SINCE the 2015 Paris climate agreement, European banks have lent about €256 billion to corporations that put forests, savannahs and other climate critical natural ecosystems at risk, according to new research.

The study, published by Greenpeace International, Milieudefensie (Friends of the Earth Netherlands) and Harvest and supported by other NGOs, is based on data compiled by the independent research organisation Profundo. The study focuses on JBS, Cargill, Sinar Mas and other top global producers, processors and traders of soy, cattle, palm oil, rubber, timber and other commodities that carry a high risk of ecosystem destruction, and the financial institutions that finance them. The EU is the second-largest global financial hub bankrolling these commodities sectors.

Sigrid Deters, biodiversity campaigner at Greenpeace Netherlands, said: “Europe thinks highly of itself for climate and nature protection, but looks the other way as its banks pour money into companies linked to massive nature destruction and related human rights abuses. There is a clear pattern, the EU financial sector’s links to ecosystem destruction are widespread. We can’t fight the climate crisis and ecological collapse while at the same time bankrolling extinction.”

The report shows that some of the largest banks based in the EU, such as BNP Paribas, Santander, Deutsche Bank, ING Group and Rabobank, provided 22.1 per cent of total global credit between 2016 and early 2023 to big players in sectors that put nature at risk. The vast majority (86.6 per cent) of this European credit came from banks based in France, the Netherlands, Germany and Spain. Banks, pension funds, and asset managers based in the EU also provide 9.4 per cent of current global investments to nature risk sectors.

The organisations publishing the report are demanding EU regulation to stop money flowing to companies that destroy nature, and to align the financial sector with global climate and biodiversity targets.

Jonas Hulsens, senior policy officer Forests and Climate Justice at Milieudefensie (Friends of the Earth Netherlands), said:“Our research shows that banks and investors are not changing voluntarily: they are still pumping billions of euros into companies that destroy nature. Biodiversity hotspots vital to climate stability, such as the rainforests of the Amazon, Southeast Asia and the Congo Basin, or the northern boreal forests, are disappearing at an alarming rate. The EU urgently needs to show leadership by regulating its financial sector and stopping the flow of money into climate disruption and nature destruction.”

The EU deforestation regulation, adopted in May 2023, is a first step towards meeting the EU’s global climate and biodiversity commitments. It intends to reduce the impact of EU consumption, by requiring companies to sell only deforestation-free and legally produced products within the EU.

However, while current EU rules address physical products placed on the EU market that put forests at risk, they do not cover the money flowing to ecosystem destruction. The European Commission is on a timetable to review the role of finance in deforestation and forest degradation and, if necessary, make a legislative proposal by June 2025.

Environmental and human rights organisations are urging the EU to close this loophole in the law, and stop financial flows to nature destruction. The EU rather needs to put its efforts in directing money flows to support restoration of ecosystems and struggling farmers to transition towards more resilient and ecological farming.

* Read: Bankrolling Ecosystem Destruction here.

* Source: Greenpeace International