"UBS and Santander’s ‘green’ bonds linked to deforesters and rancher accused of slave labour in Brazil", 17 October 2023

...The European banks UBS and Santander have raised hundreds of millions of pounds of “green” bonds that were partly intended for farmers and ranchers accused of environmental and human rights abuses in Brazil, an Unearthed and O Joio e O Trigo investigation has found.

Among those linked to the bonds are a farmer who allegedly held five labourers in “slave-like” conditions, a soy company identified as the biggest deforester in Brazil’s Cerrado savannah, a cattle rancher fined for preventing the regeneration of 17 sq km of Amazon rainforest, and an ethanol producer that poisoned a river relied on by an Indigenous community.

This influx of cash was made possible by financial tools called CRAs...

A CRA is a special type of asset backed security that may be issued by a company or individual who commits to invest the money in agribusiness. The role of the coordinating banks is to define the price of the bonds and sell them to investors. For this, the coordinating banks receive a fee, usually 3% to 5% of the total offer, which they divide among themselves...

As an Unearthed investigation can reveal for the first time, even CRAs distributed to investors by UBS and Santander and marketed as “green” have been destined for farmers and companies that are being investigated for their roles in socio-environmental disasters, large-scale deforestation, land grabbing, and slave labour...

The CRA market is currently dominated by Brazilian banks, but two European banks are quietly gaining traction. Spain’s Santander has been coordinator or lead coordinator in CRAs totalling at least R$23.4bn (£3.7bn) through CRAs for Brazilian agribusiness since 2018, R$8.6bn (£1.3bn) of which was in 2022 alone...

A Santander spokesperson told Unearthed that CRAs are regulated by CVM, the Brazilian Securities and Exchange Commission and that the bank can act as a structurer and distributor of these securities and also as an investor. 

“For a CRA to be classified as green or sustainable when issued to the market it must comply with the ICMA’s Green Bond Principles and require an independent second party validation. Santander has strong governance processes in place to ensure that required market standards are adhered to,” stated the bank...

A spokesperson for UBS said that they “apply Group-wide guidelines on sustainability and climate risks. These guidelines help us to identify and address possible adverse effects on the climate, the environment, and human rights, as well as the risks associated with them for our clients and UBS.”

“We support our clients in their transition to the net zero target and we do not provide finance or advisory services to companies whose primary business activity is associated with illegal logging or high conservation value forest,” the statement said, adding that they do not comment on client relationships...