seek out environmentally ethical ways to invest their money.

They believe it is time the economy was geared to protecting nature (as do we all) but perhaps have not yet been exposed to the ways in which many corporations are using the climate crisis and the financialization of nature as an opportunity to greenwash their operations.

And that poses a serious problem.

Sustainability-linked stocks and bonds are appealing to ethical investors, and companies are competing for those funds by wrapping themselves in promises to be part of the climate solution. Green financing serves the purpose of allowing people to feel good about investing in the market while not challenging the deep flaws in the increasingly deregulated market economy and the part it plays in nature’s destruction. Investments in funds marketed as ESG (environmental, social, and governance), three areas identified for evaluating “good” corporate behaviour, are skyrocketing as companies and asset managers compete to look........

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