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In early 2020, the Environmental Paper Network (EPN), of which BankTrack is a member, evaluated the investment policies of 68 major financiers of the pulp and paper industry for the second time. They benchmarked the policies against 14 absolute minimum criteria that all financial institutions should require their clients, investments, and business partners to adhere to in order to preserve forests and protect the environment, respect human rights and safeguard the interests of communities. These “Red Lines” are fully described in the Green Paper, Red Lines report, which is a translation of EPN’s Global Paper Vision for use by financiers. They include requirements for legality, to exclude any deforestation and forest degradation, and to respect customary land rights.
The assessment found that most Red Lines are still poorly protected by financial institutions. On average, only 6% of the banks scored “well protected” for a Red Line criteria. The highest scores were obtained for the Red Line requiring legality and respect for human rights, for which 22% and 26% of banks scored “well protected”, respectively. The worst scores were obtained for the Red Lines requiring a full Environmental Impact Assessment and no introduction of high-risk species (which includes genetically engineered trees). None of the financial institutions scored “well protected” for these criteria.
Recommendations
Although the scores of each of the 68 financial institutions assessed by the report widely vary for each Red Line, none of them have policies in place that fully protect the Red Lines. This is extremely worrying. The Red Lines form only the minimum requirements for pulp and paper companies to avoid social and environmental harm. As stated in Green Paper, Red Lines, “Companies that do not cross these Red Lines are not automatically deemed to be operating in a sustainable manner. However, companies that do cross these Red Lines, and financiers providing support to them, are highly likely to be the target of campaigns by civil society organisations."
EPN and BankTrack therefore recommend that each financial institution active in financing the sector should:
- If it has not already done so, create and make publicly available a full investment policy framework for the pulp and paper sector;
- Examine EPN’s assessment of its policy and improve it where necessary, to make sure they avoid becoming financially involved in any companies or projects that breach the Red Lines;
- Have consultation meetings with concerned groups in the process of policy formation;
- Maintain open communication with civil society organisations and community groups;
- Publish their policy through a range of media; and
- Ensure that all policies are implemented through adequate due diligence procedures.
Green Paper, Red Lines is strongly supported by more than 150 civil society organisations worldwide. We hope that the finance sector will use it to work with us to move the pulp and paper industry towards a sustainable future.
For more detailed information on the policies and the scores of each financial institution, see the overview table of the In the Red scores below.
Overview of bank policy scores 'In the Red' report
This table lists banks that have adopted each criterion fully ( ), partially ( ), or that have not adopted ( ). Click on 'Details' for the rationale of this assessment for each bank.