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How to halt the financing of deforestation

EU-based financial institutions play a large role in financing deforestation. Fern has revealed that in 2015, EU-based banks provided nearly two-fifths of the loans given to 23 Asia based producers linked with illegal deforestation. The amount of these loans totalled more than US $50 billion between 2010 and 2015, a staggering amount under any circumstances. If we are to have any hope of tackling these financers, the EU must look to create and enforce policies which ensure transparency so financers can be held accountable.

Many banks and investor organisations have already signed up to voluntary codes of conduct on environmental and social issues. However, this has not stopped the abuses. Something stronger than voluntary measures is required. Part of the solution lies in toughening up and extending the existing framework of EU financial regulation. But to really address the problem, policy makers will need to introduce new forms of targeted regulation that specifically address the role EU financial institutions play in funding destructive agriculture projects.

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