Statement: Protecting Australia's forests is just good business

A decision by Bendigo Bank to not provide finance to a native forest logging company on environmental grounds has been in the spotlight in recent days. Those criticising the bank are, however, missing a crucial point: financial institutions’ decisions are borne not only out of values around protecting nature and people, but out of risk and economic considerations.

The Economic Dependency on Nature

The Australian economy depends on a safe climate and healthy nature to function. Approximately half of Australia’s GDP ($892.9 billion AUD) is derived from sectors with direct dependence on ecosystem services. Deforestation in Australia impacts carbon storage, soil quality, biodiversity, and water—services on which the food, forestry, tourism, and construction sectors, among others, depend. The destruction of nature is a threat to the viability of these sectors—and therefore to banks financing them.

Environmental Costs of Native Forest Logging

Native forest logging is Lutruwita/Tasmania’s highest carbon-emitting industry, destroying world-class high conservation value forests and biodiversity. These forests are essential to the survival of threatened species, upholding rich Aboriginal cultural heritage, and cleaning our water and soil. These values are degraded by native forest logging.

The Shift in Financial Practices

We are starting to see a change in the lending practices of banks in Australia, as part of a global shift away from financing environmentally destructive activities. For example:

• Westpac has set a zero-deforestation target for loans to livestock farming.
• Commbank is no longer lending money to fossil fuel companies that are not aligned with the Paris Agreement.

Protecting nature is becoming a key requirement to successfully do business globally, influenced by international agreements like the Global Biodiversity Framework. For instance, Australian beef and timber companies that wish to export products to Europe will soon have to demonstrate they did not source from deforestation, under a new EU law.

Financial and Reputational Risks of Funding Deforestation

It will become business as usual in coming years for banks, insurers, and investors to limit their exposure to the financial and reputational risks associated with funding deforestation—and they have every right to do so. A political leader that would seek to stop businesses from making independent decisions to protect the environment is not acting in the best interests of nature, the economy, or the wider community.

A Call for Sustainable Solutions

Adele Chasson, Manager of Corporate Advocacy and Engagement at the Wilderness Society:

“Solutions exist: instead of financing the destruction of precious forests and bushlands in Lutruwita/Tasmania for timber and pulp, or in Queensland for beef, banks can direct funding to well-managed plantations and deforestation-free agriculture. This creates jobs, secures access to environmentally conscious overseas markets, and fosters both economic and environmental benefits. In this green transition, it is the job of governments and corporations to ensure workers, families, and communities are supported.

“Australians love nature—that is perhaps most obvious at this time of year, when many are enjoying the outdoors. We need nature for our economy and lives.”