Banks direct $209 billion to firms responsible for deforestation: Study

A deforested area close to Sinop, Brazil, on Aug 7, 2020. PHOTO: AFP

NEW YORK (BLOOMBERG) - Global banks have directed US$154 billion (S$209 billion) through loans and underwriting to the commodity trade that causes deforestation and degradation of land since 2015, according to a report.

Banks have increased credit to commodity companies by 40 per cent since the December 2015 Paris Agreement, affecting tropical forests in South-east Asia, Brazil, and central and west Africa, non-profit Amazon Watch said in a statement.

Banco do Brasil was the largest creditor, providing US$30 billion since 2016 to companies that put forests at risk, the group said. Those companies, which operate mainly in Brazil, are involved in beef, soy and paper production, Amazon Watch said. Other banks include Brazil's Bradesco, Dutch bank Rabobank and JPMorgan Chase & Co in the United States.

"Despite various multilateral and industry commitments to zero deforestation, tropical deforestation has nearly doubled over the past 10 years," Amazon Watch said in the statement. It said that tropical deforestation reached 11.9 million hectares in 2019 alone.

Fifteen banks accounted for about 60 per cent of the US$154 billion, of which eight signed the United Nations' Principles for Responsible Banking. The pledge means the banks are committing to align their operations with the Paris Agreement and Sustainable Development Goals. One of the goals is to halt deforestation and restore degraded forests by 2020, Amazon Watch said.

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