Financial sector under the spotlight in new international push to protect forests and forest communities
FOR IMMEDIATE RELEASE
Contact: Blair Fitzgibbon, [email protected]
Singapore ––Today, Rainforest Action Network (RAN), TuK INDONESIA and Profundo announced the launch of a new, interactive online web platform as part of a growing Forests and Finance campaign targeting investors and financial institutions financing companies implicated in tropical deforestation in the Asia Pacific region. The new research tool was introduced with a press conference during a side event at the world’s largest sustainable investment conference – the United Nations-supported Principles for Responsible Investment (UN PRI) in Singapore.
The research is now available on forestsandfinance.org, providing for the first time a comprehensive assessment into how companies linked to rainforest destruction are financed, with a fully searchable database through various field search functions. The platform also assesses what policies financial institutions have in place for addressing common environmental and social risks involved in forest-risk sector financing and features a number of case studies demonstrating the impacts of some of this financing on forests and local communities. The platform will be updated on a quarterly basis, providing an on-going resource for the responsible investment community, researchers and campaigners.
“The world’s biggest banks are pumping billions of dollars a year into tropical forest-risk sectors like pulp & paper, palm oil, rubber and logging, with too few checks on whether clients are actually obeying forest laws or respecting the rights of local communities,” said Tom Picken, Forests and Finance Campaign Director with Rainforest Action Network. “This research suggests that banks continue to turn a blind eye to the devastating impacts of their financial services; only tightened financial sector regulation is capable of setting the kind of binding standards needed to stop banks fuelling forest crime.”
The research released today finds that between 2010 and 2015 at least USD38 billion worth of commercial loans and underwriting facilities were provided to just 50 companies that impact natural tropical forests in Southeast Asia, through their production and primary processing operations of palm oil, pulp & paper, rubber and tropical timber. The forest operations of these 50 companies were supported by an additional USD14 billion worth of bond and shareholdings at the start of 2016. The tropical forests of Southeast Asia have some of the highest rates of deforestation in the world resulting from the large-scale expansion of these forest-risk commodities.
“The combined impact of relaxed law enforcement and minimum due diligence standards applied by financial institutions in credit approval processes is adding pressure on the environment, people and business. The devastating forest and land fires of 2015 and new fires in 2016 can be seen as one such impact, but so far none of the financiers have been held responsible for their role in enabling plantation expansion,” said Rahmawati Retno Winarni, Executive Director with TuK-INDONESIA. “It is time for the financial authority in Indonesia to come up with regulations setting transparency and accountability standards for the financial sector it supervises. This website shines a spotlight on the problems of uncontrolled finance and will become a platform of communication among stakeholders who share the objectives of sustainability and responsible investment.”
Some of the banks found to be most involved in financing these tropical forest-risk sectors include Malayan Banking, CIMB, DBS, OCBC, Mizuho Financial, Sumitomo Mitsui Financial, Mitsubishi UFJ, HSBC, Standard Chartered, JP Morgan, China Development Bank, Bank Mandiri and Bank Negara Indonesia.
The study finds that even some banks with voluntary environmental and social policies in place are routinely providing loans and other financial services to clients engaged in deforestation and social violations. A primary recommendation is that financial sector regulators in key jurisdictions – such as in Japan, Indonesia, Singapore and the UK – introduce mandatory requirements on banks and investors to conduct robust due diligence screening processes on forest-sector clients, with strong penalties for non-compliance.
Rainforest Action Network runs hard-hitting campaigns to protect endangered forests and Indigenous rights, break North America’s fossil fuels addiction, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org
TuK INDONESIA works to encourage political solutions and options for vulnerable groups, local communities and indigenous peoples to secure and protect human rights, access to justice and self-determination. For more information, please visit: http://www.tuk.or.id/
Profundo is an economic research consultancy analyzing commodity chains, financial institutions and Corporate Social Responsibility (CSR) issues – predominantly working for environmental, human rights and development organizations in the Netherlands and abroad. For more information, please visit: http://www.profundo.nl/page/show/home-122
This post is also available in: Indonesian