• F4B

Finance and Illegal Trade in Wildlife

John Scanlon of the Elephant Protection Initiative spoke at a recent covening by F4B on nature and illicit finance.

As you might expect, I come to these issues from a conservation perspective – fully recognizing the role of the finance sector as a central part of a prosperous economy, while at the same time being cognizant of the fact that it can be an enabler of the destruction of biodiversity.

We all want to stop the wanton destruction of nature and loss of biodiversity. But what are we asking of the financial sector? What do we say it must do, should do, or could do? Are we asking it to be a de facto regulator, to support regulators, carry out due diligence, and when, make full disclosure, of what, or to determine for themselves what is or is not environmentally destructive?

In considering these issues, I must confess that my personal viewpoint has wavered, and I am not sure of the way forward either – and what I will do today is, in my own way, try and briefly address some of the initiatives that are underway and then highlight a few areas that may warrant further attention.

Let me start with a short story from my when I was in law school and my early days of legal practice, which has influenced my thinking.


I worked across several States and Territories in Australia – but I started out in Adelaide, the capital of the state of South Australia, which, as an aside, is close to twice the size of France.

Late 70’s and early 80’s there was a big NGO campaign to end the clearance of native vegetation, which had historically been promoted by the Government to enable agriculture.

The best scientists had explained it was a serious issue, not just for biodiversity, but dryland salinity, water quality, land degradation. It was basically killing the land.

The Government consulted widely, and it put into place a voluntary scheme. In short, if you agreed not to clear your land, you would be compensated for the diminution in value, with a caveat placed over the title.

It was a good scheme, that attracted about 10-15 % of landholders – the ones who accepted the science and understood the need to end land clearance. But the rest would not come on board for a variety of reasons and land clearance continued.

After a lot of lobbying, the Government then decided to legislate and it moved to prohibit all clearance of native vegetation, which was backed up by a compensation scheme.

As such, the clearance of native vegetation finally came to an end.

But without that legislative intervention 80% of what was left, would probably be gone today.


I share this story because over the past decades we have placed a lot of reliance on non-binding, and voluntary initiatives, and pledges, and declarations, and in this sector, we all know of the Equator Principles amongst others that were just referenced.

They all serve a purpose. But where has it got us? Is the planet benefiting from these voluntary measures?

As you know, global value chains have become an increasingly important feature of the global economy. To bend the curve on nature loss, we need to see changes across all value chains, although perhaps just a handful pose the most significant challenges to biodiversity.

Major companies have made significant commitments to zero deforestation through the New York Declaration on Forests of 2014. This Declaration was a necessary part of an effective strategy, but, as the independent five-year review of the New York Declaration recently revealed, it was not enough without the “stick” of government action.

Today, we see governments, most recently in the EU and the UK, stepping up action to put in place binding legal measures on imported deforestation, which were just referenced, and this is positive. But why only forests – what about fish, and other wildlife products? And what is the responsibility of those who are financing these activities, which is often overlooked?

Voluntary initiatives are fine, but they tend to attract the industry leaders, not the entire industry. They have their place – but they also have clear limits.

If things are as dire as IPBES and IPCC tell us, which they are, then how long will we continue to believe that voluntary measures will save the day? Haven’t we reached the point where we need to see governments play a much stronger role as an effective regulator and to enforce their regulations?


If we look at the illegal wildlife trade, there has been a lot of progress made over the past decade, as was outlined in the last session. The level of political awareness, resourcing, regulation, enforcement, and community engagement right across the illegal supply chain, has grown exponentially. We have not yet turned the corner, but we are much better placed than we were just ten years ago.

One of the biggest gaps, including in the various UN resolutions and reports we see, is the focus on CITES-listed species. CITES lists just 38,000 of the world’s eight million species and excludes most commercially harvested fish and timber species. The other major gap is that we have no international agreement on wildlife crime, as we do for example for human trafficking.

The illegal exploitation of all wildlife is too often defined by the value of the contraband. But as was just shown, it is way larger than that – it denies governments of revenue, impoverishes local communities, impacts entire ecosystems, including their ability to sequester carbon, and poses a risk to public and animal health.

It is not okay to steal a countries wildlife or to enable it, just because it is not endangered and listed under CITES, and we need to embed into international law, the principle of comity, mutual respect for each other’s national laws. Importing any illegally sourced wildlife or wildlife product, including fish and timber, should be illegal under the laws of the importing State.

We need to move away from this emergency ward approach to conservation. We need to look to all species of wild animals and plants being illegally traded, especially given the devastating impacts of such trade on economies, local people, and ecosystems, as the World Bank has done in its 2019 Report.


So, where does the finance sector come into play, as opposed to the entity that is being financed? We have heard some very good presentations and have excellent background papers. There are different entry points, and not all require regulation.

Today’s focus is on the illegal exploitation of natural resources. Yet, we seem to cross over between talking of financing legal but environmentally damaging activities, activities that are legal but could lead to illegal activity, activities that are in themselves illegal, as well as the issue of tackling money laundering. They are all slightly different and may require different responses.

Money laundering is an issue that is well understood and accepted, where the finance sector has a clear role to play in supporting law enforcement. It is a well-tested area of the law but has not been well applied to the proceeds of illegal wildlife trade – be it detecting suspicious activities or submitting suspicious transaction reports, through to enforcement authorities conducting financial investigations, prosecutions, and pursuing asset recovery.

The Duke of Cambridge’s Financial Task Force that has been referred to, as well as the work of the Financial Action Task Force (FATF) – both address these shortcomings. However, the extent to which the finance sector recognizes illegal wildlife trade and makes use of all the tools available is still very limited. More needs to be done, including bringing more financial actors on board.

Further, both the Task Force and the FATF Report only concern CITES-listed species and exclude the illegal trade in fish and timber, the impacts of which are massive. This needs to be corrected and as mentioned earlier, we need to view wildlife, and illegal wildlife trade, as it affects any species of wild animal or plant, fish, and timber species included.


Environmental issues, including biodiversity loss, pose a financial risk, but this is not yet well understood by the sector. We can look to climate change to see how the finance and other sectors' views of environmental risks have evolved and continue to do so. With climate change, there is also increasing recognition of the massive opportunities, which are not yet as evident with biodiversity.

But these are risks to the finance provider itself. It is in their own financial self-interest to take measures to address them – and there are many advisers to the sector raising awareness of these risks. It is an area that gets lots of attention, including on what should not be financed as it could pose an unacceptable risk to the financier – not to the environment, although they are interrelated.

But what about where the risk is to the environment? I do not have time to address all possibilities, but in the context of today’s discussion here is two:

Directly financing illegal trade. What is the legal liability of the financier? It could be exposed for aiding and abetting a crime. But providing the financing is not illegal in and of itself. This is not always the case. The financing of terrorist organizations or individuals is a crime that carries serious consequences. Is there anything to be learned here?

Financing trade that could be illegal. In many cases, natural resources can be exploited, but only with the necessary permits. How far should the financier’s due diligence extend? To check that permits are sought, that they have been obtained, and if they have if they are based on credible science, that they are being complied with. Then we have the issue of financing legal activities that could lead to illegal activity, like land clearance to enable agriculture, where similar questions could be posed.

We could also talk of financing a legal activity that is legal but damaging to the environment. It may run counter to international commitments, like the Paris Agreement or the Strategic Plan on Biodiversity, but none-the-less be legal. Just recently one Australian bank refused to finance a new Australian coal port based on its climate policies. Another bank, with a slightly different climate policy, stepped in to provide the finance. Is this just a space for corporate and consumer choice, or depending on the issue and the place is more needed? It was suggested in the last session that we look to unsustainability rather than just illegal trade, and that we reference supranational standards as well as national laws.


My time is short. Here are a few questions about what we may wish to consider:

  • should there be some form of legally binding due diligence obligations on the finance, as well as the wider corporate sector, regarding the legal sourcing of any wild plants or animals, including timber and fish.

  • is there a need for more direct guidance on what to look out for in screening processes, and what places or activities should be avoided, or carefully scrutinized, due to the likely damage to the environment. For example, we recently learned of moves to explore for oil in the Okavango catchment. Quite legal by the looks, but also likely to be seriously damaging to the environment.

  • do we need to take a more holistic approach to illegal trade in wildlife – addressing all wild species in trade, including timber and fish that are being trafficked.

  • do we need a global agreement on wildlife crime that covers all wildlife, whether protected under international or national law, and that embeds the principle of comity into international law and criminalizes the import of illegally sourced wildlife by the importing State.

  • what do we have to learn from other areas, especially human trafficking, and the sorts of obligations imposed on other sectors, such as the transport sector, which is obliged to check the identity of all passengers, and the laws on the financing of terrorism.

  • and finally, we know we need more data, due diligence, and disclosure in one way or another, and some even suggest biodiversity protection becomes a fiduciary responsibility of directors. But what about good judgment. Should we push for biodiversity competent board rooms, which means advocating for a wider array of expertise on boards themselves.


We are close to 50th anniversary of Stockholm, which led to a flurry of ground-breaking activity, with new national and international laws and institutions. It is now 2021, and many initiatives have gone stale or become dated, as has the overreliance on voluntary approaches – our laws and institutions need to be fit for purpose and able to address the challenges set forth by IPCC and the IPBES.


It is time to stop repeating the call for transformational change and start acting on it – including by taking a more assertive approach to well-targeted regulation of sectors that pose a direct or indirect threat to biodiversity, and that includes the enablers of the destruction of biodiversity.

Thank you.