Finance, fires and Indigenous rights

Protecting the land rights of Indigenous peoples and local communities is key to protecting tropical forests and reducing forest fires.

By Tara Chaussalet

Forest 500 Intern

Deforestation is a driver of severe forest fires and human rights abuses against Indigenous peoples and local communities. The link between human rights and environmental destruction often appears to be forgotten or overlooked in corporate policies. Indeed Forest 500 data shows that too few companies with supply chains linked to tropical forest areas recognise the need to protect the rights of the communities that live there. Pressure must be put on financial institutions and companies so that this changes, and the UK and European governments have a role to play. 

Almost half of intact forests in the Amazon Basin are in the territories of Indigenous peoples and local communities, who often play a vital role in sustainably managing their forests. The right that Indigenous peoples have to be consulted on what happens on their land is recognised in the UN Declaration on the Rights of Indigenous Peoples (the right to give their Free, Prior and Informed Consent – known as FPIC), yet too few of the companies – or the banks and investors that finance them – are ensuring this is respected. 

Global Canopy’s Forest 500 assessments look at the 350 most influential companies in forest-risk supply chains and the 150 financial institutions that provide the most finance to those companies. Our most recent Forest 500 assessment found that none of the financial institutions and very few of the companies had relevant policies in place across all commodities and all human rights issues assessed (including FPIC, labour rights, gender equality and smallholder rights). 

In total, 248 out of 350 companies had no FPIC commitments and 112 out of 150 financial institutions did not encourage or require the companies that they finance to have FPIC commitments. 

Why rights matter

All human rights matter, but the land rights of Indigenous peoples and forest communities can be particularly vulnerable at the deforestation frontier. Land can be taken without the local community’s consent, in clear breach of FPIC, often leading to land conflicts.  

When the rights of Indigenous peoples and local communities are respected, they can continue to manage the land, and this often means protecting intact, old-growth forests, which are more resilient to harmful forest fires than land that has been cleared for agricultural commodities. 

Global Forest Watch’s data shows that tree cover loss in Brazil is significantly lower in Indigenous and Community Lands (ICL), than outside them (see graph). Similarly recent research into forest fires shows that the recognition of land rights may increase the potential for Indigenous knowledge to guide land management which subsequently can lead to less serious fires. 

In 2019, fires in the Brazilian Amazon negatively affected 148 indigenous territories. These fires typically happen after an area has been deforested. 1,047,600 hectares of forest was cleared in this area over the past year – the highest annual level in a decade – this is cause for concern.  High rates of deforestation were largely due to illegal land-grabbing across Indigenous territories.

Given the importance of this issue, the Forest 500 assessments this year have a new indicator which assesses companies and financial institutions on their commitments to resolve land conflicts in their operations and supply chains before developing or acquiring land.

Where to go from here

The dots must be reconnected so that the companies and financial institutions with the biggest influence on agricultural supply chains recognise that protecting the land rights of Indigenous people is key to protecting tropical forests.

We need to put more pressure on companies and financial institutions to include a commitment to protect human rights and to resolve land conflicts, alongside their commitment to end deforestation.

But the lack of voluntary action by companies and financial institutions shows there is also a need for regulatory action. Proposed mandatory due diligence laws on deforestation risks in the UK Environmental Bill and potentially in the EU’s proposed legislation on deforestation, as well as the postponed EU law on Sustainable Corporate Governance should also include human rights abuses in supply chains.

It is time financial institutions and companies stopped adding fuel to the fire. They need clear commitments on deforestation and human rights, and we need transparent reporting so that they can be held to account.