A conversation on combating deforestation in Brazil

Fabiana Alves (Brazilian herself) and Martijn van Vliet (then responsible for strategy at Group Sustainability) were already working with other colleagues on renewing Rabobank’s Brazil-specific strategy on land use by customers in 2023. This was because the bank’s existing global policy and strategy could not always be easily applied in practice, given the differences in regulations and market developments per country.

“Combating deforestation is high on Rabobank’s agenda. And developing an effective and workable policy on land use by farmers in Brazil, by an internationally operating bank headquartered in the Netherlands, turned out to be complex”, says Alves. “We did not only develop a renewed global Rabo policy on deforestation but also developed a Brazil-specific land use strategy. The core aim of our approach has always been to prevent illegal deforestation within our portfolios. However, Brazil also recognizes legal deforestation and land conversion. To discourage customers from using their deforestation or land clearance permits, we’ve now developed more specific products for farmers and expect to offer even more in the near future. On top of that, we’re actively leveraging our knowledge, networks, and experience in the Food & Agri sector to contribute to getting the local system moving in another direction , with key stakeholders - ranging from policymakers and politicians to NGOs and players in the F&A industry. Taking on such a major issue as deforestation requires collaboration—we can’t do it alone.” Van Vliet adds: “Rabobank has been investing in impact projects in Brazil for some time and in doing so we want to show the market what’s also possible. That’s an important part of our approach in the country as well.”

Together with Van Vliet, Alves reviewed the land use approach in Brazil and developed a new strategy specifically focused on land use. A crucial component of this was ‘more & better data’. “We were already measuring and monitoring a lot, but to further improve our assessments and decisions, we needed more data about our customers. We raised the bar and focused on ‘more, better, and more current data’, Alves explains. “We not only improved satellite monitoring but we visited many customers on their farms as well. We also developed tools with our colleagues that use more data sources and combine them more effectively. In a clear dashboard, we now see various types of current embargo lists—such as IBAMA, ICMBio, SEMA—and any possible impact on our customers, which part of their land may be affected, and the status of any possible procedures related to the embargo. This gives us a much better understanding of the facts and risk levels. And when the situation calls for it, we engage in a dialogue with our customers.”

“The reality is that because we now have more data on our customers in Brazil, the limitations are also highlighted. Some problems cannot be solved by us or our customers due to bureaucratic obstacles. Legislation is complex and sometimes contradictory”, says Alves. She explains that in Brazil, national, regional, and local laws overlap. In practice, this means many customers follow local legislation. “Fortunately, the same Brazilian regulations also ensure that farmers are important stewards of nature, as they are required to preserve a certain percentage of their land as natural area—sometimes up to 80%!” Alves explains. However, regarding the part of the (natural) land that may legally be converted to agricultural use, the complex system can still create uncertainty, as one authority may deem it legal while another considers it illegal. “That’s why it’s sometimes so difficult for a bank to act on this. Still, the improved data quality helps us better assess what we can do.”

One question Alves and Van Vliet, together with their colleagues who were also working intensively on this topic, asked themselves several times during the early development phase was whether Rabobank should withdraw entirely from Brazil. “Can Rabobank operate in a country where deforestation occurs? That was essentially the question we asked ourselves”, says Van Vliet. “The answer is a resounding ‘yes’—we choose to remain active in Brazil, provided we can do so on ‘our terms’.” Alves adds that it’s important to understand that most deforestation in Brazil is illegal and most of that illegal deforestation takes place on government-owned land (editor’s note: unlike private land such as in Rabobank’s portfolio). “We continue to commit ourselves and take action against illegal deforestation in our portfolio, and we’ve now further strengthened our processes and monitoring systems for that”, she says. “For the legal part—which may only occur with proper government permits, and often includes converting grassland to farmland rather than just cutting down trees—we aim to prevent deforestation as much as possible. However, we cannot force the farmers not to use their permits.”

Alves and Van Vliet emphasize that Rabobank still wants to contribute to a deforestation-free food system. “And we’re investing time and money into that as a bank”, says Van Vliet. “This country is so important for the global food supply that we want to remain active here and use our role as a bank to help achieve our goal of preventing deforestation—within our portfolio,” he says.

Together, they summarize once more where Rabobank’s strengthened approach lies. “The core of the strategy is that we prevent illegal deforestation within our portfolio. In addition, we’ve developed specific products for farmers to discourage legal deforestation, such as more favorable interest rates and longer loan terms for activities like nature restoration or conservation. We’re also working on solutions like carbon credits for reforestation of degraded land. Since agricultural land often yields more financially than natural land, we’re trying to assign more value to natural land in these kinds of ways. And we’re actively trying to get the system moving through dialogue with the F&A industry, the government, and the financial sector in Brazil—that’s also very important. Finally, Rabobank invests directly in impact projects to help shift the market.”

Rabobank always reasons from the customer’s perspective, they say. “Because together with the customer, we can try to make a difference. And that gives us the strong conviction that we can be present in Brazil”, says Van Vliet. “We do, however, need to continuously ask ourselves the critical question: do we think we are doing enough, as our customer’s financier in Brazil, to help combat illegal deforestation and discourage legal deforestation?” he adds. “Although there’s still a long road ahead, we truly believe we are doing that right now. And it’s also encouraging that this is being recognized. The Brazilian Minister of Environment publicly praised the bank for our efforts to raise the sustainability bar and for our long-standing, committed collaboration with the F&A sector in Brazil”, Alves concludes.

Impact Report 2024 (page 58-60)
Why Rabobank values nature

1 Where we use the brief term “deforestation”, we also mean land conversion