Banks Putting Forests in Peril
IN EARLY 2015, scientists monitoring satellite images at Global Forest Watch raised the alarm about the destruction of rain forests in Indonesia.
Environmental groups raced to the scene in West Kalimantan province, on the island of Borneo, and found a charred wasteland: smoldering fires, orangutans driven from their nests, and signs of an extensive release of carbon dioxide into the atmosphere.
“There was pretty much no forest left,” said Karmele Llano Sánchez, director of the nonprofit International Animal Rescue’s orangutan rescue group. “All the forest had burned.”
Fingers pointed to the Rajawali Group, a sprawling local conglomerate known for its ties to powerful politicians like Malaydeforestation and forest burning in Southeast sia’s scandal- plagued prime minister. But Asia alone, according to the California-based lesser known is how some of the world’s largRainforest Action Network, the Dutch consulest banks have helped Rajawali — and other tancy Profundo and the Indonesian nongovglobal agricultural powerhouses — expand ernmental organization TuK Indonesia. More their plantation empires. than a third of that comes from American,
The year before the clearing of trees in West European and Japanese banks. That figure Kalimantan, Rajawali’s plantation arm seis almost certainly incomplete because not all cured $235 million in loans — funds that the financing is made public. Indonesian company used to buy out a partWhile there has been a growing movement ner and bolster its landholdings — from banks among endowments and pension funds to diincluding Credit Suisse and Bank of America, vest from the fossil-fuel industry — and banks according to an examination of lending data have started to back away from financing coal by The New York Times. projects — any move away from deforestation
The deal forms part of at least $43 billion in has been slower to catch on. loans and underwriting to companies linked to The money is aiding a process that scien- tists say destroys ecosystems, displaces indigenous communities and covers the region each year in a thick, suffocating smog that stretches from Jakarta to Hong Kong.
Deforestation — and the fires that frequently accompany it — also generates one-tenth of total global warming emissions, making forestry loss one of the biggest single contributors to global warming, according to the Union of Concerned Scientists.
“Destroying the world’s forests makes fighting climate change almost impossible,” said Andrew W. Mitchell, executive director of the Global Canopy Programme, a forestry think tank. “The finance sector is really lagging behind in realizing that.”
In funding Rajawali’s palm oil plantations, the banks appear to have violated their own sustainability policies. In its policy, Credit Suisse says it will not finance or advise companies with operations in “primary tropical moist forests” like those of West Kalimantan. Bank of America says it will not finance commercial projects that result in the clearing of primary tropical moist forests.
The 2014 deal financed Rajawali’s expansion into palm oil. Demand for palm oil is surging worldwide, driven by rising incomes in markets like China and India and a switch