Regulation needed to save rainforests from financial sector, WWF says
The UK government must develop regulation to stop the financial sector from providing billions of pounds to companies that threaten rainforests worldwide, WWF has said.
In a new report, the NGO reveals how 300 UK-based financiers directly fund companies whose activities threaten rainforests in Brazil and Indonesia with £40bn of investments and loans.
At the heart of this deforestation risk is the production of beef, palm oil, soy and cocoa, with the financial sector playing a major role in facilitating trade of these commodities with both the UK and foreign markets.
The report explains how trade in these commodities can and must be done in a way that does not drive deforestation, but that only a few financiers are taking action in this space.
The Environment Bill includes measures for traders in forest-risk commodities to undertake due diligence investigations to protect forests, and WWF is calling on the government to apply the same provisions to the finance sector.
“Every hectare of rainforest that is destroyed makes it harder to limit global warming to below the 1.5°C target set out in the 2015 Paris Climate Agreement,” said, Karen Ellis, director of sustainable economy at WWF-UK. “Alarmingly, UK investments in forest-risk commodities have not significantly reduced since then.
“The Environment Bill will require companies trading in palm oil, soy, and other forest-risk commodities to undertake due diligence checks. This must equally apply to firms that finance forest-risk commodities as voluntary measures clearly aren’t giving forests the protection they urgently need.”
At present, a lack of clear standards and transparency requirements make it difficult accurately assess the level of deforestation risk, according to the report, which says that the financial sector has a critical role to play in addressing this.
WWF said that enhanced due diligence on deforestation and conversion should be an integral part of any net-zero transition plans, and that the government should develop a pathway for mandatory due diligence of the financial sector in the run up to COP26.
This comes after it warned that over two million hectares of Brazilian rainforest could be legally converted to supply the UK with soy under current deforestation laws proposed by the government.
“Deforestation is one of the biggest threats to our climate, to wildlife and to the local people who rely on forests for their livelihoods,” Ellis continued.
“The UK government committed to protect forests and address nature loss impacts from financial decision making – we won’t forget if they fail us on this promise.”
Image credit: iStock
Chris Seekings is a reporter for TRANSFORM