BNDES to join anti-deforestation effort from banks

Brazil’s National Development Bank (BNDES) is soon to adopt self-regulation protocols of the Brazilian banking federation Febraban, which include a commitment not to lend to slaughterhouses and companies in the meat industry that are linked to deforestation, whether directly or indirectly. 

In a note to the press today, Febraban said that BNDES’s admission was only recently approved and that the institution is still in the process of nominating members for the entity’s technical forums. As soon as the bureaucratic process is finalized, Brazil’s most important development agency will automatically adopt Febraban’s self-regulation commitments.

On Monday, Febraban announced that 21 banks, including the country’s top five institutions, had already signed the pledge. Together, these institutions account for 81 percent of the Brazilian credit market. 

Still, the new rules do not take effect immediately. 

In practice, banks will have to ask their slaughterhouse and meat-packing clients in ten Brazilian states (the nine belonging to the so-called Legal Amazon, in addition to Maranhão) to implement a traceability and monitoring system that allows them to show, by December 2025, that they do not purchase cattle from direct or indirect suppliers linked in any way to illegal deforestation.

This system should include information such as embargoes, overlaps with protected areas, identification of deforestation polygons, and authorizations for the suppression of vegetation, in addition to the Rural Environmental Registry (CAR) of the properties that the animals come from. Social aspects, such as checking the records of employers who have subjected workers to slavery-like conditions, also need to be considered.

Febraban’s move comes in the wake of international pressure, mainly from the European Union, for stricter controls in the Brazilian meat chain, as the industry is the primary driver of deforestation in the country.

In April, the European Parliament approved a new law that obliges producers to identify the exact plot of land where a product was planted or created as a way of preventing the import of both manufactured goods and raw materials linked to deforested areas. The new law was endorsed by the European Council this month, giving exporters 18 months to comply.

To encourage producers and resellers (meatpacking plants) to implement traceability systems, banks will also define adequacy and consequences plans for their customers in the chain. Those not already implementing such a program will have to hurry to adapt, as banks will require companies to disclose this data periodically.

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