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Forests play a crucial role to sustain life on earth. Apart from their intrinsic value and beauty, forests perform a wide range of essential ecological functions without which humans and other species could not survive. Tens of millions of people in the world also call forests their home and depend on them for livelihoods.
Despite their value for human beings and the global environment, forests continue to be destroyed at unprecedented rates, and with it the ten thousands of species essential for life to flourish on earth. Only around 30% of the earth's land surface - almost 4 billion hectares - is covered by forests. Of this total forest area, around 271 million hectares are not natural forests but wood plantations and semi-planted forests. The speeds of deforestation may have slowed down during the current decade, yet forests are still being cleared much faster than they can regenerate themselves. In addition to full deforestation, large areas of tropical, temperate, and boreal forests are each year significantly degraded due to over-exploitation.
- Forests are the most biodiverse terrestrial ecosystems on earth: they are home to 80% of the world's terrestrial biodiversity. Moreover, the richer the forest's biodiversity, the more resilient global ecosystems are to natural disasters and climate change. Consequently, logging forests results in the permanent loss of an untold number of animal and plant species, leading to a severe degradation of the global web of life, the negative consequences of which are hardly understood.
- Intact forests are critical climate buffers: growing plants and trees act as a carbon sink and their cooling ability dampens changes in regional weather patterns. Vice versa, clearing forests results in the release of large quantities of carbon dioxide and other greenhouse gases into the atmosphere and may well alter local weather patterns.
- Forests contribute to soil and water conservation, preventing us from floods, erosion and other natural disasters. Deforested areas may quickly turn into uninhabitable waste lands, devoid of the top soil required for agriculture.
- Forested watersheds and wetlands supply 75% of the world's accessible fresh water and act as a natural filter for our air.
- 1.3 billion people, one-fifth of the global population, depend on forests for employment, forest products (timer and non-timber), and contribution to livelihoods and incomes.
- Nearly all forests are inhabited by indigenous (estimated 60 million people) and rural communities who have customary rights to their forests and fully depend on it for their livelihood.
- Forests contribute to genuinely sustainable development: providing wood and non-timber forest products such as food, medicinal plants, fibres and rubber. Also, forestry activities create employment, yet the amount of jobs differs extremely between various types of forestry activities: small-scale and informal forestry can be an important source of employment, but large-scale plantations generate fewer jobs than alternative land uses.
Drivers of deforestation and forest degradation
Everywhere, forests are under threat from a range of factors:
- Unsustainable, harmful logging occurs when forests are exploited at a rate or in such a way that regeneration is impossible. This can involve both legal and illegal logging, as forestry legislation in many countries does not yet incorporate sustainable logging practices, and small-scale illegal logging by forest-depended communities is not always unsustainable. Logging of forests also results in new roads to access more and more remote forests, which then leads to further deforestation.
- Forests are destroyed for the development of industry and infrastructure, such as roads, railways, dams, mines and oil and gas installations. BankTrack has several campaigns focussing on these sectors: Banks, climate and energy, and Tracking the Equator Principles.
- The biggest driver for deforestation is agriculture, such as palm oil plantations, and large-scale pulp and paper mills, but also aquaculture (shrimp and fish cultivation) which in many coastal areas threatens mangrove forests.
- Deforestation thrives especially in jurisdictions with weak legal institutions and rampant corruption, allowing illegal logging on a scale vastly superior to legal logging operations.
Banks and forests
Banks and other financial institutions can play a crucial role in the protection of the worlds' remaining forests, by committing themselves to a zero deforestation goal, ensuring that they will not finance any business activities that lead to further deforestation, especially the further disappearance of old-growth forests. When banks operate in sectors with a potentially strong impact on forests, such as agriculture, mining, and the forestry sector itself, they should develop stringent investment policies that ensure this. BankTrack and Environmental Paper Network developed guidance for such policies for banks and investors active in the pulp and paper sector.
Role of BankTrack/aim of this campaign
BankTrack's Banks, forests and biodiversity campaign focuses on the financiers of important initiators of deforestation, with the aim to push banks to act more responsibly regarding their forest-related investments. The long-term goal of our work is to help ensure that private sector banks no longer finance companies, projects, and business activities that cause a large negative impact on forests. Within this campaign, we focus primarily, but not exclusively, on biomass, pulp & paper, and other forest-risk commodities, such as soy, palm oil, and timber.
BankTrack is working in partnership with the Forests & Finance coalition to ensure that banks and other investors of these industries have improved access to information about these risks and opportunities and strengthen their policies and practices in financing the sectors. In addition, we research the role of banks that continue to finance projects with large negative impacts, and assist communities affected by such projects in dealing with banks.