European banks, along with other financial institutions (insurance companies, pension funds and asset managers) have been involved in illegal land clearances for palm oil production in Indonesia. Such decisions may have been partially a cause in forest destruction and extra carbon emissions, fueling global warming.
Citizens across Europe have unintentionally contributed to this impact as their bank deposits and pension savings are turned by financial institutions into money for forest-risk commodity companies.
During the last seven years, finance providers in the EU, UK, Switzerland, Norway and Andorra have channelled large amounts of funding to palm oil producers sourcing their raw material from plantations where vegetation has been repeatedly burnt down, in breach of Indonesian law. The total area affected by fires from 2015 to 2019 equates to 112,687 hectares (10 times larger than Paris city center).
The European market imports huge/large volumes of palm oil from Indonesia, primarily to be refined into biodiesel to replace fossil fuel in the transport sector. It is also employed as a key ingredient in the food industry as well as in daily chemicals such as detergents, shampoo and cosmetics, thus making the palm oil sector a profitable business for creditors and investors.
Our investigation has matched individual institutions with palm oil groups by combining data shared by the Forest & Finance Coalition and Greenpeace. The former tracked financial flow records from its database. The latter cited figures from its reports of 2019 and 2020, which exposed the fires observed in all the agricultural concessions which supply palm oil fruits to mills and refineries. Such fires were only rarely prosecuted. Of all fires that occurred between 2015 and 2019 in concessions associated with palm oil groups funded by European financiers, only 15 were sanctioned. To note that 17,550 fires were recorded in 2019 only.
Most of the finance has been provided by banks through credit (loans and underwriting services)