Wall Street's New ESG Money-Maker Promises Nature Conservation - With a Catch (bloomberg.com) 27
Big global banks are eying some of the world's most fragile countries for a new experiment in financial engineering: debt relief in exchange for environmental protections. From a report: Called "debt-for-nature swaps," they present a tempting solution for the rising number of nations in distress, particularly those with ecosystems to protect. A country gets to avoid default and lower its debt burden, as long as it's willing to earmark some of the savings to salvage a coral reef, preserve a forest or build a wind farm, for example. Global investors get better returns and enhanced green credentials. Wall Street takes a cut.
As much as $2 trillion of developing country debt may be eligible for this kind of restructuring, according to a rough estimate by the Nature Conservancy, a US nonprofit that's taking a lead role in these deals. Belize inked a $364 million nature swap in 2021; Gabon signaled plans for a $700 million restructuring in October; Ecuador is said to be working on a $800 million transaction, and Sri Lanka is considering a $1 billion deal. Buoyed by the finance industry's newfound enthusiasm for biodiversity, backers of this latest flavor of swap are finding eager partners in investment banks and institutional investors.
These are "turbocharged swaps," said Daniel Munevar, economic affairs officer at the United Nations Conference on Trade and Development and former adviser to finance ministries in Greece and Colombia. "The limit in these operations isn't the money to fund the swaps, it's how much debt can be swapped." Behind the feel-good headlines, it's unclear whether these kinds of swaps will deliver the promised benefits. The terms can be murky. Transaction costs are high. Experts question whether the complex and costly deals will achieve long-term financial stability. In December, as negotiators gathered at the United Nations' COP15 biodiversity conference in Montreal, Greenpeace and dozens of other non-profits called for debt-nature swaps to be rejected.
As much as $2 trillion of developing country debt may be eligible for this kind of restructuring, according to a rough estimate by the Nature Conservancy, a US nonprofit that's taking a lead role in these deals. Belize inked a $364 million nature swap in 2021; Gabon signaled plans for a $700 million restructuring in October; Ecuador is said to be working on a $800 million transaction, and Sri Lanka is considering a $1 billion deal. Buoyed by the finance industry's newfound enthusiasm for biodiversity, backers of this latest flavor of swap are finding eager partners in investment banks and institutional investors.
These are "turbocharged swaps," said Daniel Munevar, economic affairs officer at the United Nations Conference on Trade and Development and former adviser to finance ministries in Greece and Colombia. "The limit in these operations isn't the money to fund the swaps, it's how much debt can be swapped." Behind the feel-good headlines, it's unclear whether these kinds of swaps will deliver the promised benefits. The terms can be murky. Transaction costs are high. Experts question whether the complex and costly deals will achieve long-term financial stability. In December, as negotiators gathered at the United Nations' COP15 biodiversity conference in Montreal, Greenpeace and dozens of other non-profits called for debt-nature swaps to be rejected.
The likelihood of this working (Score:3)
Re: The likelihood of this working (Score:3)
There has to be a catch anyway (Score:2)
Nobody is forgiving debt for nothing, they have to be getting something, and I sincerely doubt it is just promises to improve ecological impact. Sadly, the article is on bloomberg, which nobody trusts. Presumably these articles enjoy paid placement.
I thought so too (Score:5, Informative)
Short answer, it's just a trick to keep them in debt so the corps can keep extracting wealth from the citizens. It looks like so many of these nations are on the verge of defaulting they're coming up with increasingly bizarre schemes.
This is just 21st century imperialism. China even has a name for when they do it, "Belt and Road". I suppose it's a *little* better than just sending in troops, but there's always the threat of violence there anyway.
Re: (Score:2)
Yep. Sound to me like they're going to "refinance" those countries and keep them in long-term debt in return for lower short-term interest payments.
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Yep. Sound to me like they're going to "refinance" those countries and keep them in long-term debt in return for lower short-term interest payments.
Yep. Also, it may cost the U.S. taxpayers as well. FTFS:
As much as $2 trillion of developing country debt may be eligible for this kind of restructuring, according to a rough estimate by the Nature Conservancy, a US nonprofit that's taking a lead role in these deals.
Looks like they're after a donation tax write off, probably in addition to whatever tax write off they'll get just for being a corporation "loosing money" in a restructure where they actually still make money.
Dup (Score:2)
Nobody is forgiving debt for nothing, they have to be getting something, and I sincerely doubt it is just promises to improve ecological impact. Sadly, the article is on bloomberg, which nobody trusts. Presumably these articles enjoy paid placement.
Article may as well be a dupe; NYT covered the same scam:
https://news.slashdot.org/stor... [slashdot.org]
Bank takes all (Score:3)
Off course the debt originates from the fact that the banks issue loans with usury (please don't call it "that what is in between", not even in Latin). This makes sure that there is always more debt than money, and not every loan can be paid back because the money to do it with simply does not exist.
What is even more painful is that one of the ways to escape this usury trap is to plunder nature. So first they force everyone to plunder nature with their usury demands, and then they pretend to suddenly care about nature.
Re: (Score:2)
Even moving away from a fractional reserve banking system would not change those underlying facts. Historically if you couldn't repay your interest-free loan you could always sell yourself or your family into slavery to settle the debt, but we decided that was worse than loan intere
Re: (Score:3)
Re: (Score:1)
What exactly does that solve other than what OP already said: either you've got cash up front, some kind of collateral or a wealthy benefactor, or you get nothing.
And I've looked into these kind of schemes before, you basically have to fund your own loan for at least some period of time, you continue doing that even during the payback period (so your monthly payments are significantly higher) and then afterwards you need to continue adding money in order to prop up other member loans because if you didn't,
This is the K&P two conmen skit (Score:1)
maybe a few gullible greenies will part with their currency but almost everyone involved will be a cynic trying to run a scam or throw a few dollars at credibility points with the woke brigade.
Imperialism the woke can support (Score:3)
You see kids, this doesn't use icky things like troop movements and gunship diplomacy. This is just financial warfare and control of countries too weak to stand up for themselves. It's also for a good cause.
Now don't be a Russian stooge and ask why it is that most of the world outside of the West is aligning with Putin and Xi against the Empire of Universal Values, Freedom and Democracy.
Re: (Score:3)
Now don't be a Russian stooge and ask why it is that most of the world outside of the West is aligning with Putin and Xi against the Empire of Universal Values, Freedom and Democracy.
Not even the Russians or Chinese really want Putin or Xi, they just have no choice. In the rest of the world people aspire to join the west. Nobody wants to move to Russia. They don't need any walls to keep people out.
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It has always been the Empire of Brown People (and Sometimes, Yellow People) Have to Fix Our Problems for Free. It's not called imperialism anymore but "nation building". Countries spend a lot more money, mostly on invasion and occupation, proving they care but the refusal to create Universal Values is the same.
Who says Colonialism is dead? (Score:2)
Ah, force the developing world to curtail their economies and make the hard cuts that the rich nations don't.
Sri Lanka tried that (Score:2)
Follow the money - ESG is a scam (Score:1)
ESG is about control, guilt and wealth transfer
Obvious international banking scam...but (Score:2)
This is so clearly a way for global investors to be able to get high yields from risky developing nation debt, yet get it 'guaranteed' by first world governments. Total rip off and just a(nother) way global finance giants live off the teat of the rest of the world. No magic financial engineering, no nothing but graft. And generally there are willing politicians on both sides who make these bad deals because the bonds have maturities over 10, 20, 30 years, but the politician only needs to steal as much as
Does it have to be in my country? (Score:2)
How much can I get for *not* firebombing a sensitive ecosystem in the country next door.
Pay to Caesar (Score:2)
Wall Street takes a cut.
That service fee becomes bigger and bigger because the only place debt-stricken countries can acquire Green Credits they can sell to Wall Street, is from Wall Street.