Environmental journalist Jeremy Hance, a regular contributor to ALERT, tells us about a valuable new database that identifies the lending institutions that are bankrolling forest destruction in Southeast Asia.
What do you need to knock down a primary forest and replace it with a plantation?
One word: money. Without capital –- often in the form of loans from a bank –- forest-destroying corporations couldn’t clear-cut forests.
But this process –- who’s giving money to whom –- has often been secretive and shrouded. Now, a new database is tracking which mega-banks are bankrolling forest destruction in Southeast Asia, a region losing tropical forests faster than any other.
The new database, called Forests and Finance, tracks US$50 billion worth of capital from 244 banks and investors to a wide variety of so-called “forest-risk” companies, such as those dealing in palm oil, pulp and paper, logging or rubber.
OFFENDER NUMBER ONE: MAYBANK
According to the database, the worst offender is Malayan Banking, otherwise known as MayBank, which has pushed $2.7 billion into forest-risk companies from 2010-2015.
Ironically, MayBank’s mascot is the tiger. Scientists estimate there are only 250-340 Malayan tigers left in the wild, down from about 500 a decade ago.
The database also includes an assessment of each financial institution's environmental and social policies. For example, while Malayan Banking rates a zero on its environmental policy (out of 30), ABM Amro –- a bank in the Netherlands –- gets a vastly better score of 24.
In total, Malaysian institutions such as Malayan Banking have invested over $7.7 billion into forest-risk companies.
But the money isn’t stemming only from Malaysia. Chinese institutions have invested over $6.2 billion, almost entirely into the industrial pulp and paper production, whereas Japanese institutions have invested $4.1 billion and Indonesian institutions, $3.9 billion.
NOT JUST THE EAST
But forest-killing funds are not just coming from Eastern countries.
U.S. institutions have invested nearly $3 billion into forest-risk corporations in Southeast Asia. JPMorgan Chase is the biggest, investing over $1.2 billion. The bank has a score of 14 out of 30 for its social and environmental policies.
Even larger is HSBC, headquartered in the United Kingdom, which has invested $1.6 billion.
The biggest investor in Australia is ANZ, which has put in $448 million. It has a score of 11 for its policies.
Worryingly, many banks in the database rated poorly on their environmental and social policies.
Of course, it’s not just banks that invest directly in forest-destroying companies that are causing worry.
Banks that invest heavily in infrastructure are also playing an out-sized role in forest destruction, though these are not tracked by the Forests and Finance database.
Major international lenders such as the World Bank, Asian Development Bank, African Development Bank, and Inter-American Development Bank, have a long history of funding major infrastructure projects -- ranging from new highways to coal-burning power plants -- in areas of rich biodiversity and primary forests.
And to make matters worse, scientists fear that new infrastructure banks, such as the Asian Infrastructure Investment Bank and Brazilian Development Bank, are establishing even worse environmental records.
For example, the Brazilian Development Bank is one of the biggest funders of dozens of planned dams in the Amazon and across South America. Such dams have been heavily criticized for imperiling indigenous groups and promoting large-scale deforestation, biodiversity loss, and sizeable carbon and methane emissions.
VOTE WITH YOUR WALLETS
Investigations such as the Forest and Finance database can play a powerful role by showing the world whose hands are on the financial axes that are decimating forests.
Now that the sinners are increasingly being revealed, it is up to conservationists and investors to pressure those institutions to clean up their acts. Voting with our wallets -- divesting from such lenders and institutions -- can send a powerful message.
And past conservation campaigns have shown that bad publicity alone can have a powerful impact on many corporations.
What major bank would want to have little children and grandmothers picketing in front of their headquarters with signs accusing them of killing orangutans and decimating the world's forests?