Over the last two years, we’ve exposed the companies which are some of the worst culprits when it comes to destroying the world’s climate-critical forests. Behind every one of these companies, there’s someone supplying the money which enables them to stay in business – including well-known high street banks and major financial institutions.

When our investigations reveal the destruction which these financiers’ money is enabling, they have two choices:

  1. Admit that something has gone wrong, work with affected communities to provide remedy for harms, and take action to stop their money causing similar harm in future.
  2. Give an excuse which allows them to evade their responsibility, hold onto the profits they made from problematic deals, and appear more environmentally friendly than they actually are.

Can you guess which of these happens most often? Here are some of the most common responses we receive from banks, and why they’re simply not good enough.

“We’re engaging with the company”

Often when we flag that a company on a bank’s books has been involved in deforestation, the bank will say that they have spoken with the company in question. Did the bank require any change from them, or stop lending them money until they can satisfy the bank that they’ve stopped their destructive behaviour? Don’t be ridiculous.

“Green finance”

By directing our attention to the specific funds they’ve set aside for ‘green finance’, banks hope that we won’t notice all the rest of their financing which continues to bankroll companies linked to the destruction of forests and human rights abuses.

And who gets to define what constitutes ‘green finance’ anyway? The banks themselves, of course. So even these supposedly environmentally friendly finance schemes can be funnelling money to notorious agribusiness companies well known for their involvement in deforestation.

“We have a policy”

Banks will also point us to one of their policies which claims that they’re “committed to environmental sustainability” or something along those lines. The problem, of course, is that actions speak louder than words. It’s no use having a policy if you’re not acting on it, or if it’s so non-committal or full of loopholes that it may as well not exist. 

Clearly your policy isn’t worth the paper it’s written on, otherwise the situation we uncovered would never have happened in the first place. So rather than point us to your policy, tell us what action you’re going to take to stop the same thing happening again. 

“We’re revising our policy and would welcome your input”

While this is better than directing us to their (clearly inadequate) existing policy, it’s not much of an improvement. What normally ensues is weeks poring over drafts, amending language, going back and forth over what’s possible and what’s feasible. And in the end, there’s no point having the best-written policy in the world if there are no consequences for not following it.

All the while, the bank keeps funding the same problematic clients as before. The thing is, it’s easy to talk about policies that may hypothetically lead to positive action in the future, rather than taking concrete action to deal with the problem at hand.

The recommendations sections of our reports have plenty of pointers for how banks can take action to stop their investments damaging the environment. If they’re genuinely interested in changing their ways, that would be a good place to start.

“Lender liability”

Even if banks have excellent environmental and human rights policies, they do not actually require their clients to follow them as a condition of lending them money. They rarely, if ever, even write ‘no deforestation’ clauses into their loan agreements, which should be the bare minimum.

Because of this, banks can later claim that they are limited in the extent to which they can compel companies to act…because of the weak terms in the loan agreements which they themselves wrote. Here’s an idea: write better loan agreements.

“We just don’t have the data”

A common excuse for why banks haven’t done better checks on their clients’ environmental records is to claim that the supply chain data simply isn’t available. Of course, a company which knows it’s responsible for deforestation has a strong incentive not to supply their bank with evidence of their wrongdoing. So, unless banks require that companies hand over that data as a condition of lending to them, there’s a high chance it will remain unavailable.

A bank wouldn’t approve a mortgage to someone who refused to provide information about their employment status, income, or credit history. Yet we’re expected to think it’s reasonable for these same banks to give truckloads of money to high-risk companies that source goods from the middle of the forest without knowing what they’re doing or buying?

Instead, it’s often left to marginalised at-risk communities and under-resourced NGOs to uncover companies’ environmental records. While we’re good at what we do, it would probably make sense for the billion-dollar banks making huge profits off these deals to take on some of the burden.

“Client confidentiality”

When asked about how their financing is linked to large-scale forest destruction, banks will often say that ‘client confidentiality’ prevents them from commenting – even if other banks that finance the company are openly speaking about the case. However, this confidentiality only exists because the banks choose not to make it a requirement for doing business with them that high-risk clients consent to be named as a client of the bank.

At the same time, these banks ask their clients to provide very detailed information about the loans they receive to databases that are available to anyone willing to pay the exorbitant fees, which the banks use to advertise how many big and important deals they do.

The impact of this is that even when banks’ policies commit to supporting forests or human rights , communities affected by the bank often have no way of finding out which bank is involved. This raises the question of how exactly banks expect communities to flag their concerns or seek just outcomes. 

The right of communities to know who is profiting off or financing activities in their local area should trump the desire of banks to veil their actions in secrecy. 

“We support accountability”

If banks’ avowed concern for the environment is anything more than warm words, surely they should welcome legislation that requires financial institutions to undertake basic checks to ensure that the companies they finance aren’t razing forests or committing related human rights abuses.

Parliamentarians have been discussing the role of finance in proposed laws on deforestation in the EU and UK, and companies themselves are becoming more vocal that they want their banks to follow the same rules that they do. 

Such laws would reward banks that are moving away from harmful financing towards backing truly sustainable food systems, and penalise the banks backing deforestation. And it would reassure their customers that they want to keep forests standing as much as the general public does.

If instead they choose to fall back on any of the excuses listed above, we will all see that their climate commitments amount to little more than hot air.