Friday

1st Mar 2024

EU banks play 'major role' in deforestation, report finds

  • Most banks have specific sustainability policies aimed at preventing deforestation, but companies easily evade scrutiny (Photo: CIFOR)
Listen to article

European banks and asset managers play a major role in deforestation, a new report by Global Witness shows.

Lenders based in the EU have earned a reported €401m from deforestation, out of more than €30bn worth of deals with companies linked to logging.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Researchers analysed over 70,000 financial deals struck between financial institutions and agribusiness companies between 2016 and 2020.

Deal-making was dominated by big banks from the Netherlands, France, Spain, Germany, and Italy.

The report shows that Rabobank, HSBC, BNP Paribas and Deutsche Bank have invested billions in companies with proven links to deforestation.

Among these are soy giant SLC Agricola, which the report accuses of clearing 30,000 hectares of forest in the Amazon and Olam International, charged with razing 40,000 hectares of rainforest in Gabon between 2012 and 2017 to create rubber and palm-oil plantations.

"These companies' problematic track records should have raised major red flags for bank compliance teams," researchers write, but the data shows companies often use subsidiaries to evade scrutiny.

"Banks have benefited from the destruction of precious habitats and human rights violations," Global Witness wrote, detailing investments in livestock farming and plantations for soy, palm oil or rubber linked to deforestation.

In total, over the past five years, €135bn has been invested in activities leading to logging in tropical regions in Brazil, Southeast Asia and Africa. This generated €1.5bn for the international financial sector.

Strikingly, most banks under examination have specific sustainability policies aimed at preventing deforestation.

"We have a strict policy and strict controls. If we receive signals about deforestation, we take immediate action," a spokesperson for Rabobank said.

But the report details the close relationship the bank maintains with Anthoni Salim, Indonesia's fourth-richest man.

Salim owns a sprawling group of companies notorious for rainforest destruction. According to the study, just two of its palm plantations in Kalimantan cleared 7,000 hectares of pristine rainforest between 2015 and 2018.

The firm has also been accused of facilitating child labour through its subsidiaries.

Rabobank has said it will not comment on individual customers. The Salim Group did not respond to questions about actions committed by its subsidiaries.

The worst offender mentioned is JPMorgan, with a reported €8bn in deals resulting in tens of thousands of hectares of rainforest lost.

The Bank of China is connected to investments that resulted in the clearing of 140,000 hectares of forest in Sumatra, exposing the culpability of financial institutions around the globe.

The report builds on earlier records of displacement of indigenous people.

"Life was better before [the company cleared the forest]," Maliau, an elderly inhabitant of Sumatra, told Human Rights Watch in 2018.

"We made lamps from gum resin. Now we cannot find materials to make these."

EU law

The findings come just weeks before the EU Commission will announce a new law to tackle deforestation, currently scheduled for November 17.

EU imports result in the loss of 200,000 hectares of forest annually, a figure that is predicted to increase in the next decade.

And while this new law could help curb the bloc's role in driving deforestation, the current proposal does not cover financial institutions.

"This would be a huge missed opportunity,' Global Witness told EUobserver. "Financial organisations should also be required to carry out due diligence."

The European Parliament has previously called on the commission to include financial institutions in the new law.

Opinion

Amazon deforestation and the EU-Mercosur trade deal

Regrettably, it seems that the EU has turned a blind eye to deforestation in the Amazon. So much so that over 400 NGOs are pushing 'Stop EU-Mercosur', to derail the free trade agreement with South America.

Brussels proposes EU anti-deforestation fund

The European Commission wants the EU to support international work to cut deforestation around the world by 50 percent by 2020, with proposals to aside CO2 emissions trading cash to pay for forest preservation in the third world.

Greta Thunberg leads pan-Europe COP26 climate protests

In total 50 financial centres around the world were targeted on Friday to usher in the United Nations Climate Change Conference in Glasgow, also known as COP26, with Greta Thunberg in the City of London.

Opinion

Why are the banking lobby afraid of a digital euro?

Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.

Latest News

  1. Why are the banking lobby afraid of a digital euro?
  2. Deepfake dystopia — Russia's disinformation in Spain and Italy
  3. Putin's nuclear riposte to Macron fails to impress EU diplomats
  4. EU won't yet commit funding UN agency in Gaza amid hunger
  5. EU Commission clears Poland's access to up to €137bn EU funds
  6. Right of Reply: The EU-ACP Samoa agreement
  7. The macabre saga of Navalny's corpse
  8. Belgium braces for Flemish far-right gains, deadlock looms

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us