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Banks contribute to deforestation, land degradation: Report
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This aerial photo taken on March 3, 2018 shows a protected area of the Rawa Singkil wildlife reserve as part of the Leuser Ecosystem in Trumon, South Aceh, which is being burnt in preparation for the opening of a new palm oil plantation. (AFP/Januar)
A
n ongoing report by environmental groups suggests that the banking and financial services sector should be liable for deforestation, as they continue to provide services to clients driving massive fires that raze swathes of land and tropical forest cover in countries like Indonesia.
According to forestsandfinance.org, a website run by multiple civil society groups from around the world, nearly US$154 billion in credit lines and loans were granted between 2016 and April 2020 by banks to companies that are prone to driving deforestation and land degradation.
Among the creditors named are three Indonesian state-owned banks – Bank Mandiri, Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI) – which, together, provided more than $8 billion in loans and underwriting, according to Forests and Finance.
In its report, BNI provided at least $2.39 billion in underwriting, while BRI and Mandiri offered $3.3 billion and $2.93 billion, respectively.
It also became clear that Malaysian and Singaporean banks were also major financiers of the fire-linked groups, despite their countries and economies also being severely impacted by transboundary haze.
At a recent webinar, Edi Sutrisno, executive director of the TuK Indonesia environmental advocacy group, said the report singled out banking clients in the palm oil, pulp and paper, rubber and soybean industries as carrying an outsized risk of driving forest fires.
He insisted the report was not meant to antagonize the sectors but served more as a warning for banks to apply sustainability practices more strictly.
