State-owned banks fund companies allegedly damaged peat ecosystems

Pantau Gambut and Transformasi untuk Keadilan (TuK) have issued a joint research report on the investments provided by Bank Rakyat Indonesia (BRI) to 6 groups of palm oil, pulp and paper companies. These companies are suspected of violating commitments to protect peatlands.

During the 2016-2021 period, BRI has funded a total of USD 4.21 billion (around 65 trillion rupiahs) in financing that risks damage to peat ecosystems, especially in terms of deforestation and activities that cause peatlands to dry.

The results of Pantau Gambut’s research using the Environment, Social, and Governance (ESG) criteria assessment supported by field investigations conducted by the Simpul Jaringan (SJ) Pantau Gambut found that six companies received funding from BRI are proven to have violated commitments to protect peat. Most of the violations of peat protection commitments found included using peat-protected areas with a depth of more than three meters for extractive plants, no efforts to restore post-burnt peat, and using burnt areas for extractive plants. The companies in question are:

In addition to field investigations, Pantau Gambut reviewed the results of independent assessments of ESG criteria using tools owned by Forests and Finance. The results are very different from what BRI claims in its sustainability report. The report stated that BRI’s ESG policy assessment results on two commodities were concerning. The pulp and paper commodity scored very badly, while the palm oil commodity received a medium score.

Based on the score above, Pantau Gambut Researcher, Agiel Prakoso, emphasized, “The reality of the sustainability report provided by BRI and the palm, pulp, and paper group of companies that have been mentioned, is, in fact, very different from the environmentally friendly claims they convey.”

As a bank that claims that all investments made are environmentally friendly, Pantau Gambut encourages BRI to:

• strengthen ESG safeguard policies by taking into account government regulations related to peat protection
• immediately formulate ESG policies on commodities that are at risk to the environment
• improve the sustainability report verification protocol
• improve information disclosure and complaint procedures
• stop financing if environmental violations are found

Iola Abas, the National Coordinator of Pantau Gambut, concluded, “BRI debtors’ non-compliance with policies that protect peat must be addressed firmly by BRI. A strict credit policy for industries at risk of environmental damage must be implemented strictly. Don’t let claims of commitment to ESG principles just embellish in the annual report.”

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This article has been published on Pantaugambut.id
Title : “State-Owned Banks Fund Companies Allegedly Damaged Peat Ecosystems”
URL : https://en.pantaugambut.id/publications/state-owned-banks-fund-companies-allegedly-damaged-peat-ecosystems
Author : Agiel Prakoso and Linda Rosalina (TuK Indonesia) dari Pantau Gambut