Money to burn

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Harmful EU financing driving deforestation shows the need for Commissioner designate Frans Timmermans to commit to new rules on corporate responsibility for deforestation and environmental harm, writes Giulia Bondi. [EPA]

Harmful EU private sector financing driving deforestation shows the need for Commissioner designate Frans Timmermans to commit to new rules on corporate responsibility for deforestation and environmental harm, writes Giulia Bondi.

Giulia Bondi is an EU campaigner for Global Witness

Our new investigation Money to Burn shows the urgent need for the EU to introduce new regulation requiring companies and investors to conduct due diligence throughout their entire supply chain and investments in order to identify, prevent, and mitigate environmental, social and human rights risks and impacts.

The burning of the Brazilian Amazon this summer illustrated in the most graphic way possible humanity’s war on the planet. But such scenes play out every year in rainforests all around the world to make way for big agribusiness, away from the horrified stare of global television audiences.

These forests, along with the brave land and environmental defenders protecting them, are on the frontline of protecting the earth from climate breakdown. One famous study published in 2017 estimated that forests and other ecosystems could make up more than a third of the total carbon mitigation by 2030 needed to limit global heating to a 2° Celsius rise.

Yet between 2001 and 2015, over 300 million hectares of tree cover was destroyed: nearly the size of India. About a quarter of this loss was driven by the production of commodities such as beef and palm oil, according to a recent study. It also found that in south-east Asia alone, deforestation for growing commodities such as palm oil is responsible for as much as 78% of tree cover loss.

Our latest investigation revealed that EU based financial institutions were the main source of financing – providing nearly €13 billion between 2013 and 2019 – for the six key agribusiness companies involved in deforesting climate-critical forests in Brazil, the Congo Basin and New Guinea.

The household name institutions in our exposé will be familiar to anyone who has looked at the skyline of Europe’s main financial districts or opened a current account.

While some of these institutions have developed their own deforestation policies, there is no penalty if they ignore them – and they often do. The EU’s failure to regulate the financing of deforestation has left the foxes in charge of the hen-house. Members of the public may be shocked to learn the institutions they bank with enable the sort of apocalyptic destruction witnessed in the Brazilian Amazon this summer.

Commissioner designate Frans Timmermans rightly proclaimed at the recent climate summit that “forests are a global public good”. It is now time for EU action to tackle deforestation and protect this vital global good by following the recent European Commission communication with regulatory measures.

Along with other NGOs we are calling for the EU to adopt mandatory due diligence to require companies and financial institutions to undertake checks to ensure that their activities are not linked to deforestation, forest degradation, environmental harm and human rights abuses.

The new Commission must now follow words with actions and commit to the urgent measures needed to stop the EU driving deforestation through its own consumption and investments.

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