Barclays, HSBC among major banks financing six “most harmful agribusinesses” with $44bn

Wednesday, October 16th, 2019

A new Global Witness report reveals how more than 300 financial institutions funnelled money into global beef, leather, palm oil and rubber firms linked to deforestation and corruption.

Six of the world’s “most harmful agribusinesses” with operations impacting tropical forests are backed by $44bn of financing from more than 300 banks and investors, including household names such as Barclays, HSBC, Santander, Goldman Sachs, JP Morgan, and Morgan Stanley, a new Global Witness report reveals.

Based on financial research by consultancy Profundo covering the period 2013-2019, the report found funders lending to or investing in agriculture operations that drive global deforestation – often in violation of the banks’ own forest conservation policies.

The six agribusiness firms featured include three major Brazilian ranchers and meatpackers JBS S.A., Marfrig Global, and Minerva Foods, Cameroonian rubber plantation owners Halcyon Agri Corp of Singapore, Gabonese oil palm plantation developers Olam Group (also of Singapore), and Rimbunan Hijau Group, a Malaysian conglomerate with vast oil palm holdings in Papua New Guinea (PNG).

The companies are variously accused of massive deforestation – often illegal – in the production of the commodities they trade, including beef and leather, rubber, and palm oil.

In Brazil, the world’s biggest meatpacker, JBS S.A., has been repeatedly found to buy cattle from illegally deforested ranches, including in 2019. In 2017 the company was fined R$24.7m (£6.5m) for cattle purchases linked to illegal deforestation. The same year its parent company was fined a further R$10.3bn (£2.4bn) in a leniency agreement with state prosecutors for making illegal campaign donations to 1,829 candidates from 28 political parties over more than ten years.

Yet the Global Witness report finds that JBS has maintained major financiers amongst its significant shareholders, including the Brazilian Development Bank BNDES ($2.7bn in JBS stock as of April 2019), Capital Group ($800m of JBS shares), Blackrock ($218m of JBS shares), and Deutsche Bank ($11m of JBS shares).

Last month an Earthsight investigation revealed JBS’s Brazilian beef has for years been used for UK military operational ration packs supplied by Vestey Foods. Vestey – a major customer of JBS – has also held catering contracts with the armed forces of Ireland, France and Denmark. Vestey also has a ration packs contract with the United Nations, and has received shipments from JBS described as ‘RP Minced Beef … UN Halal’.

In May, Earthsight also identified JBS’ beef being sold in major EU supermarkets including Sainsbury’s, Asda, Lidl, Morrisons, and Carrefour.

In the Congo Basin, the report found that the Netherlands’ third-largest bank ABN Amro and Singapore’s DBS Bank had facilitated a $388m revolving credit facility for Singaporean firm Halcyon Agri Corp, which had taken control of tens of thousands of hectares of rubber plantations.

The plantations adjoin Cameroon’s Dja Faunal Reserve, a UNESCO World Heritage site. Greenpeace have accused the local Cameroonian operator Sudcam of clearing 11,600 hectares of forest between 2011 and December 2018.

The report found that while the world’s largest sovereign wealth fund – the Norwegian Pension Fund Global – had divested its stake in Halcyon on environmental risk grounds, China Development Bank – a state owned “policy bank” remained Halcyon’s biggest shareholder.

In PNG, the report focussed on financing for the Rimbunan Hijau Group which controls tens of thousands of hectares of palm oil operations in the country. Previous Global Witness research had identified “credible allegations of fraud and forgery perpetrated at the expense of indigenous landowners” and 20,000ha of deforestation at its plantations in the province of East New Britain since 2008.

Financial research flagged up $6m of Rimbunan Hijau Group shares held by the office of Sarawak’s State Financial Secretary of Malaysia and $33m in loans from Malaysia’s Affin Bank.

Global Witness highlights the role of such deforestation in driving biodiversity loss, human rights violations and climate change, and argues that “Governments’ failure to regulate the financing of deforestation has left the foxes in charge of the henhouse.”

The report calls for government regulation of the finance sector to “stop the financing of, and investment in, deforestation”, as well as for financiers themselves to commit to “Deforestation and Land Grab free” policies, implementation of due diligence on investments, enforcement of such policies, and active support for government regulation.

Image credit: Creative Commons.