Cross-party support for UK Environment Bill to tackle role of UK banks in funding global deforestation, with £900m funnelled into forest-risk commodities in 2020

The Environment Bill includes a provision to prohibit the use of certain commodities associated with illegal deforestation and require large companies to undertake due diligence and reporting on their supply chains. While this is an important and welcome step, the proposed law currently fails to address the money pipeline from UK banks to destructive businesses driving deforestation.

As global deforestation is taking place at increasingly alarming rates, Global Witness’s latest analysis of Forests and Finance data shows that UK banks channelled over £900m into over 300 major companies involved in forest-risk commodities such as palm oil, soy and beef in 2020.

Our research has previously shown that UK-based financial institutions have been the single biggest source of international finance for six of the most harmful agribusiness companies involved in deforestation in the climate-critical forests of Brazil, the Congo Basin and Papua New Guinea, providing almost £5 billion between 2013 and 2019. This includes major banks like HSBC, Barclays and Standard Chartered.

Household names like HSBC and Barclays also variously backed Brazilian beef companies JBS, Marfrig and Minerva, despite the links we exposed to extensive illegal deforestation in the Amazon rainforest and contrary to the banks’ public commitments. In total, we found that between 2017-2019 UK banks and financial institutions had either provided or facilitated more than £500 million to the Brazilian arms of these meat traders, with other studies reporting hundreds of millions more going to their parent and subsidiary companies.

For the UK Environment Bill to stop UK consumption and financing fuelling the destruction of climate-critical forests, it must be amended to cover all businesses, including financial institutions, so that they can no longer bankroll deforestation and related human rights abuses around the world.

The legislation must also be amended to include all deforestation, not just that deemed illegal under local laws, as this misses 50% of the tropical deforestation taking place.

Finally, the proposed rules must go further in upholding the rights of indigenous people and local communities, who have safeguarded their forests for generations and are on the frontline of defending our climate.

Global deforestation is not only a key driver of climate change and biodiversity loss, but it also increases the risks of further pandemics of zoonotic diseases like Covid-19.

Jo Blackman, Head of Forests Policy and Advocacy at Global Witness, said:

“As the UK government gears up to host the G7 and COP26, the UK Environment Bill is a crucial test of their climate credentials.

For the deforestation legislation to be ‘world-leading’ as the government has promised, they must heed the calls to ensure it does not let the UK finance sector off the hook, protects the rights of indigenous and forest communities and covers all forms of deforestation.

If the UK law is strengthened, it would demonstrate global climate leadership and be a game-changer in addressing the UK’s ongoing complicity in global deforestation.”

Neil Parish MP, Chair of the Environment, Food and Rural Affairs Select Committee, said:

 “The British people are increasingly concerned about the climate crisis, both at home and abroad. As the UK prepares to host crucial climate negotiations, the Environment Bill is an opportunity for the Conservative government to showcase our leadership on environmental issues.

This landmark legislation must be as strong as possible when it comes to stopping global deforestation, which is one of the key drivers of climate change. That is why I have introduced important amendments to ensure the Bill does not exclude the UK finance sector when it comes to their role in bankrolling deforestation and to ensure that free, prior and informed consent of indigenous people and local communities has been sought by companies.

These amendments have garnered support across the political spectrum, showing that there is broad-based consensus on the need for effective action to tackle the UK’s role in the destruction of climate-critical forests.

A strong UK deforestation law would not only be a huge achievement for the government but it would also set an important international precedent and set the bar high for other countries considering similar laws, including the EU.”

Ruth Jones MP, Labour’s Shadow Minister for the Natural Environment and Air Quality, said:

“The UK Government talks a big game on global climate leadership, but the Environment Bill is a key test of whether their rhetoric will be backed up with stronger action on deforestation.

“The Bill must be strengthened to ensure that UK banks and investors cannot continue funding deforestation with impunity and that there are stronger protections for the communities most affected by this destruction.

“Labour hopes the Government will listen to the concerns raised by MPs and civil society if they are serious about tackling climate change, biodiversity loss and human rights abuses.”

Barry Gardiner MP, member of the Environmental Audit Committee and Environment, Food and Rural Affairs Select Committee, said:

“Few people realise how companies and banks in the UK are causing deforestation around the globe. These companies trading in soya or beef don’t stop to consider the impact this is having: burning forest to create land for farming.

The Environment Bill is an opportunity to change that and to ensure sustainability standards are part of the way we do business. The Government must support cross-party efforts to protect the lungs of the world and preserve these forests from further destruction.”

Caroline Lucas, Green Party MP for Brighton Pavilion, said:

“The UK plays a key role in driving deforestation around the world, including through the financing that some of our most well-known financial institutions provide to companies ripping up forests and destroying communities. This cannot continue.  

This year, when the UK hosts the UN climate summit, the government’s green credentials are under more scrutiny than ever before. If they want to show they are committed to tackling the climate emergency then they must strengthen the Environment Bill so it addresses the disastrous impact of UK financing on the world’s forests and the communities who depend on them.”

Sonia Guajajara, Executive Coordinator of the Network of the Indigenous Peoples of Brazil (Articulação dos Povos Indígenas do Brasil – APIB), said:

“Agribusiness is a widespread driver of deforestation in the Amazon and is causing threats and violence against indigenous communities who are protecting our land, our forests and the global climate. We are being silenced, jailed, attacked and even killed.

Global financial institutions are funding harmful agribusiness companies and fuelling the destruction of our forests, our homes, our cultures. The UK government must pass legislation to ensure its banks and companies do not support this destruction.

To be effective, the UK’s Environment Bill should also consider both legal and illegal deforestation and ban commercial activities on commodities and products linked to any kind of exploitation of our territories and forests.

Free, prior and informed consultation is legally recognized by international measures and must be fully respected. Nonetheless, it does not happen in practice in Brazil. We are counting on the new UK legislation to enforce that right, with the extension of due diligence obligation to financial institutions to ensure they are not funding activities linked to deforestation and rights violations."