How finance influences the emergence of novel disease risks

Zoonotic diseases can have devastating effects on human health and societies. The COVID-19 pandemic is a stark reminder of how such emerging and re-emerging infectious diseases (EIDs) at times propagate through transnational trade and travel routes and overwhelm fragile health systems. Unfortunately, such risks to both human and animal healthcare are likely to increase substantially in the near future due to the combined effects of climate and land-use change (Carlson et al., 2022).

There is an increased recognition that human activities including deforestation, the expansion of agricultural land, and increased hunting and trading of wildlife, can be linked to the emergence and re-emergence of such diseases, in particular of zoonotic and vector-borne diseases (Allen et al., 2017; Marco et al., 2020). The production of certain types of high deforestation-risk commodities such as palm oil, have been linked to increased zoonotic spill-over through land fragmentation and habitat loss (Morand et al., 2021).

In today’s globalized economy, many large companies rely on obtaining external capital from financial institutions to expand their operations and increase production with notable environmental, ecological and social impacts in both land- and seascapes. This means that financial investments and institutions such as banks, pension funds and multilateral development banks may indirectly affect ecological dynamics by funding – and benefitting economically from – extractive activities that create new patterns of interactions between pathogens, non-human animals, and humans (Galaz et al., 2023).

For example, consider financial institutions which hold significant shares in companies that cultivate maize, rice, sugar cane and soybeans for international markets. Through their voting rights as owners, such institutions indirectly hold influence over corporate activities that drive the conversion of landscapes that help maintain rodent populations and rodents’ breeding sites, which in turn increases the rodent zoonotic disease spread through inhalation of infected aerosols particles stemming from the rodents’ urine, faeces, or saliva (e.g., hantaviruses, see Galaz et al., 2023).

Financial influence – but where?

Financial instruments such as equity, loans and bonds provide pathways for investors interested in influencing the policies and actions of companies. Financial institutions such as pension funds for example, engage in direct dialogues with corporate management, use their voting influence at corporate annual general meetings, and sometimes threaten to divest as a way to influence companies to act on issues that are central to their interests. When successful, such engagements can have considerable “downstream” effects when large companies choose to use their dominating market position and globally spanning supply chains to advance sustainability and climate ambitions (Folke et al., 2019). 

But where in the world is such financial influence at all possible? A recently published study (Galaz et al., 2023) analyzes the possibilities of such influence by tracing equity investments in companies and regions in the world where EIDs risks have been shown to be particularly high and associated with deforestation risk prone commodities. Figure 1 shows the overall investments patterns in six different regions of the world, and two cases in Latin America associated with deforestation-risk commodities.