Day: April 26, 2024
Commercial financial flows to the forest-risk commodity sectors are driving the majority of tropical deforestation.
In a global context where tropical rainforests play a critical role in biodiversity conservation and climate regulation, these ecosystems are severely threatened by expanding agribusiness and logging activities. This poses significant risks to the environment, wildlife, and communities dependent on rainforests.
Against the backdrop of escalating climate change impacts, urgent action is needed to prevent the collapse of these vital ecosystems and address the injustices faced by Indigenous and local communities and workers within the agricultural sector.
The ratification of the UN Global Biodiversity Framework in December 2022 marked a pivotal moment, signaling a collective commitment by 196 countries to reverse the decline in global biodiversity. However, financial institutions have historically failed to address their role in exacerbating the biodiversity crisis.
A 2023 report by Forests and Finance—a coalition of campaign, grassroots and research organizations that includes TuK Indonesia, Profundo, Amazon Watch, Repórter Brasil, BankTrack, Sahabat Alam Malaysia, Friends of the Earth U.S., and my organization, Rainforest Action Network—sheds light on the extensive financial support provided to sectors responsible for tropical deforestation, including beef, palm oil, pulp and paper, rubber, soy, and timber. “From January 2016 to September 2023, banks provided at least $307 billion in credit to these operations,” states the report, while institutional investors held approximately $38 billion in related shares and bonds.
Despite fluctuations in financial flows, there has been no discernible downward trend in financing forest-risk commodity production. Alarmingly, the analysis of more than 100 financial institutionsʼ policies in 2023 revealed grossly inadequate safeguards against deforestation and its associated social and environmental impacts. The average policy score was just 17 percent, according to the report.
Entities like JBS, Cargill, Royal Golden Eagle, and Sinar Mas Group exemplify the egregious behaviors tolerated and enabled by banks and investors.
Demands to Correct a Systemic Issue
The report by Forests and Finance urged governments and financial institutions to adopt and enact five principles:
1. Halt and reverse biodiversity loss
2. Uphold and prioritize the rights of Indigenous peoples, women, and local communities
3. Facilitate a just transition
4. Safeguard ecosystem integrity
5. Harmonize institutional objectives across sectors, issues, and instruments
Immediate action is crucial to combat the climate and biodiversity crises. The report urges financial institutions to align their activities with sustainability goals, enact robust environmental and social policies, and ensure transparency and accountability. By holding the financial sector accountable for its role in enabling social and environmental harm, we can work toward preserving biodiversity and mitigating the impacts of climate change for current and future generations.
Notable Progress
The Forests and Finance report highlights the significant progress of tropical forest countries and key import and financial jurisdictions in promoting sustainable financial practices and combating deforestation. Brazil, Indonesia, Malaysia, the United States, and the European Union have all taken notable steps toward integrating environmental, social, and governance (ESG) considerations into their financial systems.
Brazil stands out for excluding industrial livestock activities from sustainable sovereign bonds and for being the first country to commit to integrating the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards into its regulatory framework by 2026. Implementing these standards will help bolster Brazilian capital markets by amplifying transparency in sustainability-related risks and opportunities. This, in turn, will ensure that companies attract capital and foster global investments that are aligned to meeting the goals of nature protection and sustainable development.
Another initiative that supports sustainability is the implementation of green taxonomies. These taxonomies are meant to simplify guidelines regarding activities that support decarbonization objectives, including efforts to curtail deforestation and environmental degradation. This can bolster financiers’ confidence in investing in projects that move the needle toward a low-carbon and climate-resilient economy.
Indonesia introduced its Green Taxonomy in January 2022 to expedite financing for sustainable sectors. “Indonesia’s joint targets under the Just Energy Transition Partnership (JETP) include capping power sector emissions to 290 MT by 2030 and reaching net zero by 2050,” reported Luthfyana Kartika Larasati and Tiza Mafira of the Climate Policy Initiative, an independent nonprofit research group based in San Francisco, in October 2023.
“To achieve these [targets], phasing out coal-fired power plants while accelerating the deployment of renewable energy sources is necessary. As financiers are now reluctant to finance coal, a transition taxonomy defines measurable parameters within which coal investment is allowed in order to facilitate early coal decommissioning,” wrote Larasati and Mafira.
Malaysia implemented the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) in November 2019 and issued the Climate Change and Principle-based Taxonomy in 2021 to guide Islamic financial institutions.
Meanwhile, a March 2024 Securities and Exchange Commission (SEC) climate disclosure ruling seems to be a step in the right direction toward the U.S. managing its climate risk, even though the move remains inadequate to effectively protect the world’s forests. On the procurement side, the new EU Deforestation Regulation, expected to take effect on December 30, 2024, provides a potentially powerful new tool for achieving supply chain traceability and transparency.
The European Union also approved new EU Taxonomy criteria in 2023 focusing on biodiversity protection and ecosystem restoration, despite criticism that it judged harmful sectors like forestry and bioenergy to be environmentally sustainable economic activities.
Forest-Risk Credit Trends
The report revealed that at least $307 billion in credit had been directed to forest-risk sectors from 2016 to September 2023. The beef sector dominated South America, while palm oil led in Southeast Asia and rubber in Central and West Africa. Primary beneficiaries included agro-commodity traders and companies with significant environmental and social violations.
While progress has been made, heightened attention and enhanced due diligence procedures are needed to address associated ESG risks and promote sustainable financial practices to combat deforestation and environmental degradation.
Big corporations launched the Taskforce for Nature-related Financial Disclosures (TNFD) in June 2021 to guide businesses in reporting nature-related dependencies. However, civil society organizations have repeatedly raised concerns about the task force’s development, composition, approach, and potential for greenwashing.
Regional Analysis of Credit Flows
The analysis of regional credit flow and investment trends in forest-risk commodity sectors across South America, Southeast Asia, and Central and West Africa revealed significant financial flows and investments contributing to deforestation and environmental degradation.
In South America, the beef sector dominated forest-risk credit flows, followed by soy, and pulp and paper, with Banco do Brasil emerging as a significant creditor. Infamous beneficiaries included companies like Suzano and Marfrig.
In Southeast Asia, palm oil was the dominant recipient of forest-risk credit, followed by pulp, paper, and rubber. Indonesian banks played a significant role as financiers, with recipients including tycoon-owned conglomeratesSinar Mas Group (SME) and Royal Golden Eagle (RGE). Concerns over governance risks and greenwashing practices persisted despite reductions in primary forest loss.
Central and West Africa saw the rubber sector attracting the majority of forest-risk credit, with Chinese companies emerging as primary financiers. The Chinese Sinochem Group was the largest recipient of the credit, followed by China Forestry Group and Wilmar.
Despite fluctuations in credit flows, challenges remain in corporate structures and accountability. For instance, companies like “SMG [and] RGE… have established complex corporate structures that mask ownership relations. This poses serious governance risks and facilitates leakage and greenwashing. They have all been linked to egregious social and environmental harms for decades,” states the report.
Forest-Risk Investments
Investments in activities likely to damage forests globally amounted to more than $38 billion, with palm oil receiving the most significant share, followed by pulp and paper. Major institutional investors like BlackRock and Vanguard increased their stakes in forest-risk commodity companies, while others maintained or reduced their investments.
In South America, investments were predominantly allocated to the pulp and paper sector, with Suzano being the highest recipient. Southeast Asia saw the most investment in palm oil companies, with Sime Darby Plantations and IOI Group among the leading recipients.
In Central and West Africa, palm oil companies also received the majority of investments, with Sumitomo Forestry and Itochu being prominent recipients.
Forest-Risk Policy Assessments
Forests and Finance’s assessment methodology evaluated financial institutionsʼ adherence to 38 criteria to avoid contributing to deforestation and associated ESG issues.
These criteria are categorized into environmental, social, and governance requirements, covering commitments to zero deforestation, respect for land rights, anti-corruption measures, and more.
Forest-risk policy assessments of more than 100 financial institutions revealed a lack of robust policies, with an average score of only 17 percent. Despite incremental improvements since 2016, vague language, unclear timeframes, and loopholes persisted, leading to continued facilitation of human rights violations and deforestation.
The analysis underscores the urgent need for heightened attention, enhanced due diligence, and more stringent policies to address associated environmental, social, and governance risks. It also highlights the need to promote sustainable financial practices in combating deforestation and ecological degradation in tropical forest regions.
Policies by Sector
Regarding sectoral policies, financial institutions exhibit the most robust policies for palm oil, followed closely by timber, and pulp and paper. However, the average scores for these sectors remain relatively low, indicating room for improvement despite sustained civil society campaigns and certification schemesʼ existence.
The assessment of forest-risk bank policies reveals that, on average, the largest 30 forest-risk banks have higher overall policy scores than the largest forest-risk investors. However, the scores across the board are still low, reflecting minimal policy coverage across ESG criteria.
While some banks like CIMB and BNP Paribas scored relatively higher, others like Banco do Brasil and ICBC had notably low scores, indicating inadequate policies to address harmful activities.
Four Corporations Leading Destruction
The report highlights four corporations—Cargill, JBS, Royal Golden Eagle, and Sinar Mas Group—that continue to receive significant credit and investment from financial institutions despite having egregious environmental and social track records. Cargill, in particular, has received substantial credit for its soy operations in tropical forest regions despite having a legacy of human rights abuses and environmental degradation.
Cargill
Cargillʼs expansion into the Brazilian Amazon and the Cerrado savanna has raised concerns due to decades of deforestation, violations of Indigenouspeoples’ rights, and failures to meet deforestation commitments. Civil society campaigns, such as Burning Legacy, have aimed to hold Cargill accountable for its practices, documenting evidence of human rights abuses and deforestation in its supply chain.
Despite making commitments to ensure zero deforestation by 2020, Cargill has failed to meet its goals and has faced allegations of land grabbing and violations of Free, Prior, and Informed Consent (FPIC) rights.
The report also discusses the implications of the financialization of land and the role of the financial sector in exacerbating soy-driven deforestation through land speculation. It evaluates the policies of banks financing Cargill, revealing low scores and loopholes that weaken their effectiveness in preventing harm in forest-risk sectors.
JBS
The report delves into the multifaceted issues surrounding JBS, the Brazilian meat giant, and its impact on the Amazon rainforest, climate change, and local communities. Financed by major banks from Brazil, the United States, Europe, and Japan, JBS has received substantial credit and investment despite its documented history of harmful business practices. Since 2019, banks have provided more than $718 million in forest-risk beef credit to JBS, while investors held $667 million in bonds and shares as of September 2023.
JBSʼs operations in the Brazilian Amazon have devastating consequences for forests, biodiversity, and Indigenous and traditional communities. The company’s practices include bribery, corruption, price fixing, forced labor and labor abuses, forest destruction, land grabbing, and contribution to climate change. Despite JBS’s high-profile pledge to achieve net-zero emissions by 2040, independent research suggests that the company lacks a credible decarbonization plan, leading to allegations of greenwashing.
The exploitation of people and forests in the Amazon is a systemic issue linked to JBS. Between 2008 and 2020, the company’s involvement in deforestation extended to approximately 200,000 hectares in its direct supply chain and 1.5 million hectares indirectly. Despite agreements to clean up its supply chain, JBS has failed to ensure its products are free from deforestation and forced labor, as evidenced by ongoing violations.
The assessment of JBS policies reveals concerning scores, indicating inadequate measures to prevent environmental harm and protect human rights. While some banks like Barclays scored relatively higher, others like Bradesco and BTG Pactual had alarmingly low scores, raising questions about their commitment to addressing crucial issues like deforestation and climate change.
The communities affected by these actions are now holding financial institutions supporting companies like JBS responsible for the environmental damage. In April 2024, the Parakanã people met with the Brazilian Development Bank (BNDES) to ask for reparation for the devastation of their territory, including by JBS suppliers. The Brazilian bank holds 20 percent of the shares of JBS and is therefore considered co-responsible for the impacts.
Royal Golden Eagle Group
The report also reveals mounting evidence that the multibillion-dollar Royal Golden Eagle Group (RGE), which says on its website “manages a group of world-class companies specializing in resource-based manufacturing,” operates numerous “shadow companies” and complex offshore ownership schemes to hide their destruction of forests across Indonesia. Banks have poured more than $4.5 billion into forest-risk pulp and paper-attributable loans and underwriting services for RGEʼs operations between 2019 and 2023.
However, none of the financial institutions assessed have adequate policies to mitigate the negative impacts. Scores for RGEʼs top creditors range from 1 percent to 24 percent, indicating a lack of comprehensive policy coverage regarding forest-risk commodity sectors.
Sinar Mas Group
Sinar Mas Group (SMG), Indonesiaʼs largest conglomerate, has attracted substantial financing, receiving more than $20.3 billion in credit since 2019. Its palm oil division alone obtained $3.7 billion, primarily from Indonesian and Malaysian banks, between 2019 and September 2023. Despite this financial backing, SMG faces accusations of human rights abuses, massive greenhouse gas emissions, and large-scale deforestation, mainly through its pulp and paper division, Asia Pulp and Paper (APP).
The destruction of the Rawa Singkil Wildlife Reserve by illegal palm oil plantations linked to SMGʼs operations poses a significant concern, threatening biodiversity and local communitiesʼ well-being within the Leuser Ecosystem. Despite documented evidence, SMG and its subsidiaries have failed to address these issues adequately, raising questions about their commitment to sustainability.
The report evaluates the policies of banks and investors financing SMG, revealing a spectrum of approaches. Malaysian banks CIMB and Maybank and Dutch bank Rabobank exhibit more robust policies, scoring highest for the palm oil sector. However, Indonesian banks such as Bank Panin, BRI, and Japanese bank MUFG have notably weaker policies, indicating insufficient measures to address environmental and social risks.
What Governments and Financial Institutions Can Do
The report underscores the urgent need for financial institutions to adopt robust policies and due diligence measures to address environmental and social risks associated with companies like JBS and RGE. Failure to do so perpetuates ecological destruction and human rights abuses and exposes banks and investors to significant financial and reputational risks.
Critically, the report also advocates for governments to step in and mandate financial sector regulation necessary to safeguard society and the ecosystems we depend on, consistent with international public policy goals. This is a problem that ultimately demands stronger, more systemic interventions. These could include, for example, prohibiting the allocation of capital to certain sectors or corporations driving ecosystem destruction and legislating for meaningful sanctions against financial institutions that fail to align their lending and investment accordingly.
- About the author: Laurel Sutherlin is the senior communications strategist for Rainforest Action Network and a contributor to the Observatory. He is a lifelong environmental and human rights campaigner, naturalist, and outdoor educator passionate about birds and wild places. Follow him on Twitter @laurelsutherlin.
- Source: This article was produced by Earth | Food | Life, a project of the Independent Media Institute.
The post How Banks And Investors Are Fueling A Global Biodiversity Crisis – Analysis first appeared on The South Caucasus News.
It is unfortunate that column space should be dedicated to Britain’s shortest termed prime minister and, arguably, one of its most imbecilic and cringingly juvenile. But given that some people still sympathise with her and her views, it falls to one to tackle her latest work which resembles other types of the gloomy genre warning that action, if not taken now, will result in civilisational catastrophe.
From the outset, the premise of Ten Years to Save the West is confused. She declares the work is not a political memoir so much as “a call to action for fellow conservatives who believe in our nation and our way of life and who share my frustration at what has been going wrong with our politics and governance.” But the aggrieved memoirist, rather than a sound political thinker, dominates the narrative.
In Ten Years to Save the West, Truss gives us what The Daily Telegraph describes as a “romp”. Certainly, it is not like other prime ministerial accounts more likely to induce a mild coma or soporific escape. She did have a mere 49 turbulent days in Number 10, a time so short it did not enable her to move in her furniture. During that spell, she managed to tank the British economy and cripple the Tory party. In a span of just over a month, her policies pushed 13% of Tory voters towards Labor.
Truss never tires of telling us that everything was stacked against her. In all the ministerial positions she occupied in government, she claims to have been a radical stymied by a host of forces. She faced opposition in the education portfolio. As environmental secretary, she battle Tory colleagues afflicted with “climate fever” while fighting off the Marxist climate lobby. She might have secured a UK-US Free Trade Agreement with the Trump administration were it not for her wretched colleagues.
Whatever undercooked notions she had – a loose collection of economic musings that came to be called Trussonomics – she laments the “sheer power of the administrative state and its influence on the markets and the wider polity”. But she has the order the wrong way around. The very markets that she sees as the state’s salvation – at least in terms those operating in them – had no confidence in her. It was her Tory idol, Margaret Thatcher, who endorsed the view that the state had a minimal role to play when it came to meddling in finance and money markets. Release the forces, cut back the state’s fetters. The libertarian Truss got exactly what she deserved.
With stunning incoherence, Truss is convinced that those forces at work were all infected by a left-wing virus, from the administrative wonks and lever pullers in White Hall to humble teachers and charity workers. Not that questionable, eccentric, even idiotic policies don’t find an audience in self-defeating bureaucracy. They always do, and always will. As an example of the latter Truss cites environmental policies that led to the construction of a “bat bridge” at considerable increased cost to expanding one of the local roads under her charge.
The shrill, unhinged analysis by Truss in this half-manifesto, half-lament, is mysteriously capable of identifying the left-wing virus in such conservative institutions as the International Monetary Fund, the Bank of England, the Treasury, and the Office for Budget Responsibility, bodies that found her promises of indulgent unfunded tax cuts in the September 2022 budget unworkable, even dangerous. Throughout, she draws on the thesis of former US president Donald Trump of the “Deep State” that managed to hold her “at gunpoint”, one made up of a progressive and Marxist alliance that hates growth and cherishes decline.
A few observations, at a pinch, should be taken seriously. The poor trappings of a British PM’s office are noted. Truss makes the point that discharging its heavy burdens are made nigh impossible by institutional impediments. The modern British prime minister “is treated like a president but has nothing like the kind of institutional support for the office that we would expect in a presidential system”. But Truss tends to spoil such observations with trivial whines: that she had to do her own hair and make-up.
She also complains about the media saturated, short-term horizon that characterises the workings of Downing Street. This is a tad rich coming from the same individual who made such extensive use of social media in her various postings, be it jogging in New York or driving a tank in military gear in Estonia. During her stint as Foreign Secretary, she uploaded upwards of 700 pictures or more a day in what came to be derided as Instagram diplomacy.
The warnings for Truss’s demise were many. Many came from close to home. Her husband, Hugh O’Leary, predicted that her stint as prime minister would “all end in tears” though “accepted that this was the moment I was expected to run and that if I didn’t, people would say I had bottled it”. She even writes of her Norfolk constituency political agent’s harsh assessment: “I should run – but he thought it would be best if I came second”. The late Queen Elizabeth II, whose discussions with the prime minister of the day are, according to convention, never disclosed, is documented as giving the following advice: “Pace yourself.” Truss concedes that she “should have listened”.
This grossly, at times embarrassingly uneven thesis of Western doom and necessary salvation, wrapped up in personal resentment, is unlikely to do much to change matters in the corridors of power. But its occasional slips of candour and frequent revelations of sharp incompetence suggest that Truss’s 49 days in office were 49 days too many.
The post Liz Truss And The West: A Failed Former Prime Minister Speaks – OpEd first appeared on The South Caucasus News.
By Rizky Ihsan and Muhamad Arif
Indonesia’s 2024 elections, marked an important milestone in the nation’s democratic trajectory. The electoral commission has declared Prabowo as the winner of the presidential election with 58.6 per cent of the vote, which translates to around 96 million voters.
But a more profound story is unfolding behind this electoral success, with scholars raising concerns about the troubling democratic decline in Indonesia. The election was rife with irregularities, such as the nomination of Gibran Rakabuming Raka, incumbent President Joko ‘Jokowi’ Widodo’s son, as well as the alleged politicisation of social assistance programs. These controversies serve as clear reminders of the challenges facing Indonesia’s democracy.
Gibran only became eligibile to run for the vice presidency after a special Constitutional Court ruling granted him the opportunity. While the court affirmed the previous age limit of 40 for those seeking candidacy, it introduced exemptions for individuals who have previously been elected as regional leaders. This decision facilitated 36-year-old Gibran’s candidacy for vice presidency in the 2024 election, as he had previously held the position of mayor of Surakarta.
But the integrity of the top court came under scrutiny amid revelations that Anwar Usman, the chairman of the judicial court, is Jokowi’s brother-in-law. The integrity of this state institution is now in doubt due to a series of questionable interventions and conflicts of interest which have undermined the electoral process.
Jokowi’s favouritism towards Prabowo and Gibran also sparked public criticism. Just days before the election, a documentary featuring law experts shed light on the government’s use of social assistance programs to secure political support — a tactic commonly referred to as ‘pork barrel politics’. The strategy, which involves allocating state funds to specific electoral areas to ensure victory, seems to have been successful — 69.3 per cent of voters who received social assistance voted in favour of Prabowo and Gibran.
Rumours also circulated that the social aid program would be discontinued if Prabowo and Gibran, who had obtained President Jokowi’s endorsement, were to lose in the election. Such revelations raise questions about the integrity of the electoral process, while highlighting the declining legitimacy of state institutions.
The decline in Indonesia’s democratic standards may have implications on Indonesia–Australia relations and Indonesian foreign policy in general. It may undermine the stable groundwork upon which Indonesia and Australia have cultivated stronger ties over the past two and a half decades.
Before Reformasi, the relationship between these ‘strangers next door’ was characterised by volatility, with Indonesia perceived as a strategic threat by Australia. The brief period of close rapport during the early to mid-1990s was sustained only by personal trust between leaders, connections that did not survive changes in leadership.
Post-Reformasi, Indonesia and Australia have discovered a more enduring basis for their relationship, moving beyond personal ties to a shared commitment to democratic values. This alignment has in turn allowed them to comfortably collaborate on shared concerns including human trafficking, counterterrorism and disaster relief. Despite occasional setbacks, the relationship has remained resilient and continues to progress overall. But future recalibrations of the relationship look uncertain, especially under shifting balances of regional power.
Within the broader context, democracy has historically enhanced Indonesia’s confidence in its foreign relations. During the Yudhoyono administration (2004–14), the promotion of democratic ideals and the positioning of Indonesia as a successful Muslim democracy became crucial foreign policy assets. This period witnessed Indonesia’s renewed leadership in ASEAN, as it introduced novel agendas such as the promotion of human rights and good governance to the regional organisation otherwise known for its ambivalence towards authoritarianism and strong adherence to non-interference. Indonesia also confidently articulated its vision for regional order, seeking to maintain a dynamic equilibrium.
In the aftermath of the 2024 elections, these dynamics are likely to shift. Under Prabowo, Indonesia will likely project even greater confidence on the international stage. But successful democratic transformation will become a less prominent source of Indonesia’s confidence, replaced by tangible markers of strength such as economic achievements and increasing military capabilities. This pragmatic shift to prioritising power over shared values is already evident in Prabowo’s choice of both China and Japan for his inaugural visits as president-elect.
The erosion of democratic norms may see a return to leader-centric foreign policymaking in Jakarta. The former general’s idiosyncrasies will likely exert a greater influence on both the timing and substance of Indonesian foreign policy given the minimal constraints that are anticipated on Prabowo’s regime, as well as his perceived expertise in foreign affairs.
Though systemic constraints arising from US–China rivalry will persist as the main driver of Indonesian foreign policy in the long term, the international community may need to brace for occasional glitches as Prabowo adopts a more hands-on approach to foreign policy.
About the authors:
- Rizky Ihsan is an HDR Candidate at the School of Government and International Relations, Griffith University.
- Muhamad Arif is an HDR Candidate at the School of Government and International Relations, Griffith University and 2024 Blue Security Fellow at La Trobe University.
Source: This article was published by East Asia Forum
The post Prabowo’s Election Heralds A More Muscular Indonesian Role On Regional Stage – Analysis first appeared on The South Caucasus News.
A message to Kim Jong Un? #southkorea #ICBMs #defense https://t.co/Z3sfs1iLHm
— Robert Morton (@Robert4787) April 27, 2024
The post @Robert4787: A message to Kim Jong Un? #southkorea #ICBMs #defense eurasiantimes.com/south-korea-ap… first appeared on JOSSICA – The Journal of the Open Source Strategic Intelligence and Counterintelligence Analysis.