Read the open letter.
To fight global climate change and biodiversity loss, the proposal for a EU-Deforestation Regulation requires companies to ensure that products sold in the European Union do not come from deforested land or degraded forest. This will guarantee consumers that the products they buy do not contribute to the destruction of forests. The European Commission, Parliament and Council are currently negotiating the final EU-regulation.
The new regulation will address EU-driven global deforestation by imposing due diligence obligations on organisations placing forest-risk commodities and some derived products on the European market or exporting them from the EU. In scope: imports of coffee, timber, palm oil, cattle, palm oil, soy and cocoa which are linked to deforestation. Signatories of the open letter support the proposal of the European Parliament to equally impose due diligence processes to banks and investors in the Regulation as their services could lead to support activities linked directly or indirectly to deforestation and forest degradation.
According to IPCC reporting 23% of total human caused GHG emissions are linked to agriculture, forestry and other land uses. In this, deforestation and peatland degradation contribute the most, thus making it a major cause of climate change. Forest and peatland 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.
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 labor practices.
COP27 is an important moment for assessing progress on commitments agreed at COP26, notably the Glasgow Leaders’ declaration on forest and land use by which 145 countries, representing 90% of the world’s forests, committed to ending and reversing deforestation this decade. One year later, little has been done to finance protections or pass new conservation laws, experts say.
In the declaration the EU Commission and EU-member states, signatories promise namely to ‘Facilitate the alignment of financial flows with international goals to reverse forest loss and degradation, while ensuring robust policies and systems are in place to accelerate the transition to an economy that is resilient and advances forest, sustainable land use, biodiversity and climate goals.’
The EU has now the opportunity to step up and adopt in the final negotiations for the EU-Deforestation Regulation a law that is fit for purpose.
Tackle biodiversity loss
Triodos Bank recently also supported the call of more than 330 business and finance institutions -initiated by Business for Nature - to Heads of State to move beyond voluntary actions, ‘transform the rules of the economic game and require business to act now’ to halt and reverse biodiversity loss at the UN Biodiversity Conference (CBD COP15) in December 2022. We urge world leaders to adopt mandatory requirements for all large businesses and financial institutions to assess and disclose their impacts and dependencies on nature by 2030.
Triodos Bank believes 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.