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News ::
The Ecological Crisis and Finance Activism as the Achilles Heel
17 Jul 2001
The planet is in a state of crisis. We are shredding the interlocking web of life on which we depend. This post is dedicated to examining finance activism as the strategic lever to transform the landscape of an unaccountable, unsustainable and fundamentally perilous global system that is destroying lives and land. In fighting such a system, we need targets that help us connect local struggles and global struggles.


the planet is in a state of crisis. We are currently living through the sixth great mass extinction. The rate of species loss has surpassed the die-off of the dinosaurs and everyday countless species of plant and animal life disappear forever. Only 22% of the Earth’s original forests remain intact. These last old growth forests are home to over half of the planet’s plant and animal species as well as three quarters of the world’s remaining traditional indigenous cultures. At the current rate of destruction all the world’s remaining large tracts of primary forests could be degraded beyond restoration in the next twenty years.

The assault on the world's forest is shredding the interlocking web of life on which we depend. Clearcutting the forests, poisioning the air and water, disrupting the climate itself with carbon pollution - we are literally undermining the basic life support systems of the planet. Quite simply our global society cannot continue on its current path. The corporate global economy - based upon blindly maximizing short term profits regardless of their impacts on the environment, working people, local communities, or future generations - is a doomsday machine. We need to sound the alarm and organize to confront the root causes of the global ecological crisis.

Banks are key conduits in the world of money. While they claim neutrality, they profit from moving money from where it's not being used (your bank account, mutual fund, credit card balance, student loan) to where it's "needed"--funding oil pipelines in pristine rainforests, building massive new hydroelectric dams and pulp mills. They also profit from policies that prey on unsuspecting and underprivileged consumers, perpetuating a system of racist exploitation.

Banking decisions are based solely on financial indicators: will this endeavor turn a profit or not? Their analysis ignores the realities of on-the-ground impacts and long-term implications of actions. And big banks are instrumental in determining which companies and activities receive support. With a vast network of power brokers and a web of interlocking directorships, they posses a profound influence on the economic agenda for stock exchanges and companies around the world.

A few incredible recent trends have led to an effective overhaul and restructuring of the global economy (what pundits call "the new world economy"):
1) the magnitude of finance-
the sheer volume of money and transactions in the global economy has exploded at a breakneck pace in recent years. In 1980 there were $12 trillion in financial assets around the world. By 1998, that number had jumped to $80 trillion. This is unprecedented economic growth. The nature of these assets has changed radically as well. Whereas before, money was tied to real goods and services, the bulk of the new financial assets now reflect a speculative economy (currency trading and futures). In 1970, 80% of international financial transactions were about the real economy, and 20% were speculative. In 1998, 2% were real, and 98% speculative. The casino economy doesn't feed anyone, clothe anyone, or put roofs over heads--it's about rich people trading their money to get richer, while the poor of the world and the natural world all too often pay the price.
2) the privatization of development-
sources of finance have in recent decades shifted from public coffers to private ones. Since 1990, public finance (World Bank, Import/Export banks, OPIC) has remained static at $50-60 billion per year. During the same period of time, private (corporate) finance has increased by 700% from $30 billion in 1990 to $210 billion in 1996. With development now being largely funded by private capital, we're seeing rapid economic expansion into "emerging markets" in wholly unsustainable and unaccountable ways. The corporate financial sector is subject to no real social or economic criteria governing their operations.
3) the decentralization of finance-
the majority of development money flowing to egregious projects now comes from stocks and bonds rather than consolidated mega-loans. And Americans' investments are up. In 1980, 4.6 million US households owned shares in mutual funds. In 1998, 80 million US households did. There has been a profound power shift: banks are now arrangers and facilitators, channeling your money into projects around the world. This makes destructive projects vulnerable to the public's demand for sustainable business practices. And it makes our role as activists, consumers, investors--as the case may be--all the more significant. We have clout to demand that our money support a sane and healthly present and future for all.

This post is dedicated to examining finance activism as the strategic lever to transform the landscape of an unaccountable, unsustainable and fundamentally perilous global system that is destroying lives and land. With their tendrils exacting a stranglehold on people and the planet, Citigroup is a posterchild for an economic system based on bad behavior and based on principals of short-term profits over the long-term health of communities and ecosystems. In fighting such a system, we need targets that help us connect local struggles and global struggles.

We're calling on Citi to be a leader in the industry and to transform the way Wall Street does business. This must happen. Will Citi be a leader or a laggard? It's up to us. How loud is the call? Will they hear us? At the end of the post are two most recent examples of our message getting out and getting through. Congratulations to all who've been engaged in the struggle to create a better world. Let's keep up the fight!

-Beka Economopoulos
Rainforest Action Network


For background information and downloadable flyers on Citigroup's destructive practices check out
For direct local organizing support and networking contact the Rainforest Action Network :
SF - organize (at) 415-398-4404/1-800-989-RAIN
NY - beka (at) 718-218-7566/1-888-840-6416

- - - -


Our message is out and getting through! Citigroup and the rest of the corporate financial sector can't expect to operate in a moral vaccuum and enjoy infinite long-term gains. Operating decisions that reject environmental and social considerations WILL come back to haunt them.

2 most recent cases in point...
- - -
Asian Pulp and Paper was delisted from the NY Stock Exchange July 5th. Their demise underscores the fact that forest destruction no longer pays. As one of the top institutional investors in AP&P, Citi must face the results of bad financial advising. They hold shares for clients around the world who will be slammed by the delisting.

AP&P is Indonesia's largest pulp and paper company. 75% of their operations are in primary (1st-growth) forests, and up to 60% of this is thought to be logged illegally. Their unsustainable practices of clearcutting have done more than ravage the environment, they have placed at risk the lives of the local Sakai people. Intent on saving their ancestral lands from clearcutting, the locals blockaded roads to prevent the passage of logging trucks. Fifty-two Sakai were injured during the protest.

Citigroup's involvement with an eco-criminal like AP&P belies their lack of concern for the on-the-ground impacts of their investments. Citi has encouraged AP&P to engage in debt-driven expansion, and the paper company has pumped their product out at alarming rates--distorting the global paper market with prices that undercut the norm. Citi has issued bonds and financed projects ammounting to over $200 million in investments.

Their financial advising has now driven the company to the brink. AP&P's total debt amounts to $13.4 billion. On March 12, 2001, they claimed a standstill on debt repayment. On April 4 the NY Stock Exchange suspended trading on AP&P, and on July 5 the company was delisted.

The case of AP&P exemplifies the need for financial institutions need to account for the long-term economic and environmental health of their investments. Wise up, guys!

for more information on AP&P and Indonesia, check out Friends of the Earth's report "Paper Tiger, Hidden Dragons" at
- - -
Score for the good guys! Under increasing pressure from community activists and ultimately the FTC and Federal Reserve, Citigroup recently announced that they would stop selling single premiun credit insurance on mortgage loans. The practice of rolling credit insurance payments as a lump sum into mortgage loans and having the borrower pay interest over the life of the loan is a prime example of abusive predatory lending. The extra burden of the typically unnecessary insurance payments can amount to thousands of dollors, and lead unsuspecting consumers left with no equity, or worse--homeless--when payments aren't made.

As a result of persistent pressure and public scrutiny, fair-lending advocates were successful in ending Citi's practice of peddling single premium credit loans. Citi is now offering insurance with monthly pay options. While they continue to engage in a litany of exploitative sub-prime lending behaviors, this is a significant step , as well as a model of partnership on the part of community groups, regulators, and legislators to hold accountable a key player in the banking industry.

This victory for consumers is a clear indicator that the financial industry Goliaths are compelled to respond when enough Davids get together. Let's keep up the heat!!

for more information on the victory, and on Citi's predatory lending:

See also:
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