Banks, Pulp & People

Press Release: Urgewald targets the pulp industry in new report and website (6 August 2007).





Over the next five years, the global pulp industry is planning to increase its production capacity by more than 25 million tonnes. This capacity increase is unprecedented and would mean a five-fold increase, when compared to the growth rates of the last decade. More importantly, it would mean a dramatic increase in the problems that the pulp sector is already causing for people and the environment in producer countries.

“Pulp mills and the industrial tree plantations that feed them have become increasingly controversial”, says Chris Lang, the author of the report Banks, Pulp and People – A Primer on Upcoming International Pulp Projects. “The vast areas of monocultures required to feed modern mills have severe impacts on biodiversity, forests, water, land rights and livelihoods. And pulp mills themselves are among the most polluting industrial facilities, with grave consequences for the health of local communities and riverine ecosystems. Its no wonder, that in country after country, local people and environmental organizations have taken to the streets to protest against these developments”, he adds.

Lang, who studied Forestry at Oxford University, has been analyzing the pulp sector for over 15 years. His study gives an overview of the industry’s expansion plans and provides information on individual projects in the pipeline. The bulk of new expansions are slated to take place in only a few countries: Uruguay, Brazil, Indonesia, Australia, China and Russia. The report gives a detailed description of the impacts of the industry in these countries as well as analyzing the track records of the involved companies.

“The aim of our report is to inform financial institutions about the impacts and risks of upcoming pulp investments before decisions are made and contracts are signed”, says Heffa Schücking, director of the German environment and human-rights organization Urgewald. Building on some of the work the Center for International Forestry Research (CIFOR) has done, “Banks, Pulp and People” not only provides an overview of the risks associated with the sector, but also points out the gaps and weaknesses in banks due diligence processes.

“Pulp mills are extremely capital intensive”, says Schücking. “Financiers of pulp mills play an important role in deciding which mills get built and where. One only needs to look at countries like Indonesia, to see that financial institutions have yet to begin taking their responsibilities seriously. A first step would be to conduct proper due diligence into the companies and projects they are supporting to avoid financing new economic, social and environmental disasters. Our study makes comprehensive recommendations in this regard”, she adds.

In order to hold the financiers of the pulp industry accountable, Urgewald has also set up a new website, www.pulpmillwatch.org. It documents the problems caused by the pulp industry’s operations and informs the public, financiers and decision makers regularly about upcoming problematic projects. “We hope it will be a useful tool for social and environmental activists who are campaigning against these projects as well as for banks, who want to avoid repeating the mistakes of the past”, she says.