About $238 billion in credit was provided to the biggest firms linked to forest loss - many dealing in agricultural commodities - over the past five years, says new report
By Michael Taylor
KUALA LUMPUR, Oct 28 (Thomson Reuters Foundation) - Banks based in China, the United States, Indonesia and Brazil have invested billions of dollars in businesses carrying out, or linked to, deforestation since the Paris Agreement on climate change was adopted in 2015, researchers said on Thursday.
An annual report from Forests & Finance, a coalition of research and civil society groups, analysed policies and investments by financial institutions in companies with the highest exposure to deforestation risks after the Paris pact.
It focused on financial flows to the largest 300 firms involved in the production and trade of key commodities that threaten forests if land is cleared for plantations or ranches - including palm oil, pulp and paper, beef and soy in Southeast Asia, Central and West Africa, and South America's Amazon.
"The real world economy is continuing to sow the seeds of climate chaos," said Tom Picken, forest and finance campaign director at coalition member Rainforest Action Network (RAN).
"The solution is actually very simple: stop financing forest destruction now. The world simply cannot afford further government and corporate greenwash and delay," he added.
Cutting down forests has major implications for global goals to curb warming, as trees absorb about a third of the planet-heating carbon emissions produced worldwide, but release the carbon they store when they rot or are burned.
Forests also provide food and livelihoods, help clean up air and water, support human health, are an essential habitat for wildlife, aid tropical rainfall and offer flood protection.
But last year, tropical forest losses worldwide equalled the size of the Netherlands, according to monitoring service Global Forest Watch.
The new report found that about $238 billion in credit was provided to the biggest deforestation-risk firms by banks and other financial institutions between January 2016 and June 2021.
The banking sectors most responsible for tropical deforestation-risk investments are located in Brazil, Indonesia, China, the United States and Japan, the report noted.
The majority of investments by these institutions lacked adequate policies or checks to safeguard against deforestation, nature destruction or human rights violations, it added.
RAN's Picken called for harmonised international financial regulations to tackle investments linked to forest loss.
"We need to see a wholesale change in the way that the financial sector continues to fuel deforestation and climate change," he told the Thomson Reuters Foundation by phone.
In the last decade, pressure from consumers and green groups has pushed major brands that grow, trade or buy commodities to pledge to end deforestation in their supply chains.
But high-profile members of the Consumer Goods Forum (CGF) - many of them household names - struggled to meet a 2020 target to purchase only sustainably produced commodities.
At November's COP26 climate summit, host nation Britain wants an agreement to end deforestation by 2030, and has asked big producers and consumers of agricultural commodities to halt tree clearance for their cultivation, UK-based media reported.
Jan Willem van Gelder, director of Profundo, a Netherlands-based nonprofit involved in the report, said banks were putting the Paris accord out of reach by funnelling billions into deforestation globally.
"If governments continue to leave these financial flows unaddressed, there is little hope that we will achieve even the most conservative of our collective climate goals," he added in a statement.
Read more:
U.N. biodiversity chief urges COP26 climate talks to prioritise nature
No end in sight for deforestation, as national goals and funding fall short
Beyond coal: End to deforestation sought at COP26 climate summit
(Reporting by Michael Taylor @MickSTaylor; Editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
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