Why the government must stop the UK finance industry bankrolling Amazon deforestation
This post is by Jo Blackman, head of forest advocacy and policy at Global Witness
Since 2017, major UK banks and finance institutions have either provided or facilitated more than £500 million to the Brazilian arms of three of the world’s largest beef companies, all linked to deforestation in the Brazilian Amazon, as our new Global Witness investigation reveals, and hundreds of millions more have flowed into their subsidiary companies. Drawing largely on publicly available data, our exposé found that a chain of actors from cattle ranchers through to multinational beef traders, their US and European auditors, international financiers and the governments that regulate them, are complicit in deforestation. It also uncovered devastating cases of human rights abuses against indigenous and landless peoples. Unless these issues are confronted, the world’s biggest rainforest could face an irreversible tipping point that might destroy its ecology and the communities that live in and rely on it.
The evidence is now mounting that bold action is urgently needed to stop the conversion of rainforests into pasture for beef production. Effective measures to address deforestation could reduce Brazil’s agricultural carbon emissions by 69 per cent, help to slow the sixth mass extinction of species and maintain a crucial carbon sink, vital for cooling our climate.
UK banks and unwitting consumers are funding Amazon destruction
There is a direct connection between Brazil’s largest beef production companies and leading financial institutions here in the UK. Between 2017 and 2019, beef giants JBS, Marfrig and Minerva were rewarded by major UK-based banks. Household names such as Barclays and HSBC all failed to do meaningful due diligence on their exposure to this deforestation, and continue to back the companies today, despite many warnings of their failures. The beef sold by these companies is also ending up on the shelves of well known high street stores and brands, including Burger King, Sainsbury’s, Subway, McDonald’s, and Nestlé, exposing consumers to the risk that the products they buy are linked to the destruction of the Amazon.
The positive news is there is now real commitment in the UK to introduce legislation to tackle deforestation. In November 2020, the UK government added a new provision in the Environment Bill to address deforestation by prohibiting the use of certain products associated with illegal deforestation by large UK companies and requiring businesses to conduct due diligence checks to ensure their supply chains are free of illegal deforestation. This is a welcome step in the right direction, but the government must go further. The legislation is a unique opportunity for the UK to establish a world leading legal framework for UK companies and institutions in the lead up to the Glasgow COP26 climate summit later this year.
Three ways the Environment Bill needs to be strengthened
Along with a large coalition of NGOs and environmental activists, Global Witness is calling for the Environmental Bill to be strengthened in three crucial areas. These are:
- The ‘illegal’ loophole
The legislation currently only covers about half of tropical forest deforestation because it only covers deforestation defined as ‘illegal’ under local country laws, creating a concerning loophole. To end UK complicity in deforestation, the law should ensure that no UK business is able to financially reward, incentivise or profit from forest destruction, irrespective of what local rules allow. Instead, we would like to see the government clearly define the harms the law is intended to stop the UK supporting. This should be done by adopting a deforestation-free standard or single definition of deforestation, one that draws on international standards and applies to all UK sourcing. This single standard approach would also be easier for businesses and communities to understand and uphold.
- Community consent
The legislation should recognise the need for free, prior and informed consent of indigenous peoples and local communities. This is vital to end the violence against forest defenders and the law should address all forest-related human rights harms.
- Financial institutions should not be exempt
Global Witness’s investigation, Money to burn, has shown that billions of pounds are flowing into companies involved in deforestation, and UK finance is one of the worst offenders. The role of finance institutions must be addressed through legislation.
As parliamentarians debate and scrutinise the provisions in the Environment Bill, they should know that the world is watching. A strong and robust legal framework to address the complicity of UK companies in deforestation would send a clear market signal to beef companies, and their financiers, that expectations are changing. The EU, China and the US will also be paying attention, as they consider their own measures to tackle global deforestation. It is crucial for the survival of the Amazon rainforest, and the people and species that rely on it, as well as the global climate, that the UK government takes proper action to stop deforestation and associated human rights abuses.