Are tax havens becoming a financial hub for environmentally harmful activities?
All - Oct 18 2018
A research group from the Sweden Royal Academy of Science has reached this conclusion after conducting a three-year study on the subject.
The study was published in Nature Ecology & Evolution on August 13th of this year and sought to identify the role tax havens have played in funding and sheltering activities that are harmful to the environment. The research group presented two examples to support its thesis. The first evidence presented is that 70% of the fishing vessels involved in illegal, unreported and unregulated fishing are or have been flagged in a tax haven. The second piece of evidence they used to establish the connection is the massive flow of investment from tax havens aimed towards the beef and soy sector in the Brazilian Amazon. Both of these sectors are known for driving deforestation in the area, and the research team found that around 70% of the funding received by local operating companies between 2001 and 2011 (more than USD 18 bn) was transferred through tax havens.
Though not illegal, there seems to be a pattern of financial flows transiting through tax havens to fund environmentally harmful activities. One of the study’s key researchers, Jean-Baptiste Jouffray, argues that it’s only the tip of the iceberg and that many far-reaching consequences are being concealed by a thick veil of business secrecy. The research team called for the UN to take over the investigation and to dive deeper into other sectors that they were unable to examine. The research team hopes that this paper will draw attention to the often-overlooked environmental impact of tax sanctuaries.
Guillaume Emin, Carbon/Climate Analyst - Sources: AEF, Beyond Ratings