French lenders bankroll firms linked to deforestation: Analysis

By Patrick Galey

French banks have provided almost two billion euros of financial backing to agribusiness groups implicated in deforestation despite a law preventing firms from funding environmental damage, according to new analysis seen by AFP.

Three years after France adopted landmark legislation compelling companies to identify and prevent human rights abuses and nature degradation throughout their supply chain, the analysis showed how large lenders nonetheless financed projects linked to deforestation in the Brazilian Amazon, the Congo Basin and Papua New Guinea.

The investigation conducted by watchdog Global Witness concluded that BNP Paribas, Natixis and Credit Agricole "all have policies or commitments in place on agricultural commodities which are at risk of causing deforestation."

AFP contacted the three banks for comment.

"The rapid breakdown of our climate is a concern to many—including bank customers," said Laurence Duprat, a Global Witness campaign adviser who authored the analysis.

"So it's unsurprising that banks and investors proudly trumpet policies on ethical investment and lending. But there is a blatant contradiction," she said. 

"The same French financial institutions are skirting their own policies at will. Many of their virtuous promises are barely worth the paper they are printed on."

Deforestation in the Brazilian Amazon soared by 85 percent in 2019, according to official data published by a Brazilian government institute last month.

Tropical forests absorb huge amounts of planet-warming carbon dioxide and are vital sanctuaries of biodiversity, yet every year an area the size of England and Wales is felled.

According to Global Witness, last year Natixis contributed $50 million (45 million euros) to a credit facility for Olam International, one of the world's largest agribusiness groups. 

A 2016 report from environmental campaign group Mighty Earth concluded that Olam had deforested 20,000 hectares of forest in Gabon to make way for palm oil plantations there. 

A spokesman from Olam said: "We strongly refute allegations of irresponsible deforestation or land conversion."

He told AFP that Olam works closely with the government of Gabon "to carefully balance Gabon's development needs with the imperative to conserve the country's unique forests."

‘Principal banker’

According to Global Witness, Credit Agricole is listed as a "principal banker" on the 2018 annual report of Halcyon Agri, a Singapore-based company also implicated in deforestation. 

A 2018 report from Greenpeace said the group in 2016 took control of rubber plantations in Cameroon that had a history of deforestation, and proceeded to cut down an additional 2,300 hectares in the following two years. 

In 2017, Credit Agricole acted as a lead manager on a $300-million bond for Halcyon's majority shareholder Sinochem, according to the Thomson Eikon database. 

In July of that year the bank provided $10 million of underwriting services to Sinochem, Global Witness said.

Halcyon and Sinochem did not respond to requests for comment.

Certification process

Despite signing a commitment in 2015 to align its investments to create "net zero deforestation", BNP Paribas in 2019 was still one of a number of banks operating a $500 million bond for Brazilian beef trader Marfrig, the analysis showed. 

The bond supports Marfrig's cattle purchasing chain of indirect suppliers, which sees the agribusiness giant buy cattle that has not been raised on a single property, making it hard to trace. 

Daniel Brindis, forests director at Greenpeace US, said that Marfrig "do not have consistent assurances that the farms that sell to their direct suppliers are free of deforestation."

A consultancy tasked with reviewing the bond said it could give only "moderate" assurance that it was not contributing to forest loss, according to the analysis. 

Marfrig did not respond to AFP's comment request.

BNP Paribas was a lead underwriter of a $1-billion bond issued in May 2019 to Marfrig's subsidiary NBM US Holdings, according to the Thomson Eikon financial database.

It also managed bonds worth $1 million in Sinochem International, the Global Witness analysis said. 

A letter sent by the bank in December, seen by AFP, said that its investments "in commodities are screened and assessed under the scope of dedicated financing and investment policies in the sectors of wood pulp, palm oil, and agriculture."

It said it proceeds from the Marfrig bond were "strictly focusing on reducing deforestation and land rights issues within Marfrig's cattle supply chain."