As France’s Minister of Economy and Finance Bruno Lemaire prepares to host the Climate Finance Day on Tuesday 26 October, he would do well to take time to read our new Global Witness report showing France’s largest bank, BNP Paribas, could have generated over €32.9 million in income from €5bn worth of deals with agribusinesses linked to deforestation and associated human rights abuses, between 2016 and 2020.
Protecting the world's forests is vital to tackle the climate crisis - if deforestation were a country, it would rank third in CO2 emissions, after China and the US. And of course, forests are key for the preservation of biodiversity. Earlier this month French President Macron said at the opening of COP15, the UN conference on Biodiversity, that: “All our investments, both public and private, must be aligned with the aims of the Post-2020 Framework, meaning their impact on nature must be either null or positive”.
Whilst France is sadly not the only country with banks who finance destructive agribusinesses, it does have an opportunity to lead the world in getting this right. With the French Duty of Vigilance Law already on the statute books and the Presidency of the EU Council on the horizon for 2022, it’s time for France to make it clear that voluntary deforestation commitments are not enough and that regulation is needed in the EU and beyond. COP26 is the perfect global opportunity to advance that cause and ensure that shiny new voluntary finance initiatives do not distract from real and effective action to tackle forest destruction.
Global Witness’s new report will make for difficult reading for both the French government and BNP Paribas itself- ‘the bank of a changing world’ - which portrays itself as climate-conscious but is accused of ploughing more than €5 billion into some of the world’s worst deforesters. The methodology for these calculations is available in the full report.
BNP Paribas has continued financing destructive agribusiness despite red flags on deforestation
|Deforestation-linked agribusinesses invested in (/20)||19|
|Value of deals||$5.71 billion|
|Estimated proceeds (adjusted)||$37.3 million|
|Most lucrative relationship||Cargill|
Our report’s revelations about BNP Paribas’ links to tropical deforestation are deeply concerning.
The relationship between BNP Paribas and commodities giant Cargill has been a lucrative one for the bank, which has provided Cargill with credit facilities and bond underwriting worth almost €3.5 billion in the last five years. However, during that time there have been clear red flags that should have put Cargill in the ‘ineligible to fund’ category, if BNP Paribas were serious about preventing and addressing deforestation risk in its business.
According to Global Witness’ data analysis, the most deforestation-linked parts of Cargill’s trading empire – chiefly soy and palm oil – could have netted the bank around €14.1 million in proceeds since 2016.
In Brazil, the expansion of soy production is thought to have led to the destruction of 17,000km2 of forest and other native vegetation in the Cerrado region between 2006 and 2017. The Cerrado is one of the most ecologically threatened regions of Brazil and home to five percent of the world’s biodiversity, including jaguars, giant armadillos and tapirs. As the largest trader of Brazilian soy, Cargill appears to have played a role in this devastation. In 2018, Cargill was fined close to one million US dollars by Brazilian environmental agency Ibama for sourcing 600 tonnes of soy from illegally deforested areas in the Cerrado. Ibama’s investigation found that the advance purchase of grain had financed the illegal land clearance. Cargill told Global Witness that it had not paid these fines and was contesting them in detail with Ibama, saying: “Cargill did not purchase deforested soybeans.”
It has also been reported that alleged Cargill soy suppliers have been involved in occupying and blocking the demarcation of lands claimed by the Munduruku indigenous people in Planalto Santareno.
Evidence of BNP Paribas benefiting from the destruction of the world’s forests does not end there. The bank also has a longstanding relationship with Wilmar. A 2018 report alleged Wilmar was sourcing palm oil from 18 different companies responsible for deforestation. Between 2016 and 2020, BNP Paribas provided almost €265 million in credit to the broader Wilmar empire. When adjusted to reflect the proportion of Wilmar’s business that is linked to palm oil or other forest-risk commodities, these deals could have brought in €5.3 million for BNP Paribas.
When contacted by Global Witness, Wilmar said it had strengthened its "no-deforestation" policy since Greenpeace’s allegations were published, and that controversial suppliers flagged by Greenpeace had been dealt with through the company’s grievance system.
Another money-spinner for BNP Paribas has been its relationship with Olam International, who is accused of razing 40,000 hectares of rainforest in Gabon between 2012 and 2017 to create rubber and palm oil plantations. Olam said it strongly disagreed that its forest clearance was irresponsible or breached FSC rules and said its plantations had been developed on degraded or “secondary” forest as well as grassland. The company promised to stop cutting down Gabonese forest in 2017 and said it has permanently protected more than half of the high-value conservation land in its Gabonese oil palm concession.
In 2020 it was reported that local people were still suffering from the loss of their land rights because of Olam’s operations. Olam has dismissed these reports as “inaccurate and false” and said it is committed to obtaining Free, Prior and Informed Consent from communities for agricultural developments and that it invests in projects to improve local education, healthcare and access to water.
The deforestation-risk elements of Olam’s business could have generated over €6.2 million in proceeds for BNP Paribas since 2016, our analysis suggests, mostly through providing revolving credit facilities.
Other BNP clients with known links to deforestation include Brazilian beef giants Marfrig and Minerva, whose business has generated an estimated income of over €882,000 forest-risk commodities according to Global Witness analysis.
When contacted by Global Witness, BNP Paribas said: “We can only regret and deny the assumption ... that BNP Paribas would profit from financing activities that destroy the world’s rainforests.” The bank went on: “BNP Paribas now only provides financial products or services to [agribusinesses] having a strategy towards zero deforestation in their production and supply chains by 2025 (…). BNP Paribas remains the sole bank to have seriously tackled the issue of deforestation and traceability in the soy and beef supply chains by setting such specific and timed criteria.”
France must hold its banks accountable
While BNP Paribas has made efforts to burnish its green credentials, including by joining the Net Zero Banking Alliance and publishing statements on the importance of protecting eco-systems, money speaks louder than words. Given the concerns outlined in our report, based on publicly available accusations of deforestation, BNP Paribas should not have done any business with any of these companies.
Voluntary commitments have failed. Strong regulation that applies to the financial sector and holds them to account for their deforestation impact and associated human rights violation is the only credible answer.
France’s pioneering Duty of Vigilance Law, adopted in March 2017, forces French companies of a certain size, to identify, mitigate and prevent human rights abuses and environmental harms. French banks are among the companies covered by the law. A Global Witness report from 2020 raised concerns about BNP Paribas’ efforts to comply with France’s Duty of Vigilance Law. This report will add to that pressure. It is understood the law has yet to be used in a bank-related compensation case, but test cases are expected to come. Because it has this law, France has an opportunity to show global leadership on tackling the finance fuelling deforestation.
But there are opportunities in Europe more widely too – and an urgent need to take them.
BNP Paribas is one among many European banks financing and profiting from forest destruction. Our investigation has found that financial institutions based in the EU raked in €401 million in deforestation-adjusted proceeds on €30.6 billion worth of deals with top deforesters between 2016 and 2020.
The EU is developing new legislation to require companies to undertake due diligence on deforestation risk in their supply chains. There has been pressure from parliamentarians to extend similar requirements to financial institutions. The EU should listen and France can help make it happen.
France will start its presidency of the European Council in January 2022. Addressing the complicity of the financial sector and putting an end to the bankrolling of deforestation and associated human rights abuses by banks is critical to tackling the climate crisis. France must push for the inclusion of finance and human rights under the EU legislative proposal if President Macron wants to be credible in his fight against deforestation and climate change. To echo the President’s own words: " It is about being coherent and responsible”.
Methodology note: Estimates of revenues from deals have all been adjusted downwards to account for the proportion of each agribusiness thought to directly participate in a forest-risk commodity. It should be noted that banks and asset managers often hold bonds and shares on behalf of third-party investors, as well as on their own behalf. The bank or asset manager will normally gain from the transaction taking place, earning a percentage of the invested value or a fee. But not all of the income will be retained by the bank. For full details of the methodology please refer to the full report.
Please note that all banks and companies featured in our report were approached for comment and you can find their responses here.
Preview image credit: NurPhoto via Getty