Thursday, 22 May 2008

Banks urged to stop fuelling harmful agrofuel boom

Many major European banks are funding the rapid expansion of agrofuel production in Latin America, leading to large scale deforestation, increasing human rights abuses and threatening food sovereignty, according to a new report of Friends of the Earth Europe, titled European financing of agrofuel production in Latin America. The report - amid global worries about the increasing impacts of rising food prices - calls for an end to investments by European banks in harmful agrofuel projects. Agrofuels have been blamed as a major factor driving up food prices. According to the UN and the World Bank, 100 million more people are currently facing severe hunger due to higher prices for basic foods.

The report documents how major European banks, such as Barclays, Deutsche Bank, BNP Paribas, Axa, HSBC, UBS and Credit Suisse are investing billions of Euros in the production and trade of sugar cane, soybeans and palm oil in Latin American countries. Fuels from sugar cane, soybeans and palm oil are increasingly used in Europe. Their large scale production in countries such as Brazil, Argentina, Paraguay and Colombia is extremely controversial as it leads to the destruction of the Amazon and other valuable ecosystems, as well as to the contamination of drinking water. Large scale plantations (see photo with burning sugarcane) also lead to human rights violations against peasants, with working conditions on some plantations in Brazil classed as modern slave labour. At the same time agrofuel companies are making record profits, enabled by loans, investments and other financial support from private banks.

All major European banks have invested billions of Euros over recent years in agrofuel producing companies such as Cargill, Bunge, ADM, Cosan and Brasil Ecodiesel. Several of these companies have been involved in, and convicted of, illegal activities in Latin America. Some examples of European banks’ involvement: In 2007 Deutsche Bank owned 35% of the shares of Brasil Ecodiesel. Bunge currently has credit facilities worth more than 1€bn from banks such as Barclays, BBVA, BNP Paris, Deutsche Bank, HSBC, Royal Bank of Scotland, KBC and Credit Suisse. In 2007 Deutsche Bank and Credit Suisse provided financial services totalling more than 1€bn to Cosan.

Friends of the Earth Europe says banks should immediately stop their investments in such harmful agrofuel development. The NGO is also calling on the European Commission to revise its plans for a mandatory 10% target for the use of agrofuels in transport by 2020, which it says will exacerbate the problems associated with the production of agrofuels.

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