Banks will tighten rules for granting credit to slaughterhouses

A new rule by Febraban (Brazilian Federation of Banks) determines that Brazilian banks will have to comply with a protocol to combat illegal deforestation when offering credit to slaughterhouses and slaughterhouses. When granting financing, the participating banks must ask slaughterhouses in the Legal Amazon and Maranhão to implement a traceability and monitoring system that demonstrates that the cattle purchased, from direct and indirect suppliers, do not come from areas with illegal deforestation. The system needs to be operational by December 2025. “This system should include information such as embargoes, overlaps with protected areas, identification of deforestation polygons and authorizations for suppression of vegetation, in addition to the Rural Environmental Registry (CAR) of the properties where the animals. Social aspects, such as verifying the registration of employers who have subjected workers to conditions similar to those of slavery, were also considered”, informed Febraban. To put the actions into practice, the banks will define the adequacy plans, incentives and appropriate consequences. As a way of guaranteeing that slaughterhouses will comply with the agreement, performance indicators were established, to be released periodically by the sector itself. The objective, according to Febraban, is to mobilize financial institutions through sectoral self-regulation. The financing of activities related to the practice of deforestation leads to increased credit, reputational and operational risks. According to the president of Febraban, Issac Sidney, banks are committed to developing an increasingly sustainable economy. “The sector is aware of the need to advance in the management and mitigation of social, environmental and climate risks in business with its customers and channel more and more resources to finance the transition to the green economy”, he said, in a note. Institutions that adhere to self-regulation undertake, on a voluntary basis, to follow higher standards of conduct, undergo periodic supervision and may be punished in case of non-compliance.

Agência Brasil