Private Banks & Investors
Private banks and investors play an important role in financing the construction of dams. Private bank loans are often a necessary complement to the public funding usually needed to build large dams. Since many dam-building companies and governments are dependent on the financial services of private banks, these financial institutions often play a key role in dam deals.
Private financial institutions are also playing a role in irresponsibly channelling money to very destructive large dam projects – without taking into account their environmental risks and socially destructive nature. European banks are for example funding highly controversial dam projects in Europe and in other parts of the world, and more and more banks from emerging economies like China, India and Brazil are funding destructive projects at home and in the global south, thereby disrespecting environmental criteria and legitimate interests of affected populations.
However, with more and more pressure on banks from affected populations and civil society organizations, such as BankTrack, some banks are starting to realize that ignoring social and environmental issues when financing large dams considerably increases their exposure to credit, compliance and reputational risks. Some are therefore withdrawing from projects that cause large-scale displacement. Other banks are drawing up policies governing the financing of large dams intended to ensure that projects that destroy ecosystems and harm populations are not financed. The best bank policies on dams are based on the recommendations of the World Commission on Dams.