By Juliette Portala
(Reuters) – The world’s biggest financial institutions have stepped up support for companies in the agricultural, forestry and land exploration sectors that were the main drivers of global deforestation in 2021, a new study showed on Monday.
Released by the coalition of NGOs Forestry and Finance, which seeks to improve transparency, policies, systems and regulations in the financial sector, the report found that funding to these companies increased by more than 60% to $47 billion between 2020 and 2021.
The analysis was released ahead of the next round of global climate talks in November, in which the protection of tropical forests and other biodiversity will be a central theme.
Banks have pumped $267 billion into forest-risk commodity companies since the Paris climate accord was signed in 2015, according to the study, while investors held $40 billion in bonds and shares of those companies in September this year.
“The world’s financial institutions are actually increasing their lending to their own industries, pushing humanity to the brink,” Tom Picken of Forestry and Finance said in a statement, citing “dangerously inappropriate” policies.
An assessment by Florestas e Finanças of the policies of 200 financial institutions exposed to companies working in areas at risk of deforestation in Latin America, Southeast Asia and West and Central Africa ranked 59% of them with less than 1 on a scale of 10, in a sign of “an abject failure” to mitigate environmental, social and governance (ESG) risks, he said.
In Indonesia, for example, Southeast Asian pulp and paper producers continue to expand production, putting the country’s remaining forests under pressure, while in Brazil the beef industry has contributed to 80% of Amazon deforestation since 1985, according to the report.
The lending or investment policies of finance companies for both sectors were “very weak”, the study also found, and did little to prevent environmental degradation, support the rights of indigenous peoples and local communities, or ensure that companies are not exploiting people through forced labour.
“This latest assessment shows how blinded big banks and institutional investors are to the urgency of the moment,” Picken added.
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