- Ladd Connell, Bank Information Center
- Katharine Lu, Senior Manager, Friends of the Earth US
- Eva Mayerhofer, Lead Biodiversity Specialist, European Investment Bank
- Zenzi Suhadi, Executive Director, WALHI/Friends of the Earth Indonesia
- Galina Angarova, Executive Director, Cultural Survival
- Rebecca Ray, Senior Researcher, Boston University
Watch the session recording here.
Ladd Connell: Biodiversity is in crisis, and we all have a role to play. Biodiversity is critical for many SDGS on life, water and climate… biodiversity loss is an existential threat on a par with climate change.
They want to explore how MDBs (multilateral development banks) and all banks can assist in combating the biodiversity crisis. Stronger protections for rivers, forests, etc are needed, and clearer no-go guidelines.
Zenzi Suhadi: The Indonesian government sacrificed community and environmental rights, growing the economy but there is also environmental growth needed.
In only a few years in some areas, we can see a recovery of the natural environment after reforestation and also after the growth of the economy. In 1987, for the first time Indonesia built large scale palm oil plantations, with money loaned from the WB. Palm oil plantations caused the loss of a lot of assets to local communities. The economy must work within limits set by biodiversity, without biodiversity, the economy can’t function. Only sixty years of rampant exploitation has produced a crisis for many local communities. Biodiversity equates with more economic opportunities, and we have seen a loss of so much biodiversity in the last generation.
Eva Mayerhofer: This is critical for MDBs moving forward… Previous standards of biodiversity were drafted in silence, they were devoid of people. Connections between people and biodiversity are lacking, especially with indigenous communities. The nexus with nature is just not represented in standards or legal frameworks.
The UN recognition of the right to a healthy environment in 2021 changed perspectives. It recognised that biodiversity must be preserved and that natural ecosystems are essential for development. MDBs must recognise that and promote it among clients and in the public sector. Banks must look to longer term effects and the sustainability of projects when assessing their impact on biodiversity.
Can offsets ever be effective? It’s not clear… Biodiversity conservation must be put front and centre… before implementation. The achilles’ heel is in monitoring, on follow up activities, and in the longer term effects that are often not measured. What happens after is critical. Data on post project effects can be inconsistent, incomplete or absent. Because of the energy crisis, governments might fast track procedures, and this makes impact assessment hard.
Galina Angarova: Indigenous people’s lands span 24 percent of the land of earth, and this is home to 80 percent of biodiversity; there is also huge linguistic diversity. Indigenous languages also carry knowledge of the natural environment, how to protect it and live in harmony with it.
Specially protected areas are landscapes intensely managed by indigenous peoples, so loss of the human guardians could have a critical impact on biodiversity. The fates of places are linked to fates of the human populations that live there. So biodiversity means we must protect all indigenous human rights. We should consider the habits, customs, etc of the people who live in these spaces. Biological and cultural diversity are interdependent, and often coevolved. Indigenous communities are usually the strongest defenders of nature. Indigenous peoples are murdered at increasing rates relative to the overall numbers of activists murdered protecting their land. It’s time to rethink the system we currently live in.
Rebecca Ray: Financial stability must be built on sustainability, and sustainability must be based on human wellbeing. China has developed its position on biodiversity and indigenous lands. Small is beautiful is the new slogan, which is a big pivot for chinese lending.
The environmental and social risks of Chinese financing were significant, but China has pivoted toward smaller more targeted interventions, so the WB and other MDBs don’t need to lower standards to compete with China.
The China Development Bank and the Import/Export Bank of China have lent about $ 0.5 trillion since 2008, that’s 80 percent of WB lending over that timeframe. Many loan recipients used Chinese loans to fossil fuel investment, but now we haven’t seen that sort of investment for about five years.
Countries choosing Chinese as well as World Bank (WB) funding. Funding is used for different projects: the WB’s in health and education and China’s more for infrastructure and industry. So they have tracked the environmental impact and risks of Chinese projects. 736 projects in this period. 25 percent of threatened species globally are within 1km of Chinese development projects; 33 per cent are within 25 km. These projects have a direct impact over 100,000 km2; this is huge. Chinese funding is riskier than WB finance, and Chinese lending associated within higher risk even in the same sector as the WB. In almost every sector China’s lending has significantly higher risks.
There have been three phases of Chinese investment:
- Belt and road 2013-17
- Then 2018- now
In the last phase, China began targeting smaller and smaller projects in terms of cost, length and size. Critical habitats cover about 1/3 of the world’s land, and China’s projects went to critical habitats. China uses a country systems’ approach, deferring to countries in terms of environmental standards. This fall in Chinese investment’s ecological impact happened because China recognised that this affected the success of its projects.
There have been many statements on the guidance on projects. The Chinese approach is a lifecycle approach. China has said that banks need to adopt grievance mechanisms. There has been a slow but sure shift in the Chinese approach. China is learning. It’s embarking on an ambitious process, trying to develop its environmental footprint. Country systems alone are not enough to protect ecosystems, biodiversity, and local communities from risks. China learned that the hands off approach wasn’t enough. So this is a lesson for the WB going forward…
Ladd : EIB has a list of excluded activities, activities that involve conversion of natural forests or environmental destruction is a no go area. Some national legislation isn’t as clear, so local realities should be examined, and local communities should be included.
Galina: Banks are behind in their policies, they are out of date and don’t reflect current understandings and the centrality of indigenous communities. Roads don’t damage the environments much as the ancillary human activities they enable. Highways requested by indigenous communities should be prioritised, but highways they don’t request are another matter. The interests and perspectives of communities involved in projects is needed, and they should be frontloaded.
Brazil advanced, then halted, then advanced indigenous interests, depending on politics. We need more comprehensive protection, not dependent just on political whims. In China, there was a false dichotomy between sustainability and development (ie. build to alleviate poverty), but that understanding has evolved in China. Now they understand these issues must be considered up front or economic growth won’t materialise, this is a technocratic approach far removed from humanism but still an improvement. There has been a shift to now understanding that building can bring poverty.
China learned through failed projects that others didn’t want these megaprojects, it was a painful learning process.
Sustainability and community concerns should be at the heart of development and development finance.
Katharine : We aren’t saying no development, but we are saying there should only be sustainable, environment and community friendly projects. A bank must understand what it really means to finance a project.