Climate Change and the Financial System

Climate change has global impacts that will continue to intensify unless people and businesses adapt. The financial sector can help mobilise and support sustainable practices to limit the impacts of climate change and reduce the risk of climate-driven exploitation.  

Whilst the world is already feeling the impacts of climate change such as heatwaves, climate induced disasters are likely to continue unless we take steps to change our practices. The impacts of climate change will continue to destroy infrastructure and disrupt livelihoods, increasing mass migration of communities. This climate induced migration often drives workers from traditionally rural agricultural sectors to urban areas where they often enter informal and high-risk sectors for exploitation. Additionally, investors need to recognise the implications these events will have on the financial sector, specifically the risk from infrastructure and property damage. Insurance policies and claims could increase at a higher frequency due to loss caused by natural disasters.

To build resilience in communities and avoid additional risks, the financial system can help mobilise resources for climate mitigation and adaptation. For example, if banks adjust their lending policies by giving discounts on loans for sustainable projects, they could support the long-term implementation of climate change disruption.

What can your organisation do?  

  • Invest and provide loans for sustainable projects, that aim to implement long term solutions and strategies to mitigate climate risk.
  • Build programmes to support vulnerable communities’ accessibility to finances, particularly as mass migration increases and these communities become at greater risk of exploitation.

Past Issues


Financial instability can be a risk driver to a person’s vulnerability to modern slavery. Currently, those either at risk or who have experienced homelessness and exploitation face barriers to accessing financial services that could help them build resilience and prevent further exploitation.  Financial institutions need to adopt a survivor-informed approach to ensure that individuals and businesses have access to affordable and formal financial products and services.

Financial inclusion aims to ensure products and services in the financial sector are affordable and accessible to individuals and businesses. This includes access to a bank account, transactions, payments, savings, credit, and insurance services that enable financial independence and security.

Financial instability can be a risk driver to a person’s vulnerability to modern slavery. Currently, those either at risk or who have experienced homelessness and exploitation face barriers to accessing financial services that could help them build resilience and prevent further exploitation. Barriers include a lack of photo ID (often stolen by traffickers), lack of fixed address, lack of access to digital services, complex application processes, and associated banking and transaction fees. Many of these barriers still exist for survivors, further increasing their vulnerability into a cycle of re-trafficking.

Financial institutions are in a strong position to disrupt this cycle of exploitation and it is now a global agenda. The World Bank, the G20 and United Nations have addressed financial inclusion’s potential for positive social and economic development. In the 2030 agenda for the U.N.’s Sustainable Development Goals, financial inclusion features as a target in eight of the 17 goals.

What can your organisation do?

  • Build a mandated awareness strategy that focuses on the importance of financial inclusivity, recognising its role in reducing vulnerability and preventing exploitation.
  • Adopt a survivor-informed approach to products and services to ensure they are inclusive and accessible for survivors and vulnerable individuals such as refugees and formally incarcerated individuals.
  • Partner with subject matter experts to implement appropriate approaches, policies and communication of inclusion targeting those whom they are designed to protect.


The increasing number of UK bank branches closing their doors will likely change the methods traffickers use to interact with financial institutions. With several communities in the UK now facing the closure of their only bank branches, financial institutions need to address the modern slavery risks a shift towards online banking creates.

So far, in 2023, 217 bank branches are scheduled for closure, signifying the shift towards online and mobile banking services. With online services and automated processes becoming the main form of communication between people and financial institutions, the risk of financial institutions’ involvement in modern slavery and human trafficking will increase. Financial institutions need to be aware that:

  • People and businesses reliant on cash will increasingly use ATMs to deposit money. High-risk businesses for exploitation such as car washes and nail salons are often cash-based and the automated process of ATMs for cash deposits reduces the physical interaction of perpetrators with bank staff. This makes it more difficult for branch staff to spot the physical signs of exploitation in branch, thereby creating more opportunity for modern slavery for traffickers.
  • Human traffickers often exploit banking systems to launder the profits of their crimes, using businesses as a front for these operations. Small business loans from banks are valuable in supporting local economies in the UK. However, without a local branch, banks will struggle to build an intelligent picture of local businesses’ risks. The automated online process of lending can expose banks to the risk of providing loans to businesses using exploitative practices and/or laundering the profits of illicit crimes.
  • Online banking as the main method of accessing finances significantly reduces accessibility for vulnerable communities, as they may not have access to secure online platforms. Financial inclusion for survivors of trafficking is essential and reduced access to local branches presents barriers to this.

What can your organisation do? 

  • Increase regular monitoring and checks on transactional patterns and red flags for accounts primarily funded by cash and businesses in high-risk sectors of exploitation, such as car wash companies.
  • Create financial inclusion-specific processes for vulnerable communities to safely access and manage their finances online.
  • Conduct enhanced due diligence for new businesses when lending money in communities with few local branches. This includes specific KYC modern slavery checklists to identify red flags.


The construction of the Nenskra dam in the Georgian Caucasus Mountains will degrade the local landscape and may require indigenous communities to move away from their ancestral home, leaving them vulnerable to exploitation. Several development banks approved loans for the project but have since found the project does not meet human rights and environmental protection standards.

The recent decision by the managers of the Georgian Nenskra dam to invite companies for prequalification (estimate for credit given by a lender on information provided by a borrower) for preparatory works is a reminder that plans for this dam continue and with them, the increasing likelihood of exploitation. In recent years, this dam is just one of a growing number of projects in Georgia which have shown little regard to the adverse impacts on and the needs of local residents.

Building the dam and relevant infrastructure would alter the local landscape, used for agriculture by the Sven people, and the microclimate, further endangering the livelihoods of the community. There would also be considerable risk of avalanches, mudflows and landslides, which will place additional strain on the landscape and increase community vulnerability. Thus, it is possible, as a result of dam construction, modern slavery and exploitation could arise.

Although, the development and investment banks who originally approved loans for the project have since realised the human and environmental costs of the project, they are still set to sign the final loan contracts. These banks may be considered indirectly responsible for any resultant exploitation that occurs because of their investments.

What can your organisation do?

  • Decision makers should consider the human rights and environmental risks of any large investment or loans; including water-scarcity as a risk to exploitation of their investments.
  • Step up regular monitoring of accounts and transactional patterns in water-scarce, high-risk countries, particularly for global projects where vulnerable and indigenous communities are involved.
  • Implement a policy for financial crime teams to receive training on understanding the risk drivers their clients may face, such as water-vulnerability, allowing them to better spot red flags in transaction patterns.


Venture capital investments have been credited with building the most expensive World Cup in history, but these games have come at a bigger cost than just money – they have cost people’s lives. Health and safety violations were rife throughout the building sites of the World Cup facilities.

The Qatar World Cup cost an estimated $220 billion to build; in large part funded by venture capital investors. An investigation found that investors held $178 billion worth of shares and bonds in 16 of the major construction and hospitality companies active in building the Qatari World Cup. European financial institutions accounted for almost a quarter of these investments. Despite its scale, very little of this investment went into protecting the safety and wellbeing of the workers who built the roads, luxury hotels, shopping centres, facilities, stadiums and airport for the games.

Migrant workers in particular reported poor health and safety on the building sites, including a lack of effective heat protection measures and being forced to work over 12-hour days. With no water or toilet breaks and +40C temperatures, at least 200 cardiovascular deaths of Nepalese migrant workers between 2009 and 2017 were linked to these poor working conditions.

But are venture capital investors responsible for these deaths? This remains to be seen. What is clear, however, is the need to start integrating human rights responsibilities into the investment processes of financial institutions. Human rights then become a consideration before a project has been financed, reducing the risk of health and safety violations during the projects.

What can your organisation do?

  • Adopt, and continuously implement and monitor, human rights policies applicable to all industries in which you invest.
  • Encourage, build and follow a procedure where investors’ responsibilities include utilising their shareholder influence to encourage investee companies to protect workers’ rights and working conditions.


The extent and complexity of financial fraud, corruption and organised crime means governments and organisations cannot tackle these crimes in isolation but must collaborate and co-ordinate activities to prevent MSHT. In the fight to disrupt the movement of proceeds linked to MSHT, financial institutions can look to South Africa’s prevention of the illegal wildlife trade for a new model of disrupting criminal networks.

The South African Anti-Money Laundering Integrated Task Force (SAMLIT) is South Africa’s first public private partnership combatting financial crime, money laundering and trafficking in persons. Expert working groups (EWGs) and tactical operations groups (TOGs) are set up to conduct research and analyse international and local trends and threats. Through enhanced collaboration and co-ordination, all members share the knowledge gained, build skills, and develop tools to collaboratively detect, prevent, and disrupt financial crime.

Money laundering investigations have tended to focus on predicate offences such as poaching, possession or trafficking of wildlife products. To effectively fight against organised crime, prosecute higher level offenders and identify wider networks, gaps in understanding of the financial flows were researched through data mining and trend analysis. These generated profiles of key actors (their occupations and industries), and money laundering strategies. For example, cash is utilised at lower levels across a range of perpetrators including game rangers, vets & casino staff. These strategies become more sophisticated further up the supply chain requiring differing investigative techniques.

The approach has proven successful with a marked increase in the number of suspicious activity reports submitted to the Financial Intelligence Network driving further intelligence generation. This in turn has led to the profiling of a rhino poaching kingpin who was suspected of laundering money through an associate’s bank account and the identification of a cross-border illegal poaching network.

What can your organisation do?

  • Investigate how wider AML processes can be utilised to identify all levels of a criminal network engaged in exploitation of individuals. For example, using existing investigative methodologies to identify the wider network involved in laundering the proceeds of MSHT.
  • Actively engage and share knowledge, successes and insight with both financial institutions and other partners striving to eradicate modern slavery through forums and endeavour to devise inventive solutions which can be used to identify perpetrators of exploitation across the financial system.


It is possible for the financial sector to contribute to child labour by financing value chains where enterprises may rely on child labour to meet demand. However, financial institutions can also actively support the prevention of child labour through inclusion and sustainable investment strategies.

The Côte d’Ivoire is the world’s top producer of cocoa, accounting for 40% of world production. Financial institutions support this industry by providing commercial loans to predominantly national and international export companies. Co-operatives selling cocoa to these export companies lack the financial resources to obtain loans directly, so they often can only pay local producers after being paid a large sum. As a result, microenterprises may resort to unpaid family labour and child labour. It is estimated that approximately 1.3 million children are working in the cocoa sector, with 31% of them engaged in hazardous work.

Lending banks should use their leverage to eradicate child labour by supporting local communities in addressing root causes. Assessments against borrower’s actions to eliminate child labour should be undertaken through ongoing due diligence, aspirational KPIs and action plans to achieve them. Banks can also incentivise efforts to eliminate child labour by tying social criteria to commercial loans which could facilitate and support economic activity in mitigating social issues such as poverty.

Hershey chocolate has recently launched its Income Accelerator program which provides cash transfers and investment in village savings and loan associations. The program supplements farmer income and helps improve their financial and agricultural literacy with the aim to reduce poverty. Financial institutions should aim to replicate this program to provide social investment, such as fair wages and loans, to local communities directly impacted by their local investments to address the root causes of child labour and exploitation. By financing these specific developments projects, financial institutions can further encourage businesses involvement in these programmes as conditions of commercial loans in high-risk sectors.

What can your organisation do?

  • Identify and implement social investment opportunities as part of your sustainable investment strategy to break cycles of poverty and promote the empowerment of communities.
  • Develop robust governance with clear policies and procedures to outline commitments to protecting human rights across value chains.
  • Implement ongoing due diligence of value chains including investment opportunities to support the protection of human rights.


Poverty is one of the most frequent and obvious drivers of modern slavery. Exclusion from financial systems, or the lack of access to basic banking services, is a widely recognised as contributing to this vulnerability. The financial industry has an important role to play in supporting survivors to regain their independence and reduce the risk of re-exploitation.

There are an estimated 130,000 victims of modern slavery in the UK with 17,000 potential victims reported to the National Referral Mechanism (NRM), the UK’s identification and support system, in 2022. Many of these survivors and others require support to rebuild their financial stability and to reclaim their freedom and independence.

Improving access to the financial systems and giving survivors the power to take control of their own money is a key step in their recovery. However, the primary focus of financial institutions is often on risk mitigation – preventing and disrupting modern slavery through KYC and transaction monitoring programmes. The sector should be going beyond this to develop survivor support programmes, underpinned by survivor experiences to best reflect their needs.

Finance Against Slavery and Trafficking (FAST) is a UN multi-stakeholder initiative to mobilise the financial sector against modern slavery and human trafficking. FAST’s Financial Inclusion Initiative aims to reintegrate survivors into mainstream financial services, simplifying KYC to both identify and protect potential victims and enable survivor access to banking services. Addressing a lack of access to their own identification documents, simplified KYC leverages alternative methods of validating a survivor’s identity such as utilising the address of the survivor organisation or law firm supporting them. So far, the initiative has helped 2,800 survivors open bank accounts.

Financial inclusion programmes should also include access to affordable financial products and services that meet their needs. Digital banking, enabled by financial technology (Fintech) is helping grow access to banking through use of ubiquitous mobile phones. These inclusion programmes can be supplemented by financial literacy education and employability support such as STOP THE TRAFFIK & ICA’s scholarship programme for displaced Ukrainians. By engaging survivors in the design and implementation of these engagement projects, FIs can help bring about systemic change.

What can your organisation do?

  • Ensure staff are adequately trained in both spotting the signs of MSHT and on how to support and protect vulnerable customers, including survivors.
  • Review your organisations KYC and due diligence processes to ensure survivors are not just being identified but are also not being excluded from accessing basic financial products.
  • Identify ways to enabling social reintegration through financial literacy and employability programmes to build survivors’ independence.


Indigenous communities are amongst the most affected by climate change due to their dependence upon and close relationship with the environment. Banks around the world continue to finance the fossil fuel sector putting indigenous communities at greater risk of exploitation impacted by the effects of climate & environmental change.

There is a disconnect between banks’ environmental aspirations and their practices. On the one hand, ESG reports proclaim net zero credibility and environmentally conscious investments, while many are still providing loans, insurance, and financing to companies in the fossil fuel sector. 44 of the 60 banks listed in the latest banking on climate chaos report have committed to net zero by 2050 but are still financing oil & gas exploration. The of opening these sites will have an impact beyond 2050. Beyond oil and gas, banks are also financing activities causing deforestation in the Amazon and destructive mining, both of which are known to adversely affect the local communities’ way of life.

Indigenous populations are being forced to fight major investments aimed at continuing oil and gas extraction or deforestation in order to project their land and way of life. In Canada, whose banks are amongst the worst financers of fossil fuel projects, First Nations, farmers and environmentalists are fighting the construction of the Keystone XL and TransMountain Pipeline Expansion. These projects have already resulted in human rights abuses of the local Sumas First Nations following several oil spillages resulting in local evacuations.

To adhere to the UN Guiding principles, businesses, including financial institutions, have a duty to prevent or mitigate any human rights abuses including those caused to indigenous communities through project financing. Ultimately, the banking and finance industry has the power and responsibility to significantly reduce the impact on the planet and the communities most affected by climate change. By moving away from environmentally destructive investments and shifting towards balancing profit, environmental and social responsibilities, the financial sector can be a force for good in protecting the environment and preventing exploitation.

What can your organisation do?

  • Assess the impact of your business’ actions on the environment and affected communities from adverse environment impacts.
  • Conduct human rights assessments in any investment opportunities and ensure companies being invested in are themselves acting responsibly.
  • Engage with indigenous communities in the initial planning stages of projects that will impact them, giving them an opportunity to express their rights to both self-determination and to natural resources.


The financial sector should show leadership in ensuring support workers, such as cleaners, in their operations are paid fairly, receive written contracts, and do not face exploitation. 

While much of the focus is correctly on their own supply chains, financial institution shouldn’t ignore the risks of MSHT much closer to home. The ‘invisible workforce’ of around half a million cleaners provide a vital service to financial institutions. Predominantly made up of women and ethnic minorities, workers are frequently in precarious employment and made more vulnerable through subcontracting arrangements and zero-hours contracts. Workers often report exploitative practices such as not being paid for all hours worked, not being paid on time, not receiving holiday pay, not being paid at all, or being paid less than originally promised.

The use of cleaning agencies to subcontract work allows financial institutions to distance themselves from the responsibilities of ensuring fair wages and increases the risk of exploitative practices. Financial Institutions should instead ensure their responsible sourcing and modern slavery policies are enforced across subcontracting that occurs within their own buildings.

What can your organisation do?

  • Undertake a thorough risk assessment across your operations, especially those areas where agency or subcontracting is utilised to identify areas at risk of exploitation.
  • Enforce your policies and procedures for agencies and subcontractors to ensure workers are paid a fair wage.
  • Ensure all workers across operations and the supply chain have a mechanism to raise concerns or exploitative practices through a robust and fair remediation policy.


Cyber scams based in Myanmar are tricking scam victims to ‘invest’ in cryptocurrency through online dating sites. Organised crime gangs operate these scams to exploit people across borders and force them to scam people across the globe to finance their criminal activities.

Organised criminal gangs with links to China have established ‘pig butchering’ internet romance scam bases across Myanmar. In Myanmar, major crime bases have emerged in the Myawaddy region and the Shan State. These areas have extensive histories of criminal activities and are remote.

STOP THE TRAFFIK’s intelligence team are supporting several victims of trafficking who are currently trapped in a call centre in Tachileik, Myanmar, and are being forced to conduct cryptocurrency scams. Over 100 victims are at this location and were recruited from China, Thailand, and Sub-Saharan African countries through online ads advertising online sales jobs in Thailand. Through victim support, STTG is gaining insights into the operation of the criminal network behind the call centre, including bank accounts owned by the perpetrators, phone numbers and social media profiles of people involved in the network, and websites used to scam and transfer cryptocurrency. This intelligence helps to target criminal organisations through means such as financial transactions.

What can your organisation do? 

  • Conduct enhanced AML checks on transactions from Myanmar, such as actively monitoring accounts transactions.
  • Work with NGO’s and law enforcement to support targeted investigations of organised crime gangs, such as monitoring known bank accounts and contact details through your systems.

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