Dirty Profits 11 "On the Wrong Track – When Packaging Costs the Forest"
Fair Finance Germany lead member Facing Finance has published its latest Dirty Profits report "Dirty Profits 11 "On the Wrong Track – When Packaging Costs the Forest". The report addresses the massive deforestation of forests for single-use paper packaging and examines whether banks active in Germany contribute to global deforestation through their continued financial support of consumer goods companies.
While public awareness of plastic pollution is growing, a second, equally serious problem is emerging in the shadow of this global problem: the massive deforestation of forests for single-use paper packaging. The most sustainable solution - a switch to reusable systems – is rarely being used by the consumer goods industry, for example corporations such as Unilever, Nestlé, Mondelez, L'Oréal and PepsiCo, despite the fact that, given their size they have they could engage with environmentally-friendly alternatives.
Banks do, nonetheless, continue to support these consumer goods companies in issuing bonds, granting loans or investing in these companies. "If banks do not demand clear environmental and social standards, they run the risk of contributing to deforestation through their financial support or participation. The banks surveyed are doing far too little to address the risk of deforestation among their corporate customers in the consumer goods industry," says Mina Schmidt of the organization Facing Finance.
The major banks operating in Germany; Commerzbank, DekaBank, Deutsche Bank, DZ Bank, ING and UniCredit were selected for the financial research. From January 2020 to August 2024, these banks provided the five consumer goods companies analyzed (named above) with over 16 billion euros in the form of bonds and loans, thus contributing to global deforestation. In addition, they have invested a further 8 billion euros in these companies.
Significantly more than half of the determined financing volume – 65 percent or more than 10 billion euros – is attributable to Deutsche Bank. The bank's funding guidelines can be classified as more comprehensive compared to most of the other banks examined, which indicates a discrepancy between the guidelines and the actual implementation in practice. In terms of participation and investments, there is a high investment volume (August 2024) of just under 8 billion euros in the form of shares and bonds held.
The report calls for banks to critically review their business relationships with companies with high single-use consumption. On the one hand, financing and investment strategies should actually be applied and be subject to strict environmental and social criteria. Banks should not ignore superficial adjustments by companies in the consumer goods industry – such as the switch from single-use plastic to single-use paper. Rather, financial institutions must remain critical and question business models that contribute to global deforestation and adapt their credit and investment policies accordingly.
