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OPINION: Exiting Amazon oil is progress - but banks and business must do more

by Todd Paglia | Stand.Earth
Wednesday, 10 February 2021 14:00 GMT

ARCHIVE PICTURE: A rubber tree is seen at the Manu National Park in Peru's southern Amazon region of Madre de Dios. Picture taken July 17, 2014. REUTERS/Enrique Castro-Mendivil

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Under pressure from consumers and investors, some banks are stepping back from financing Amazon forest destruction, but more must join in

By Todd Paglia, executive director of Stand.earth

The fight to protect the lands, lives, and cultures of the Amazon rainforest has made a breakthrough.

Two weeks ago, European banks BNP Paribas, Credit Suisse, and ING — collectively responsible for financing the trade of $5.5 billion in Amazon oil to the United States since 2009 - committed to immediately exclude it from their trading activities.

Real movement - meaning new policies and immediate enforcement - by these banks is extremely important because they are part of the top six banks representing over 80% of the financing of the oil trade from arguably the most diverse area of the Amazon – the Amazon Sacred Headwaters.

Other major banks involved in the trade of crude oil cargoes from the Amazon have stopped short of committing to end their financing, but are under growing scrutiny. We hope that they too soon will follow suit.

We see these positive commitments from banks as a clear sign that the financial community is starting to come to grips with the human rights abuses and threats to biodiversity and climate stability from new oil development in the Amazon.

But commitments on oil in the Sacred Headwaters alone are not enough, and we are calling on banks to end expansion of oil, gas, mining, cattle grazing, palm oil and more in all endangered forests worldwide.

If this sounds ambitious, then it’s worth considering that the world’s largest financial management firm, with more assets under management than the GDP of almost every country on earth, is placing climate first and centre.

“No issue ranks higher than climate change on our clients’ lists of priorities,” said Larry Fink, CEO of Blackrock, in late January as he threatened to sell shares in the worst-polluting firms unless they can demonstrate how they will reach net-zero emissions by 2050.

When Blackrock and Fink speak, markets and companies move.

The movement by banks away from the Amazon Sacred Headwaters is consistent with where Blackrock is going – but will the rest of the economy follow suit?

While corporate commitments on climate issues have been profuse, corporate actions have consistently lagged, and perhaps most dramatically when it comes to forests.

Hundreds of consumer goods companies set goals back in 2010 to use only those ingredients that do not contribute to deforestation in their products by 2020. Yet not one achieved their targets.

The consumer goods industries’ continued deforestation and forest degradation, which includes clearcutting caribou habitat in the boreal forests of Canada to make toilet paper, sourcing palm oil  from primary forests in Indonesia and Malaysia, and sourcing palm oil tied to land rights violations - is increasingly at odds with the science around climate change.

What’s more, there are plenty of solutions at hand - such as recycled fibre for toilet paper, phasing out palm oil and investing in substitutes. Companies can and need to do much more to shift their practices.

Financial institutions are waking up to this fast, with investors demanding that consumer goods companies become transparent about their deforestation impacts, and tackle the parts of their supply chain – such as toilet paper production - that can be linked to practices like unsustainable logging.

So there we have it. A new, increasingly acrimonious battle of the titans.

On one side we have the world’s largest investors saying that without a climate-safe world business will be unable to operate and thus must be part of the solution.

On the other side, giants of the consumer goods industry are continuing to cut down forests to make toilet paper. This is fact and metaphor.

The news from the Amazon is a promising signal that the financial and corporate world is able to make real shifts in the right direction. But our climate and ecological systems require even more.

There just isn’t that much time left for places like the Amazon Sacred Headwaters and Canada’s boreal forest. A lot more pushing will be needed with financial institutions and manufacturing companies alike.

If we are going to create the climate-stable, biodiverse future we all dream of we need everyone on board - and this includes every single investor and corporate worldwide.