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European lenders criticised for bankrolling rubber industry deforestation in Africa

A new report warns European banks and tyre manufacturers are “propping up” widespread deforestation by rubber producers in West and Central Africa, sparking calls for the EU to introduce stricter due diligence requirements.

According to analysis by non-profit Global Witness, rubber plantations integral to European supply chains are suspected of wiping out large chunks of rainforest in Cameroon, Côte d’Ivoire, Gabon, Ghana, Liberia and Nigeria.

The investigation of satellite data between 2000 and 2020 found dozens of industrial plantations expanded in that time, as multinationals headquartered in Asia and Europe worked to grow their rubber operations on the continent.

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In all, Global Witness estimates nearly 52,000 hectares have been destroyed to make way for new rubber trees, and warns European consumers and lenders remain heavily exposed to deforestation and related risks.

The EU currently imports about 30% of the rubber shipped abroad by Africa’s top producers, more than 12 times the value of the palm oil it buys, the study says.

“Almost all plantations where deforestation was found to have taken place are currently owned by just three international companies: the Singapore-based firms Olam and Halcyon Agri, and the French and Belgian-owned Socfin.”

“These firms do not just rely on the EU market to sell their product but are bankrolled by some of Europe’s biggest banks,” it says.

Olam scored credit facilities worth over US$1bn with Rabobank and US$768mn with BNP Paribas between 2016 and 2020, while it also struck deals with UK banks – including HSBC and Barclays – totalling over US$3bn in that time.

While such financing is not directly tied to Olam’s rubber operations, Global Witness alleges it could be indirectly funding such activities – and by extension deforestation in Africa – through these credit arrangements.

Global Witness says this is a concern because of the deleterious impact of deforestation on the climate and the fact that it can displace local communities, robbing them of their homes or land to farm and hunt.

Forests in West and Central Africa absorb about three times as much carbon dioxide per year as France emits, World Bank data show.

“From Cameroon to Côte d’Ivoire, the EU’s voracious appetite for rubber is devastating indigenous communities and eroding a vital carbon sink,” says Giulia Bondi, senior EU forests campaigner at Global Witness.

“Yet astonishingly a draft law to prevent deforestation-linked products from being sold in Europe doesn’t include rubber, fails to oblige banks to stop funding deforestation, and does not uphold indigenous communities’ rights.”

The European Commission last year proposed new legislation with a view to stopping deforestation-linked products such as beef, soy, wood and coffee from being sold to consumers within the bloc. The EU is aiming to finalise the law by late 2022.

Campaigners claim rubber has been largely omitted due to lobbying from the tyre industry, with a draft proposal for the law including little mention of the product.

MEPs and national governments need to “overrule powerful corporate interests” and close these loopholes in the proposed law in order to protect these climate-critical forests and local communities, Bondi says in a statement.

Olam and Socfin could not be reached for comment, but a Halcyon Agri spokesperson says sustainability is a “core business tenet” and the company is committed to stopping deforestation and promoting the socio-economic development of local communities.

A Barclays spokesperson declined to comment on an individual client, but points to the bank’s forestry and agricultural commodities statement published in 2020 that outlines its approach in tackling deforestation and related ESG risks.

Rabobank tells GTR that it has “strict policies and monitoring systems” on deforestation, and farmers or companies who illegally deforest do not get funding.

“Rabobank employs several agronomists who monitor potential customers and together with NGOs, we monitor land by using satellites. However, we are not standing next to the farmers or companies 24/7 and a 100% guarantee of desired behaviour is unfortunately impossible,” the bank says.

“We do not comment on individual cases, but if we receive information about a client potentially committing deforestation, we take immediate action.”

The post European lenders criticised for bankrolling rubber industry deforestation in Africa appeared first on Global Trade Review (GTR).

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