The World Bank and 42 of the world's largest financial institutions are collaborating to create a system that will enable them to deny credit to corporations that abuse natural resources and harm the environment. The group includes 39 banks that took part in a working group at last year's UN Conference on Sustainable Development, according to The Daily Climate. At the UN event, the 39 wrote up what they call the Natural Capital Declaration — a document that defines natural capital as "Earth's natural assets (soil, air, water, flora and fauna), and the ecosystem services resulting from them, which make human life possible."
Since then all 43 of the banks — which includes BBVA (the second largest bank in Spain) and FIRA Banco de Mexico (Mexico's national rural development bank) — have undersigned the statement. The credit penalties, which the group wants in place by 2020, would essentially bring the document's stated goals into reality. "We have a key role to play in the reforms needed to create a financial system that reports on and ultimately accounts for the use, maintenance, and restoration of Natural Capital in the global economy," the declaration says. However, the banks say that they'll need government buy in — such as new financial regulations and tax incentives to pull this off.
"Everyone believes they can get out before the resources run out and the crash occurs."
If nothing is done to incorporate natural capital into banking, a financial and environmental catastrophes are inevitable, Liesel Van Ast, a project manager for the Natural Capital Declaration, tells The Daily Climate. "Everyone believes they can get out before the resources run out and the crash occurs," Van Ast says. "We are hoping to change that attitude and get companies to pay a price for overuse of natural capital."