Read the open letter.
Under the Environment Act 2021, large companies will soon be required to establish a due diligence system to assess and mitigate the risk of using commodities produced on illegally deforested land in their UK commercial activities, reporting annually on their progress. We believe a similar due diligence system should also apply to the UK financial sector which, directly and indirectly, lends and invests billions of pounds in forest product value chains exposed to human rights and deforestation risk each year. Ensuring these financial flows contribute to, and do not undermine, our climate and nature protection goals is essential.
The letter was convened by Global Witness, an international NGO that campaigns to end environmental and human rights abuses driven by the exploitation of natural resources and corruption in the global political and economic system.
Triodos Bank and Triodos Investment Management, along with 11 other financial institutions with over EUR 177 billion in assets under management, have also called on European lawmakers to include the financial sector in a proposal for similar regulation on deforestation in the EU.
Forests are vital carbon sinks and biodiversity hotspots, as well as home to indigenous communities, who preserve and defend climate-critical ecosystems:
According to IPCC reporting 23% of total human-caused GHG emissions are linked to agriculture, forestry and other land uses. Deforestation and peatland degradation contribute the most, making them a major cause of climate change, while healthy forests and peatlands are powerful carbon sinks. Protecting these critical carbon sinks has the potential to reduce GHG emissions by nearly a third, making it one of the most effective mitigation measures.
Much more is needed to tackle the loss of biodiversity, which is currently one of the most urgent and complex systemic risks we face. In our recently published paper on biodiversity, we state it is a challenge that can only be tackled through a serious re-assessment of our production and consumption patterns, and of the economic assumptions underlying individual and collective decision-making.
The main drivers of deforestation and forest degradation are the clearance of land for agriculture (for instance palm oil, soy and beef production) and for the expansion of other commodities (such as pulp and paper, timber, rubber). These sectors are also associated with serious human rights violations because of land conflicts with indigenous and local communities and exploitative labour practices.
Triodos Bank UK entirely supports mandatory due diligence as an essential enabler in efforts to eliminate commodity-driven deforestation from investment and lending portfolios.