March 21 is International Day of Forests, a day in which people all over the world celebrate the beauty and importance of forests. This year, the UN theme for today is: ”Forests and Innovation: New Solutions for a Better World”. The transparent and innovative forest monitoring and other technological advancements are seen as “essential for early warning systems, sustainable commodity production, and empowering Indigenous Peoples through land mapping and climate finance access.” But technology itself holds no power to prevent the continued destruction. We already have enough data to know who is destroying the forest and we have the means necessary to stop it. Yet, forests all over the world continue being cut for profits.

Today, the continued expansion of agribusiness and logging are one of the major threats to the world’s remaining forests. Despite the serious social and environmental damage caused by the expansion of forest-risk commodities, big money keeps flowing to agribusiness and logging companies, allowing them to expand and continue wreaking havoc on local ecosystems and communities. The ”Banking on Biodiversity Collapse” (BOBC) report published last year by the Forest and Finance Coalition of which BankTrack is a part, found that, from January 2016 to September 2023, banks provided at least US$ 307 billion in credit to business sectors with a high-impact on tropical ecosystems such as beef, palm oil, pulp and paper, rubber, soy, and timber.

It is not that the world is unaware of the destruction of forests taking place, or ignores the need to start acting urgently and decisively to halt and reverse this. In December 2022, 196 governments agreed upon the landmark Kunming-Montreal Global Biodiversity Framework (GBF), which obliges all signatory governments to ensure that all public and private financial flows align with the four long-term goals for 2050 (Protect and Restore, Prosper with Nature, Share Benefits Fairly and Invest and Collaborate) and no less than 23 targets aimed at halting and reversing biodiversity loss by 2030. Banks also need to do their part. Under Target 15 of the GBF, governments must enforce laws and policies to prompt businesses, especially large and global companies and financial institutions to monitor, assess, and disclose their biodiversity-related risks and impacts across their value chain to minimise negative effects on biodiversity by 2030.

Over one year after GBF was adopted, we still have seen neither urgent nor decisive steps by major commercial banks to prevent them financing forest destruction. Most commercial banks identified in the BOBC report mentioned above have no, or completely inadequate agriculture and land use policies in place. Where policies do exist, the language is often vague, with too many loopholes enabling banks and investors to continue to be involved in financing deforestation and associated human rights abuses.

Even banks with above-average policies, such as Rabobank and BNP Paribas, fail to meet their commitments. Dutch banking giant Rabobank for example, a major financier of agribusiness worldwide, has financed farmers linked to illegal deforestation, despite its own policies stating it won’t support clients involved in deforestation. BNP Paribas, which committed to financing a net-zero carbon economy by 2050, including implementing deforestation regulations in the palm oil, wood pulp, and agriculture sectors, is being sued by environmental NGOs for, among other reasons, providing financial services, without adequate supervision, to companies such as Marfrig, one of the world's largest meat producers. Marfrig suppliers have carried out activities involving serious deforestation in the Amazon, illegal appropriation of lands located in indigenous territories, and slave labour. 

Instead of cutting trees, banks must cut ties with harmful industries

Industrial meat production is one the most perverse examples of our outdated food system.  It is inflicting destruction of biodiversity, bringing untold harms to local communities and forest protectors, meanwhile generating more than $8.5 trillion in externalised health and climate costs per year. Brazilian meatpacking giant JBS is infamous for its corruption scandals, its sourcing of animals from illegally deforested areas, its massive climate impact, and being linked to well-documented human rights abuses, yet continues to be an attractive investment for many banks, with Barclays being the world’s largest identified creditor to JBS from 2015 to 2022. While Barclays aims for 'net zero by 2050' for its financed emissions and is updating its agricultural commodities policy, yet its ongoing funding of JBS seriously undermines the credibility of those public commitments.

Despite the enormous impact of meat production on climate and nature, industrial livestock giants such as JBS, Marfrig, Minerva and Tyson Foods have no plans to decrease animal numbers; instead, they intend to massively ramp up production ‘to meet global demand’. Yet, this expansion is not compatible with respecting the planetary boundaries as enshrined in the Paris Agreement and the Global Biodiversity Framework. Banks must recognise that there is no such thing as a sustainable industrial livestock sector, despite all the shiny policy ambitions. Divestment from industrial meat, or at minimum an immediate end to all financing for its further expansion, is the sole credible pathway for financial institutions committed to halt deforestation and limit climate impacts.

Another growing threat to the world’s forests, people and climate is the biomass industry, widely mislabelled as a renewable source of energy. Banks continue to provide loans and investments to pellet producers, and to energy companies that operate forest biomass power plants, especially those aiming to transition power plants from coal to biomass, framing this as part of the green transition. In reality, wood biomass combustion releases more CO2 per unit of energy than fossil fuels, exacerbating the climate crisis. Burning wood biomass means more logging of forests and more land conversion to large scale industrial plantations of fast growing trees such as eucalyptus, which create “green deserts” with little or no wildlife. Such plantations also store much less carbon than natural forest ecosystems, deplete freshwater sources and soils, and increase the fire risk. Particularly in the global South, a massive expansion of tree monocultures is frequently associated with land grabbing and human rights violations. Meanwhile, the booming demand for wood pellets to feed power plants cannot even be met by such plantations alone. A recent site investigation of the bioenergy plants in Finland found high-value log wood resources (trees!) were used for burning, instead of industry by-products such as sawdust, exposing a stark contrast between the marketing messages of bioenergy firms and the actual situation. Other scandals include the world’s biggest pellet producer Drax seeking to source its raw materials from the old growth forest of British Columbia, Canada.

Banks continuing to provide financing to business sectors destroying natural forests poses not only a threat to the world's remaining biodiversity but also jeopardises the stability of financial institutions themselves as ultimately their future operations depend on healthy and prosperous societies that are sustained by stable ecosystems.

Banks for biodiversity!

With only six years to reach the 2030 goals of the GBF, banks must act now to bring the loss of ecosystems of high ecological integrity close to zero. BankTrack and our partners working all over the world to protect the world's remaining forests cannot tolerate the unacceptably slow rate at which banks are currently taking steps to halt and reverse the biodiversity crisis and destruction of forests. On the occasion of International Day of the Forests, we therefore demand that all banks commit to embrace the mission of the GBF and produce and publish transition plans and investment policies that are aligned with the goals and targets of the GBF and the Paris Agreement, and that they do so before the next global Biodiversity Summit (COP16) in Cali, Colombia, in October 2024. In doing so, banks should take heed of the following;

1. If you cannot change them, leave them

To align with the goals and targets of the Kunming-Montreal Global Biodiversity Framework, banks must acknowledge that certain high-impact industries such as fossil fuels, industrial meat production, and wood biomass, cannot persist in their finance portfolios. It is imperative for banks to enact clear policies to immediately cease financing the expansion of these industries, sever ties with the most egregious offenders known for their environmental destruction, and compel their other clients to develop comprehensive transition plans aligning with the objectives and targets of the GBF.

2. No thanks, It’s a No-Go for me

While some banks have begun to restrict financial support for companies active in oil and gas extraction in specific biodiversity-rich areas such as the Amazon, or in specific wetland and peatland areas (such as BNP Paribas, Société Générale, Intesa Sanpaolo, and Standard Chartered), so far, no bank has made an explicit commitment to restrict their financing activities in all the 8 different No-Go Areas identified by the Banks and Biodiversity coalition, of which BankTrack is a member. These are areas recognised by international conventions and agreements, but also include nationally and sub-nationally recognised areas , habitats with threatened and endemic species and Key Biodiversity Areas; intact primary forests and vulnerable, secondary forest ecosystems; free-flowing rivers; protected or at-risk marine or coastland ecosystems; areas where the Free, Prior & Informed Consent (FPIC) of Indigenous Peoples and local communities have not been obtained ; and Iconic Transboundary Ecosystems. Given the severity of the biodiversity crisis, it should become industry standard that no direct or indirect financing is provided for unsustainable, extractive, industrial, environmentally, and/or socially harmful activities in these areas.

3. Put human rights into practice

The Global Biodiversity Framework acknowledges the significance of Indigenous Territories and the protection of the rights of Indigenous Peoples, particularly as over a third of the world's most biodiverse regions are situated on Indigenous lands. It is imperative for banks to enhance their policies to honour Indigenous Peoples' rights, including obtaining Free, Prior and Informed Consent (FPIC), not just as a matter of principle, but also as a critical factor for achieving positive biodiversity outcomes. Although many banks declare a commitment to uphold human rights in accordance with the UN Guiding Principles, their due diligence processes to enforce these principles are often inadequate. It is crucial for banks to translate these commitments into tangible actions and effective due diligence and compliance procedures.

4. Regulation to ensure transparency and accountability

In achieving Target 15, governments must not rely solely on voluntary corporate initiatives based on self-reporting, and frameworks such as the The Taskforce on Nature-related Financial Disclosures (TNFD).  BankTrack, Rainforest Action Network and other CSOs have all raised concerns to the TNFD about the serious risks of accommodating greenwashing. Instead, governments must develop and strengthen legislation that requires companies to limit their impacts on biodiversity and which holds companies  accountable when they do not meet such requirements. The European Union's Corporate Sustainability Due Diligence Directive (CSDDD) marked a significant legislative milestone in this field. Last week, a  watered down version of CSDDD was finally approved by the EU member states. In its diluted version, with the final outcome being largely disappointing, especially for the financial sector.  BankTrack, together with partners, will continue  advocating for strong laws to stop banks from financing projects and companies that have devastating impacts on forests and forest dwelling communities. Until such laws are in place, we will engage banks on their ongoing responsibility to help protect the world's remaining forests.

Happy Global Forest Day!