The dilemma around deforestation
Humankind has used and converted land as long as it has existed and continues to do so, mainly to feed itself. However, scientists claim that due to the way land is currently used (for agricultural, commercial, recreational, residential, and transportation purposes) and the scale at which it is converted, nature loss might be pushed beyond ‘safe limits’ and past Planetary Boundaries.
Our customers all face climate change and nature loss as massive global challenges that undermine the resilience of our planet and its ability to recover. It affects everyone, everywhere. Land Use Change (including Deforestation and Land Conversion (D&LC)) is one of the causes of this and touches our sustainability priorities. It can impact climate, through increased emissions or decreased carbon sequestration capacity, and nature through biodiversity loss: animal and vegetation. Both in turn can impact human rights and livelihoods.
How do we work in areas with risks of deforestation?
The growing world population continues to ask for more food, which consequently, puts more pressure on food production and increases the land at risk for conversion or deforestation, both legal and illegal. At the same time, Rabobank is an internationally operating bank with a strong presence in the food value chain, from smallholder farmers to multinational food producers. We are committed to helping drive a food system transition toward a future-proof, more sustainable direction. At the same time we appreciate that the international food value chain, as a whole, is not there yet. This means our financing activities can also potentially be exposed to the risk of land use change. In addition, in some regions there is a higher risk; for instance, risk is lower in areas that were converted for agricultural use long ago, such as Europe, and higher in densely forested regions, such as Brazil.
What then, if you are a bank that is against deforestation? Would you need to stay out of regions with a higher risk? Would you need to stay out of certain sectors entirely?
Withdrawing services from certain economic sectors or geographies is likely to have the unintended consequence that actual deforestation increases, as parties with lower policy levels and fewer preventive and corrective measures in place will occupy the place of banks with higher policy levels. We strongly believe that the best way we can contribute to a future-proof food system is by actively participating in it, with customers and other stakeholders, rather than simply ignoring it or being passive bystanders. In the meantime, we know that the system won’t change overnight. How do we work in areas with risks of deforestation? Asking customers to sign a ‘no deforestation’ commitment is not enough, it also requires us to work at customer level and at system and portfolio level. At customer level, we work on knowledge and financial product development to help customers towards a more sustainable direction, stimulating for example, climate and naturesmart farming practices. At system level, we work on solutions and innovations in partnerships with other key players, from banks to governments to NGOs, to push the system towards a more sustainable direction. At portfolio level, we continuously optimize for sustainability by making conscious choices in how we grow our portfolio and by developing policies that provide clarity on what we can and cannot finance going forward.
As a bank, we have a duty to adhere to contractual obligations and to respect local rules and regulations. As a consequence we cannot exclude having at any moment in time customers accused of illegal deforestation or customers who are in the process of meeting IBAMA’s (or any other relevant governmental bodies’) obligation to restore land. However, we choose to be present in countries with high deforestation and land conversion risk, and aim to make a positive impact by engaging in an active dialogue, monitoring our customers closely, setting progressive policies and acting upon these policies.