Environmental financing: Someone get the CEO of Bayer an aspirin

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By:
Helen Avery
Published on:

Greater consideration has to be given to financing conservation. That includes questioning the financing of firms that produce pesticides and herbicides.

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It was Earth Day in April when we are reminded once again how we need to stop destroying the planet. A trip to the home and garden chain, Lowes, over that weekend underscored the need for reminders. In the garden section, at the front of the store, stood row upon row of Roundup – a glyphosate-based herbicide produced by Monsanto – that’s now Bayer’s headache since it bought Monsanto in 2018. 

People (and some city governments in the US) use Roundup to kill weeds; other living organisms that come into contact with it also die. It is the enemy of land conservation. And if that’s not enough for people to stop buying it, in March a jury in San Francisco awarded a man $80 million in damages after he claimed that Roundup caused his cancer – one of over 10,000 lawsuits filed against Monsanto

Monsanto could turn out to be a very bad buy for Bayer – a $66 billion bad buy. 

When the verdict was announced, the German firm saw its share price drop 40% – it has lost $34 billion of its market cap since August last year. At Bayer’s annual general meeting, in April, shareholders came ready to fight. Some 55% of them voted against absolving Bayer chief executive Werner Baumann and other managers of responsibility for their actions in the Monsanto takeover last year. 

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Bayer chief executive Werner Baumann


The whole thing feels odd – more akin to something that would happen in the early 1980s. Didn’t anyone read ‘Silent spring’? That we still care about the odd dandelion in our lawn when pollinators are dying in the millions is mind boggling. That companies are buying other companies that sell dubious toxic products that already had several thousand court cases pending is also baffling. 

In case you are wondering, the advisers on the acquisition were Morgan Stanley, Ducera Partners, Credit Suisse, Bank of America Merrill Lynch and Rothschild. The last three in this list advised Bayer. 

When will companies and the banks that finance them recognize that what is bad for the environment is also probably bad for humans and therefore one big lawsuit away and a PR disaster waiting to happen? 

Even in the sustainable finance movement, land conservation has been something of an afterthought. Sustainable agriculture and sustainable forestry have been efforts that have seen both good returns for investors and made a nod to the environment – but they are not perfect. Some sustainable forests are monocultures that do little for biodiversity, soak up only half the carbon of a natural forest and, in some cases, require the use of, you guessed it, pesticides and fertilizers. 

And some sustainable agriculture efforts still don’t make room for biodiversity. Land would be much better put to use as grasslands or natural areas that again could soak up carbon. Once again, agreed definitions of ‘sustainable’ will be useful – when they come. 

Ambitious goal

They need to come fast. A new scientific report that coincided with Earth Day showed that we need to conserve half of the land on the planet by 2030 to prevent the world’s ecosystems from unravelling and to counter climate change. We have 10 years. 

The report, ‘A global deal for nature’, contains an outline of how to reach this ambitious goal. 

At present, several countries (excluding the US) have already committed to protecting 17% of land and 10% of the oceans by 2020 under the Convention on Biological Diversity. Most countries, however, are not on target to meet these goals; the report says countries should in fact double their protected zones to 30% of the Earth’s land area and add 20% more as climate stabilization areas, for a total of 50% of all land kept in a natural state. 

How can finance play a role in achieving that? The study estimates it will cost $100 billion a year, but the international community currently spends a paltry $4 billion to $10 billion a year on conservation. The private sector is desperately needed to help out. 

The authors suggest that in the sectors of fishing, forestry, agriculture and insurance, corporations may be able to align their financial returns directly to reaching these larger conservation targets. 

The problems, however, are lack of detail and a limited pipeline of investable projects. There are many organizations trying their hardest to get deals done, like the Nature Conservancy’s commitment to blue bonds and Rewilding Europe’s efforts towards creating ecotourism and land regeneration through peat and natural forests. But for all the land they save, I can’t help but wonder if the same effect couldn’t be achieved if everyone in the State of New York just decided not to mow or treat their lawn for a few years. 

And some days I do question whether in 10 years’ time the entire sustainable finance movement will look back and say: “Crap! We really should have pushed less on this notion that saving the planet needed to produce a return.”