Rights group Global Witness published a report on Wednesday exposing that some of the world’s biggest central banks - among them The Bank of England, the US Federal Reserve, and the European Central Bank - are destroying the Brazilian Amazon by financing agri-business giants. 

According to the report Bankrolling Destruction, these financial institutions have invested millions of dollars in bonds issued by companies linked to deforestation and illegal land-grabbing, adding: “Because these programs are guaranteed by the respective governments in the UK, the US and EU Member States, this means taxpayers throughout those territories are unwittingly underwriting companies engaged in the destruction of the Amazon and other rainforests". 

The Amazon covers parts of nine different South American countries and is considered a critical and vital carbon sink to absorb the CO2 emissions fueling the climate crisis. Brazil has observed a massive wave of deforestation projects under the agenda of far-right President Jair Bolsonaro, which hit a record high for the first seven months of the year. 

Known as “asset purchase programs”, banks buy corporate bonds issued by firms to inject liquidity into financial markets when the private sector does not lend. These aim to reduce the cost of borrowing for the firms and were witnessed in wide use during the pandemic as a way of reviving economies.

Of these firms, the report named Cargill, Inc., the Archer-Daniels-Midland Company (ADM), and Bunge Ltd Financial Corp, as three of the biggest agri-business conglomerates operating in Brazil, one of the globe's biggest producers and exporters of grains, coffee, soy, fruit, and other raw materials.

The Guardian reported the presence of a connection between Cargill and Bunge to a Brazilian farm that has been engaging in abuses of indigenous rights and land. Cargill is a main supplier of animal feed, and it continues to purchase soya and corn from a farm that is responsible for the deforestation of the Amazon. It sells feed to chicken farms in the United Kingdom, and it buys crops from a soybean farm on deforested land in the Brazilian Amazon; the supplier farm goes by the name Fazenda Conquista, as revealed by the Bureau of Investigative Journalism, Greenpeace Unearthed, Reporter Brasil and Ecostorm. 

In response to the claims in the Global Witness report, Cargill said it was “committed to ending deforestation and conversion in our agricultural supply chains” and Bunge stated it was “committed to complying with all regulations either in local or global markets and to adhering to our own strict social-environmental policies." 

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According to their website, Bunge Ltd is an agricultural business headquartered in Missouri, US, that provides products ranging from specialty oils to milled grains, to consumer and restaurant brands. 

“Since 2016, the Bank of England has also purchased an undisclosed share in a £150m corporate bond issued by Cargill, Inc., and the European Central Bank has bought an undisclosed amount of debt issued by Bunge Finance Europe B.V." stated the report, as it added that the central banks suffered the criticism the most.

In the timeframe of the mere last two years, “the US Federal Reserve has bought a combined total of $16m of bonds issued by the Archer-Daniels-Midland Company (ADM) Bunge Ltd Financial Corp, and Cargill, Inc.," the report explained, stressing that "all this comes despite the repeated public statements from all three central banks stressing the risks that climate change poses to financial stability and long-term economic growth.”

All three financial institutions have taken steps, according to the Global Witness, in light of the criticism faced regarding their measures that have been erasing the very being of the rainforest. The Federal Reserve, for instance, minimized its purchase of bonds, with the institution announcing the adoption of the policy as a one-time step in 2020 to save jobs during the global pandemic, reiterating its intentions to avoid such a thing again. 

The Bank of England then stated its initiatives to lower borrowing costs for firms - labeling the hefty support given to Cargill as “an extremely narrow focus” and would follow the steps of the Fed. 

In turn, the European Central Bank announced that it “aims to gradually decarbonize its corporate bond holdings, on a path aligned with the goals of the Paris Agreement. To that end, the Eurosystem will tilt these holdings towards issuers with better climate performance through the reinvestment of the sizeable redemptions expected over the coming years.”

UK and EU banks however have been tarnished by the Global Witness with "a lack of transparency" after refusing to make public the values of their holdings in the companies involved: “As supervisors of the private financial sector, central banks must lead by example and adopt an explicit zero-deforestation policy as part of their approach to climate change, including divestment from all deforestation-linked bonds and greater scrutiny of the threat to financial stability posed by deforestation and biodiversity loss,” the report said.

26% of the Amazon has already been wiped out and some parts of the forest that many Indigenous tribes and native animals call home, have become dry to the point of no return. Many Indigenous peoples of Brazil call the Amazon rainforest home. 

Nick Robins, a professor of sustainable financing at the London School of Economics said: “I think this report is a very useful piece of analysis which highlights the need for central banks to look at their exposure to deforestation in their portfolios", stressing that “2022 really is the year that central banks recognized nature risk as a threat to institutions. The focus up to now has been on the energy sector but this is another signal that deforestation and land use needs to be put at the heart of climate scenarios.”