What is financialisation of nature?

Financialisation of nature comprises a broad range of mechanisms, including Reducing Emissions from Deforestation and Forest Degradation (REDD), carbon offsets, biodiversity and habitat banks, biodiversity offsets, among others. These mechanisms share the common feature of putting a price on nature, turning it into a financial asset, a thing that can be traded.

The process of financialisation creates an artificial boundary between the material aspects of nature (the goods and resources it provides), and its cultural and spiritual aspects. It allows those goods to be bought and sold, along with their separate components and functions. In other words, it makes it possible to own, buy and sell a whole forest or a single tree, or even a function of the forest, such as its capacity to protect water or capture carbon.

Why does financialisation of nature happen?

Under the logic of financialisation of nature, those who have money can continue destroying the planet whilst claiming to protect it.

Large corporations buy nature’s goods, components and functions to compensate for the environmental devastation they cause, thus enabling them to continue business as usual.

For example: a mining company that destroys the environment in one place can pay for the ‘conservation’ of an area of land or forest in a different place. The Indigenous Peoples who lived there are banned from the ‘conserved’ land through claims that they would have destroyed it and the company now ‘save’ it. In doing so, the company claim to ’compensate’ for the damage caused at the mining site and can portray itself as socially and environmentally responsible. However, the destruction of nature hasn’t diminished, and there is no proof that the other piece of nature would have been destroyed. Moreover, there is evidence, as recognised by the United Nations (UN), of the crucial work of Indigenous Peoples and local communities in protecting biodiversity.

For several years, corporations and governments have been pushing for national and international policy reforms to facilitate their control over biodiversity. This has also been seen in the privatisation of seeds and other genetic and biochemical elements through intellectual property mechanisms.

What are the dangers?

Financialisation of nature leads to the privatisation of the ways of life and the livelihoods of local communities and Indigenous Peoples who live in and depend on forests and biodiversity. Very often, such privatisation results in the violent displacement and resettlement of these communities in new and unfamiliar territories, compounding the violence they experience when their traditional ways of life are destroyed and their collective and individual human rights are violated.

Financialisation of nature is dangerous because it creates a new relationship with nature, destroying the social, cultural and spiritual bonds that that peoples have developed over centuries. At the same time, it creates a new definition of nature, wherein it is regarded as capital due to the economic benefits it brings and is renamed as ‘natural capital’.

Financialisation also promotes the dismantling of environmental policies, or deregulation, with the rationale that these will no longer be necessary as corporations will now be the ones that protect nature voluntarily. Its proponents always say, as in the case of REDD, that it will bring many economic benefits and improved living conditions. They never tell us that corporations use this logic to greenwash their image whilst maximising their business, as they profit from both the economic activities carried out in the places they destroy and from the conservation initiatives intended to compensate for this destruction (including through the sale of carbon credits).