Banks Blanketed in Haze They Helped Finance

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By Andrea Vittorio

Sept. 6 — Banks on Southeast Asia’s skylines are being blanketed by haze that they helped finance.

That’s the message behind a new tool tracing more than $50 billion in financial flows to palm oil, pulp and paper and other products linked to tropical deforestation in the region.

“It’s certainly ironic,” Tom Picken, who directs Rainforest Action Network’s forests and finance campaign, said Sept. 6 from Singapore, where smokey skies from plantation land-burning have become a regular fixture. RAN created the tool with civil society group TuK Indonesia and Dutch consultancy Profundo.

Forests and Finance

They found that Malaysia’s Malayan Banking and CIMB are the most involved in corporate loans, credit and underwriting to 50 selected companies that produce or process forest commodities. Also among the top financiers: Japan’s Mizuho Financial, the U.K.'s HSBC and Singapore’s DBS.

Despite fires that briefly turned Indonesia into the world’s biggest climate contributor last year, “so far none of the financiers have been held responsible for their role in enabling plantation expansion,” TuK-Indonesia’s executive director Rahmawati Retno Winarni said in a statement.

RAN, TuK-Indonesia and other groups have called on financial regulators to introduce emergency sanctions that would stop banks from providing financial services to forest-sector clients causing the haze.

Responsible Investment

The tool was unveiled in Singapore, where signatories to the United Nations-supported Principles for Responsible Investment (PRI) are gathering to celebrate the network’s 10th anniversary.

“There’s a really strong interest from the responsible investment community,” Picken said, “to better understand what their exposure is by looking at this tool,” which is to be updated quarterly.

Five of the top 15 investors in bonds and shares of the forest-sector companies analyzed are PRI signatories, including U.S.-based Vanguard, BlackRock and Dimensional Fund Advisors. A similar tool launched in July focuses on finding palm oil in individual investors’ retirement savings.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information

The tool is available at http://forestsandfinance.org/.

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