This is the second installment in the Pulitzer Center series about uncovering the financial incentives behind environmental damage. We show how our research team follows the money as part of their support to our journalists covering rainforest and ocean issues. You can read part one here.
After you have uncovered the ownership of a company, you might want to start looking at the investors. A lot of the financing of environmental destruction comes from the institutions that should be protecting our planet. Companies are often backed by investors besides the capital put up by the owners. Investors can be individuals or institutions and often are banks, investment funds, or governments.
Some of the most polluting and destructive industries are financially supported by governments, which are supposed to protect the resources in their countries and sustainably develop the countries they invest in. Government banks from the Global North finance mining and deforestation in the Global South as part of their so-called development investments.
Two girls picking cassava leaves at the PHC waste disposal dump. Image by Glòria Pallarès/El País. Congo, 2021.
Starting from the companies
One direction to start your investigation is to begin with the companies, and then see who their investors are. For private companies, you can refer to our previous story and read the company accounts guide below.
When it comes to public companies, stock markets and the companies traded on them generally have documentation about investors and shareholders on their websites. For example, if you want to see who the investors behind the Coca Cola Company are, you can either go on their website and look for the 10-k annual filings under the Filings & Reports section, or you can look for the company’s holdings on the NASDAQ exchange.
Publicly owned companies also usually have their company accounts available on their official websites, which can be a great way to get an insight into their financials. There is a lot you can learn from that, which we cover below in the section on company accounts.
Public companies in the United States also have different filings at the Securities and Exchange Commission (SEC), an independent government agency created to monitor for market manipulation. You can find all of these on the online platform EDGAR.
- Form 10-K: The annual report includes comprehensive information about the company's financial condition, investments, and operations.
- Form 10-Q: Quarterly reports that provide updates on the company's financial performance and investments.
- Proxy Statements: Documents related to shareholder meetings, which include information about significant shareholders and executive compensation.
Company accounts
In company accounts you will find a breakdown of the profits and losses (the money going in and out), liquid and non-liquid assets (easily sellable things like equipment and more fixed things like real estate), subsidiaries (companies they own), ownership (who owns them), and investments. Anything a company owns; its assets, subsidiaries and investments; are also known as holdings.
Let’s break down where you can find investor and investment information in the company accounts (remember that these sections can have different names:
Balance Sheet
- Assets: This section lists all investments the company holds, including short-term and long-term investments.
- Equity Investments: Specific investments in other companies may be listed here.
Income Statement
- Investment Income: Earnings from investments, such as dividends, interest, and gains or losses from the sale of investments.
Cash Flow Statement
- Cash Flows from Investing Activities: Details about cash spent on and received from investment activities, such as the purchase and sale of securities, property, plant, equipment, and subsidiaries.
Notes to the Financial Statements
- These provide detailed explanations and additional information on various items in the financial statements, including investments, investment strategies, risks, and valuation methods.
- Information about significant investors, investment in subsidiaries, joint ventures, and associates.
Management Discussion and Analysis (MD&A)
- This section offers insights from the company's management on the financial results, including the performance and strategy behind investments.
Shareholder Information
- Often included in the annual report, it provides details on major shareholders, shareholder structure, and any significant changes in ownership.
Schedule of Investments
- For companies, particularly investment firms, this detailed schedule lists all individual investments, including their market values and types.
Starting from the investors
You can also begin your investigation by looking at the investors themselves, rather than the companies they invest in. A good place to start is Forest 500, which identifies the companies and financial institutions (banks, funds, etc) with “the greatest exposure to tropical deforestation risk” and assesses the companies every year.
There are many such organizations that focus on (un)sustainable investment:
BankTrack
This organization monitors the operations and investments of commercial banks to ensure they are not financing harmful projects. They have a campaign called Banks and Nature, where they look at the environmental impact of bank financing.
Forests & Finance
“Forests & Finance assesses the finance received by over 300 companies directly involved in the beef, soy, palm oil, pulp and paper, rubber and timber supply chains.” These supply chains have a historically high risk of being linked to illegal deforestation. Their website includes an online database where you can search and filter financial connections to supply chains.
Reclaim Finance
This organization researches and campaigns for environmentally better finance. They publish reports on different issues and have three trackers for coal, oil and gas, and renewable energy investments, which list financial institutions and the projects they support.
They specialize in research and campaigns focused on the financial sector's role in climate change. They advocate for divestment from fossil fuels and promote sustainable finance.
ShareAction
ShareAction works with investors and policymakers to harness “the power of investment for social and environmental progress.” They rank investors, banks and insurers, engage shareholders and raise banking standards.
Responsible Investor
A business-to-business news outlet about sustainability across financial markets, focusing on how investors incorporate ESG into their policies and processes.
Corporate Knights
A media and research organization that publishes about “sustainable economy” with rankings, reports and financial product ratings. They have a list called the “Global 100 Most Sustainable Corporations in the World,” which is released each year during the World Economic Forum.
InfluenceMap
A think tank that analyzes the impact of business and finance on the climate crisis. They have a separate website called FinanceMap, which is a database that “examines the financial sector through a climate lens.”
This article was originally published by the Pulitzer Center. This edited version was republished on IJNet with permission.
Photo by Renaldo Matamoro on Unsplash.