How global banks profit from rainforest destruction and human rights abuses

Introduction

• The destruction of the world’s rainforest fuels the global climate emergency and comes at a devastating cost for forest communities, who defend and depend on them. Through their backing of agribusiness, financial institutions have bankrolled and profited from this destruction.
• Banks and asset managers based in the EU, UK, US and China have made deals worth $157 billion with firms accused of destroying tropical forest in Brazil, Southeast Asia and Africa since the Paris Climate Agreement, our investigation has found.
• These financial institutions have netted $1.74 billion in interest, dividends and fees from financing the parts of agribusinesses groups that carry the highest deforestation risk – primarily soy, beef, palm oil and pulp and paper – Global Witness estimates.
• As governments, shareholders and the public start to see profits made on the back of environmental and human rights abuses as illegitimate, these vast sums could become liabilities for banks. The first known case of a bank returning profits from a problematic deal has already taken place.
• Financial giants who have repeatedly profited from these deals include HSBC, Deutsche Bank, JPMorgan, BNP Paribas, Rabobank and Bank of China.
• The US bank JPMorgan has made deals worth an estimated $9.38 billion with firms accused of deforestation, making it the biggest deforestation lender in the US, EU, UK and China, according to our analysis.
• At the heart of the problem is a failure of voluntary commitments and a lack of accountability, which means banks can make problematic deals over and over again. Communities and NGOs are testing new legal boundaries to try to hold financiers to account. However, governments in major financial centres, including the EU, UK, US and China, need to effectively regulate financial institutions and companies to end their complicity in deforestation and their ability to profit from it.

Rainforest loss has devastating consequences for the climate, for forest-dwelling people and for biodiversity. Demand for land on which to produce palm oil, soy, rubber, beef and leather in the Amazon, Southeast Asia and Central Africa helped drive an estimated 23 million hectares of tropical forest loss between 2016 and 2020 – an area nearly the size of the United Kingdom.

Who profits from the destruction of these climate-critical ecosystems? And just how much money is being made from it? A 2019 Global Witness report found more than 300 banks and investors had provided $44 billion of backing to six of the world’s worst deforesters over six years. Our latest investigation reveals just how much cash banks such as HSBC, BNP Paribas and JPMorgan Chase & Co (JPMorgan) could have raked in from deforestation-linked deals.

Finance is the crucial component agribusinesses rely on for their ever-expanding destruction of the world’s forest. Without this backing, they could not buy vast swathes of land and machinery for cattle rearing or crop planting. Nor could traders buy and sell these products or ship them overseas. While many banks have made efforts to burnish their green credentials, their commitment can only truly be judged by where they choose to put their money.  Currently, banks face few if any consequences for their lending and investment to firms accused of deforestation.

Continue reading and download the full report at the source (Global Wittness.)