Thursday, November 19, 2020
The survey is part of an international case study on deforestation linked investments conducted by Fair Finance International, which Etisk Bankguide is a part of. Etisk Bankguide is run by Framtiden i våre hender the Norwegian Consumer Council (Forbrukerrådet). The international case study from Brazil, Germany, the Netherlands and Norway examines financial ties to 59 companies with a high deforestation risk in Brazil. The companies produce, trade or sell soy or meat from Brazil, or have supply chains that use the raw materials in Europe and China. The studies show that the financial institutions in the Netherlands, Germany and Norway have funded the companies in question with at least 20 billion USD since 2015.
The report is covered in one of Norway's main news outlets here.
The review shows that several Norwegian banks are at the forefront of the work against deforestation in the portfolio, often ahead of their European counterparts. But although several of the banks are taking important steps, they are not protected from deforestation risk. The report identified 7 Norwegian and Nordic fund providers with financial ties to at least one of the 59 companies in the study. Four Norwegian banks have issued bonds totalling 57.9 million USD to the companies in the period 2015-2020. The Government Pension Fund of Norway has ties to 18 companies in the study with more than 2.2 billion USD and has thus invested more than three times as much as the banks in the study in the companies in question.
Several different interests and links in the supply chains push deforestation. It is particularly problematic to have ties to companies that do not take deforestation seriously, evidenced by malpractice or a deficient or lacking approach to the issue. It is crucial that investors have a comprehensive analysis with adapted instruments to prevent them from contributing to deforestation. It is unacceptable to risk financing the destruction of ecosystems in Brazil through ties to companies that take deforestation lightly.
The situation in Brazil is dramatic and urgent. Norwegian financial institutions with ties to the companies in this study must take their responsibility and the increasingly aggravated situation in Brazil seriously. Banks must base themselves on thorough analyses and continuously evaluate the measures they use. They should also continue making demands to influence deforestation-risk sectors and their management. Such efforts could build on previous initiatives that communicate clear expectations to companies and Brazilian authorities.
Financial actors can play an important role in pressuring companies to become more sustainable, but this requires clear expectations for the entire supply chain and plans if the pressure does not materialize into actions. Further measures are needed against deforestation in portfolios, such as specific requirements, timelines and consequences for lack of action.
Framtiden i våre hender recommends that the banks take note of the findings in this report. They also recommend the following measures:
The full report (in Norwegian) is available here.
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