Exposing the Money Behind Environmental Destruction, Part II: Investigating Investors

Editor’s Note: This is the second installment in a Pulitzer Center series about uncovering the financial incentives behind environmental damage (read the first installment). GIJN is co-publishing this latest piece about how their research team followed the money as part of our mutual support for journalists covering rainforest and ocean issues.

After you have uncovered the ownership of a company, you might want to start looking at the investors. 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.

One of the reporters of our inaugural Rainforest Investigations Network (RIN), Glòria Pallarès, reported on a century-old palm oil business in the DRC that exposed local residents to toxic waste. The company was controlled by European development finance institutions; its owners hidden in a maze of offshore companies. A product of Belgian colonial times, the firm received investments from Spain and the UK, as well as from Belgian, British, Dutch, and German development banks.

Besides investing in companies with bad environmental practices abroad, governments also invest in industries at home that are major contributors to climate change and destruction. The oil and gas industry, fishing, and much of agriculture are subsidized. European countries support their fishing industries, which often send their ships to the coast of West Africa and deplete the fish stock there.

Two girls picking cassava leaves at a waste disposal dump, Congo, 2021. Image: Glòria Pallarès, El País

Checks and Balances

There are many organizations that check the environmental impact of companies and financial institutions. These can be a good source for story ideas and leads, or to confirm a specific investment made by a company. However, sometimes the actual diligence checks performed by these organizations can be quite shallow and their ratings end up greenwashing companies, supply chains, or products. Of course, this in itself can also be a story.

A famous example of greenwashing was Ikea’s use of the Forest Stewardship Council label, which investigative outlet Earthsight found was reportedly used to greenwash illegally forested wood. (In response to that story, Ikea stated that they do not accept illegally logged wood in their products, and “work proactively to install measures to verify supplier compliance with legality.”)

Corporate Environmental Standards Organizations

CDP: originally called the Carbon Disclosure Project, “supports thousands of companies, cities, states, and regions to measure and manage their risks and opportunities on climate change, water security, and deforestation.” You can make a free account on their website to look at company ratings.

Sustainalytics: “Morningstar Sustainalytics provides high-quality, analytical environmental, social, and governance (ESG) research, ratings, and data to institutional investors and companies.” You can look up the names of companies to see their ratings.

Euromonitor: This business intelligence company has a sustainability report you can buy for a few euros on their website.

EcoVadis: “EcoVadis has grown to become the world’s largest and most trusted provider of business sustainability ratings, creating a global network of more than 130,000 rated companies.”

UNPRI: PRI (Principles for Responsible Investment) is a UN-supported organization that supports its network of investors with making investment and ownership decisions that consider ESG factors. It has a directory of signatories.

An alternative to corporate environmental assessment organizations are activist groups, which are often stricter and more likely to call out bad actors.

Activist Organizations that Hold the Finance Sector Accountable for their Environmental Impact

Rainforest Action Network (RAN): RAN has issued various reports about the role of banks in financing climate change such as Challenging Banks, where they look at the biggest financiers of fossil fuels. Another report they produced is called Stop Banks Funding Climate Chaos.

350.org: A global grassroots movement that organizes campaigns to divest from fossil fuels and hold financial institutions accountable for their role in climate change. Their website has a finance section that highlights all the finance campaigns.

Greenpeace: One of the most well-known environmental activism organizations, Greenpeace often targets financial institutions through their campaigns. Unfortunately, their website does not have a database or directory related to finance, but if you use the search function with the term “banks” or “finance,” you will find most of their relevant reports.

Friends of the Earth: “At Friends of the Earth, we work to strengthen and raise environmental and social standards at international financial institutions.” Their website has a section called International Sustainable Finance.

Client Earth: With a focus on legal activism, Client Earth brings cases to court and creates campaigns about sustainable finance, greenwashing, and trade and investment rules.

Juliet Efemena, a fish processor in Guinea-Bissau in November 2023, who talked to Ocean Reporting Network Fellow Gideon Sarpong about the depletion of local fish stock by big fishing vessels. The vessels are there due to trade agreements with EU countries and a lack of sustainability regulation. Image: Gideon Sarpong, iWatch Africa.

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 US also have different filings at the Securities and Exchange Commission (SEC), an independent government agency created against 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.

Some of the fellows in our investigative networks have worked with organizations specialized in finding investor information such as Data Desk and Profundo.

Company Accounts

Companies are often required to publish or file documents about their financials. Publicly traded companies will have their accounts online on their websites (usually there will be a subsection for investors) and on the stock exchange websites where they are listed. Private companies, often only those exceeding a certain size or capital, might be required to file them at the company registry in the country where they are registered.

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, and investments. Anything a company owns — its assets, subsidiaries, and investments — are also known as holdings.

In short, company accounts are useful for finding information about both the investors behind a company and the investments a company makes. Of course, they are useful for finding out much more about a company, like ownership, financial health, or ethical decision-making, but for this methodology, we stick to the investment and investor.

When you are looking for company accounts, note they can also be called financial statements or annual accounts. To look at the financial information of the company, you will want to focus on the Profit and Loss statement and the Balance Sheet. They can be called different things, like “Income Statement” or “Statement of Financial Position,” respectively. Here is a short guide by Clear Books on the different terms used in company accounting.

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.

Investment information appears in many different types of documents. If you hit a roadblock looking through the sources listed here, look at leaks databases and investigative journalism databases like OCCRP’s Aleph. The latter includes national gazettes from many countries and some of those list investments. You might find the information in a leaked email, press release, or PowerPoint presentation from a shareholders meeting. Google’s advanced search function is also great for this. Try looking up the company name and the search terms “filetype:pdf” or “filetype:pptx”. With “site:”, you can focus the search on specific websites or domains, like “.gov”.

Investment information about acquiring the company BodyArmor found in the Coca-Cola Company’s Form 10-Q. The company publishes these accounts on their website’s Investors section and submits it to the U.S. Securities and Exchanges Commission. Image: Screenshot

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.

Besides the investments of companies and institutions, you will also want to look at their sustainability commitments. Financial institutions have public statements about investing responsibly and not contributing to global warming, environmental damage, and human rights abuses. As reporters, we can hold them accountable for those commitments by investigating their investments. Stand Earth did a clear side-by-side comparison of investments and commitments in their report on gas and oil investments by European banks.

Development Banks

There are various kinds of financial institutions tied to nations and states. Public development banks and funds decide where to spend state money, and often invest abroad, and in environmentally fraught projects.

Development banks, also known as Development Finance Institutions (DFI), are supposed to promote the development of places struggling with poverty and instability. They do this through long-term loans and grants, but also through consultancy support. A bank can be tied to a specific state or can be bilateral or multilateral, so tied to multiple states. They mostly provide support for development projects like infrastructure and agriculture.

Development funds, on the other hand, provide short-term financial assistance to countries facing balance of payments problems to stabilize international money flows and exchanges. When it comes to investigating the impact on the environment, development banks are more relevant.

A good starting point to investigate projects financed by development banks is to check their websites, which usually have the projects listed along with the amounts invested and projected outcomes.

Development banks have huge budgets and are big associations with many employees, subdivisions, programs, and departments. This can be an explanation as to why they invest in projects that are bad for the environment; there are too many investments to keep track of. However, since their mission is essentially to improve life on our planet, they should be held accountable for their investments.

Besides supporting the wrong projects, the general idea and functioning of development banks is often questioned. Many former colonies are currently in debt to banks seated in the West, who set loan agreements without, for example, consulting local communities.

For example, at the end of January 2024, Italy announced it will use its funds and budget for grants, credits, and guarantees to invest into the African continent. The Mattei Plan is named after Enrico Mattei, the founder of Italy’s national gas company Eni, which is involved in the plan. When the plan was announced, African leaders responded saying that they would have liked to be consulted before its announcement.

Besides going to the development bank websites, you can also rely on organizations that aggregate investment information. Some groups of development banks have shared websites with lists of their projects.

On a global level, Finance in Common, for example, is a network of all development banks set up to direct their finance to meet Paris Agreement and 2030 Agenda goals. Their Public Development Banks and Development Financing Institutions Database is an interactive map that lists macroscopic and basic profile information of development banks, which can be useful for story context and leads.

The International Aid Transparency Initiative has a database called d-portal that lets you filter per country, sector, and year when searching developmental and humanitarian projects. It lists the organizations behind the projects as well. Their Country Development Finance Data page lets you export spreadsheets with budgets, commitments, disbursements, sectors, finance type, implementing organization, and more information of development projects.

On a regional level, the European Development Finance Institutions (EDFI) group website, for example, lists European development banks (or DFIs) that invest abroad and provides information about their projects.

National development bank websites also have lots of information about their investments available online. The French development bank Proparco, for example, has an open data portal on their website with an interactive map of the projects they finance in Africa, Asia, Latin America, and the Middle-East.

Jelter Meers is the research editor of the Pulitzer Center’s Environment Investigations Unit, which includes the Rainforest Investigations Network (RIN) and Oceans initiative. He started as an investigative reporter at the Midwest Center for Investigative Reporting in Illinois, where he wrote accountability stories on housing, migrant labor, and big agriculture.

Madeleine Ngeunga is an investigative journalist from Cameroon. Her work focuses on forest management and policy, agribusiness and land grabbing, Indigenous rights, land-use conflict, climate change, and environmental justice issues in the Congo Basin region.