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Greenpeace forces World Banks Hand
World Bank cancels 90 mil loan in response to Greenpeace report
Marcel Herbke (mherbcat)     Print Article 
Published 2009-06-18 08:45 (KST)   
In a reaction that illustrates the growing legitimacy of NGOs in the global climate change debate, a US$ 90 million loan by the World Bank to Brazilian cattle company Bertin has been canceled two weeks after a Greenpeace report revealed the destruction it was causing in the Amazon.

The International Finance Corporation (IFC) is the private lending arm of the World Bank. It promotes sustainable private sector investment in developing countries and is the world셲 largest source of loan and equity funding in this arena. The IFC has 181 member countries (essentially the UN member countries), which collectively determine its policies and approve investments.

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In 2007 the IFC approved a loan to Bertin Ltd., one of the world셲 largest leather and beef suppliers, for its expansion of slaughterhouse operations in the Brazilian Amazon. The loan was approved despite warnings from the World Bank셲 own Independent Evaluation Group (IEG). The IEG found that the proposed expansion would require an 쏿dditional cattle stock of 1 million head." The IEC reported that "if this increased demand is accomplished via a business-as-usual expansion of pasture without effective controls, it would imply deforestation of about 10,000 sq km, an area roughly equivalent to Jamaica. The IEG report concluded that 쐔he project poses a grave risk to the environment and to the Bank셲 reputation.

In addition, the Brazilian government bought shares in the country's three largest cattle companies, Bertin, JBS and Marfrig, through funding from the Brazilian National Development Bank (BNDES) in exchange for shares. This partnership ensured the 쁞usiness as usual expansion has continued without controls.

On June 1, 2009 Greenpeace released a report entitled "Slaughtering the Amazon", in which it revealed that Brazil's cattle sector is the world셲 largest driver of deforestation in the world. It also traced the source of funding for such 쁲ustainable development. It revealed Brazilian beef product suppliers had links to illegal deforestation and forced labor (referred to in the report as slavery).

On June 12, 2009 the IFC suspended its loan to Bertin, by canceling the final 30 million payment and demanding early repayment of the outstanding 60 million.

Paulo Adario, Greenpeace Brazil셲 Amazon campaign director said, 쏧t is good news that the World Bank is withdrawing these funds, yet scandalous that it was feeding a company that causes Amazon deforestation and climate change in the first place. It must now guarantee that it will not invest in such damaging projects in the future.

A Greenpeace press release stated, 쏝y helping Bertin to expand into the Amazon, the IFC has been driving further destruction of the rainforest, a haven for biodiversity and one of the world's key defenses against climate change. For a bank that portrays itself as the 쁪nowledge bank, this was a very ill-conceived and thoroughly destructive use of its resources.

Brazil is the worlds largest supplier of beef products and in July 2008, Brazil셲 President Lula announced the 2008-2009 Agricultural and Livestock Plan, which made available 41 billion in credit lines to increase agricultural and livestock production further. Brazil like all developing countries has legitimate claims to development.

Contrary to the belief that the best strategy for alleviating poverty in the Amazon region is to convert forest into pasture for farming, a study published in the journal Science this month examined 286 Amazon municipalities and found that deforestation brought quick benefits that were soon reversed. The researchers say the deforestation cycle, irrelevant of its negative ecological impacts, has no economic or social benefits for local people. 85 percent of The Agricultural and Livestock credit is designated for corporate agriculture -- corporate agriculture that feeds western economies.

The Greenpeace report identified a number of major international brands as drivers for the deforestation. While the brands deny using any products derived from illegally cleared rainforests and promote their efforts to cut greenhouse gas emissions, the report clearly shows how ranches responsible for illegal deforestation, sell cattle to slaughterhouses that then ship beef or hides to facilities in southern Brazil or other countries to have them processed for export. They are often processed again in the importing country before being sold to large brands and then passed on to consumers across the world.

Greenpeace says records show that cattle from hundreds of farms across the Amazon are processed in this way, making it virtually impossible to trace the origins of products. "In effect, criminal or 'dirty' supplies of cattle are 'laundered' through the supply chain."

Among others, meat products brands such as Burger King (interestingly no mention of McDonalds), supermarket chains such as Tesco (predominantly processed convenience meals), leather car interiors by most of the major car companies, leather across a range of known consumer brands including shoemakers Nike and Adidas, and hygiene products from Unilever, Colgate Palmolive and Johnson and Johnson all used beef products directly linked to newly deforested land.

What these companies are doing is not illegal. In the world of environmental legislation, clear, stringent regulation is difficult to enact.

The climate change issue is problematic for a number of reasons: 1) there is no easily identifiable 쁞ad guys as all of us contribute to and have bought products from these big companies, therefore indirectly driving deforestation; 2) there is no one single, easily implementable solution; 3) the climate change problem is now an acknowledged global phenomena by the science community yet on a local scale it is still intangible and difficult to identify with and take action on; 4) the time scale for climate change is long which means some of the negative effects will not occur for decades.

As there is no world government that can make decisions on climate issues and hold countries responsible, voluntary agreements and market-based mechanisms have been enacted. The influence of global civil society is one of the last governance tools left to instigate change.

In this context, the Greenpeace report was a huge success. In addition to the ICF canceling the Bertin loan, the report has also stimulated awareness and action in related industries. The Brazil Association of Supermarkets (Abras), which includes the nation's three largest supermarket chains -- Wal-Mart, Carrefour and Pao de Acucar -- will be suspending their contracts with beef suppliers found to be involved in deforestation.

An Abras statement indicated that the association will develop guidelines and allow independent auditing to ensure that cattle products were not sourced from illegally cleared Amazon lands. Abras said the move is necessary because there is no "guarantee that the meat does not come from deforested areas in Amazonia."

In Britain a Tesco spokesman said, "Our canned beef is sourced from Sao Paolo, which is about 3,000 km away from the Amazon. I have also been informed that the cows cannot travel more than 300 km." Asda said it was confident its beef did not come from the Amazon. It said, "If that isn't the case we'd take that very seriously indeed."

Greenpeace put these comments in context. "While the blue chip companies behind reputable global brands appear to believe that Amazon sources are excluded from their products, Greenpeace investigations expose for the first time how their blind consumption of raw materials fuels deforestation and climate change."

Report available here.
©2009 OhmyNews
Other articles by reporter Marcel Herbke

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