Posted on Oct 31, 2020 at 10:04 amUpdated Oct 31, 2020 3:43 PM
After putting pressure on the financing of fossil fuels, in particular coal, environmental NGOs are including biodiversity and deforestation on the climate agenda. On the occasion of Climate Finance Day, a group of associations – Mighty Earth, Reclaim Finance, Canopée Forêts Vivantes… – has just published a note, accompanied by a letter addressed to banks and insurers to put pressure on them. actors in the soybean sector, in particular traders, in order to limit the destruction of forests and land.
12% of greenhouse gas emissions
” Soy, cultivated in Latin America and in particular in the Cerrado savannah in Brazil, is one of the main factors of deforestation in the world.remind the NGOs, 50% of its area [du Cerrado NDLR] initial has already been destroyed. Its disappearance would be a disaster for the climate and biodiversity while it stores the equivalent of 13.7 billion tonnes of CO2 and is home to 5% of the world’s biodiversity “. Deforestation is responsible for around 12% of greenhouse gas emissions in the world.
The big traders, ADM, Bunge, Cargill and Louis-Dreyfus, – nicknamed ABCD – together account for 56% of international soybean trade. Traders have already made a commitment to fight against deforestation: with Chinese Cofco International, they agreed in 2019 to detail the quantities of soybeans from the Cerrado region and their purchases made from municipalities where the risks of deforestation are the strongest. Without convincing results in the eyes of environmental defenders.
Half the soybeans in ABCD’s hands
As trading is very capital intensive, traders call on banks to finance the transport of raw materials, particularly with letters of credit. According to the calculations of the NGOs, the French banks financed the “ABCD”, all raw materials combined, to the tune of 9.5 billion euros between 2016 and 2019. The associations call on financial players to condition the financial services provided to traders compliance with several measures. The main one is the cessation of the marketing of soybeans from converted or deforested soils after January 1, 2020.
” The protection of forests and biodiversity is becoming a major concern of financial players, at least in their speeches. In fact, their policies to prevent the impacts of deforestation and conversion of natural ecosystems are incomplete when they are not simply missing. »Explains Lucie Pinson, founder and director of Reclaim Finance.
Banks defend their policies
The banks are defending their action. In a written response, BNP Paribas claims to have been working for 5 years with soybean traders to ensure better traceability and to discard raw materials from regions at risk. The rue d’Antin bank stresses that it has little leverage over traders, because it only represents about 5% of their loans. Societe Generale explains for its part carrying out a review of its policy on the subject. Natixis recalls that its exposure to soybeans is very low.
However, the financing of commodity trading has been under pressure since the onset of the health crisis: several scandals and bankruptcies have splashed the sector, pushing some establishments to stop funding traders. BNP Paribas has also decided to close its offices dedicated to trading in Geneva, the main market in Europe. Societe Generale, exposed in the bankruptcy of the oil company Hin Leong, leaves the place of Singapore while Natixis, caught in the bankruptcy of Agritrade, prefers to downsize.