Analysis of 100 land titles of properties where deforestation has occurred found NAB financed twice as many of these properties as any other bank.
The analysis, conducted by the Australian Conservation Foundation, shows Australian banks are highly exposed to deforestation through their lending portfolios. It found:
- NAB was linked to twice as many cases of deforestation than any other bank.
- Nine cases where bank mortgages were re-signed during or after the time deforestation was happening on properties.
- Almost half the cases of deforestation financed by banks were reportable under Australia’s national nature law.
“Australian banks have been too slow to respond to the problem of financed deforestation,” said Audrey van Herwaarden, ACF’s Policy Analyst - Corporate Responsibility.
“Two years after ACF’s Banking on nature destruction report, Westpac is the only Australian bank to have made a no deforestation commitment.
“By examining 100 cases of deforestation that are tied to banks via a mortgage over the land title, our analysis gives just a small picture of the total deforestation likely to have occurred in the 12-month period we examined.
“The financial sector has a special responsibility to halt and reverse nature destruction because it finances industries that have the greatest impact on nature.
“Weak due diligence policies or turning a blind eye to destruction gives landholders who are destroying nature a market advantage over those that are doing the right thing.
“Our analysis shows banks still have a long way to go to mitigate the risks – and seize the opportunities – associated with their impacts and dependence on nature.
“By taking bold, science-aligned action now, Australian banks can help halt deforestation, protect biodiversity and lead the transition to a more resilient economy.
“Banks need to adopt clear policies to eliminate deforestation from their lending portfolios and invest in internal capability to identify and monitor nature related risk.”
Legal opinion by Sebastian Hartford-Davis and Zoe Bush in 2023 concluded failure on the part of company directors to identify, manage and disclose material nature-related risks may lead to them being found in breach of their duties of care and diligence.
ACF’s analysis was conducted by a small team at a not-for-profit environment group, using tools and data sources that are mostly available free of charge. It is not a shortage of data that is the barrier to action on deforestation, but the inability or unwillingness of banks to leverage and interpret information that is available to them.
Case studies in the report show:
- On a property in the Southern NSW Mallee Key Biodiversity Area known to be habitat for three key mallee bird species – the crested bellbird, the white-eared honeyeater and the yellow-plumed honeyeater – around 600 hectares was bulldozed, 366 hectares of which met the UN definition of deforestation. NAB was the lender.
- In the Sturt Plateau bioregion of the Northern Territory, an area 503 times the size of the MCG – tropical savannah woodland habitat for endangered birds like the Gouldian finch and red goshawk and critically endangered reptiles like Mitchell’s water monitor and the northern blue-tongued skink – was ‘deforested’ over a two-year period. Commbank was the lender.
- In March 2023, the pink cockatoo was nationally listed as an endangered species. In late 2023, the managers of an agricultural property with a Rabobank mortgage in the Mulga Lands bioregion of south-west Queensland began bulldozing pink cockatoo habitat.
Parameters of this analysis
ACF’s crowdsourced investigation identified 583 cases of significant native vegetation loss between winter 2023 and winter 2024. ACF’s in-house investigators examined these cases and found 159 met the UN Food & Agriculture Organisation definition of deforestation.
Of those 159, we selected the 100 cases with the largest areas of deforestation that were tied to banks via a mortgage over the land title.
This analysis presents a conservative assessment of financed deforestation on land likely to contain nationally protected environmental matters where we detected significant native vegetation loss between winter 2023 and winter 2024 and where federal approval for the change could not be identified.
Bank loans through securities on title are a common method for agribusinesses to finance deforestation, but ACF cannot be certain the loans identified were used specifically to finance the deforestation we observed.
Analysis: Financed deforestation: banks’ roles and responsibilities