Why Aussie Banks Are Rejecting Loans Connected to Native Forest Products

One of Australia's largest banks, the Bendigo Bank, is now rejecting applications for businesses involved in the "sale and marketing of native forest products."

Fri 17 Nov 23


Australian banks are now rejecting business loan applications “because they are involved in the marketing and distribution of native forest products.”

Wood Central can reveal that the Bendigo and Adelaide Bank, which trades as the Bendigo Bank, “will not provide finance to projects or large scale electricity generation” in several sectors, including native forest logging and coal, coal seam gas, crude oil and natural gas. 

Wood Central understands that the Bendigo Bank, Australia’s 7th largest merchant bank, is the first major institution to introduce a total ban on native forest logging as part of its “Climate Change Policy”, a move which has significant implications for the viability of hardwood logging and processing.

The decision came after relentless pressure from environmental groups, who have pushed Australia’s financial institutions to walk away from Australia’s native forest industry.

As reported last month, Australia is among the top 2 countries in the world for reforestation, driven to a large degree by the commitment by the Australian native forest industry to PEFC (through Responsible Wood) and FSC certification.

With more than 2.4 million customers and 900 branches predominantly located in Victoria, Queensland and South Australia, the Bank prides itself on being “open, honest and fair” with more than $98 billion in assets under management.

Along with the Australian Big Four Banks and Macquarie, it is a member of the global Taskforce on Natural Related Financial Disclosure (TNFD), targeting deforestation, land clearing, biodiversity, and conservation.

The TNFD is a push by the world’s largest financial institutions behind a new standard to make financial investment ‘nature positive’ – with the banks pushing the Australian GovernmentGovernment to include the new standard in the soon-to-be-released “sustainable finance” agenda.

They are demanding action on biodiversity, deforestation and land clearing as part of a general push to ensure that nature “is considered alongside financial, operational and climate risks.”

Last year, it published its “Climate-related Financial Disclosure” statement, where it has committed to “improve its climate-related knowledge and expertise” and “monitor policies and procedures” in the short term.

It comes as Westpac Corporation, Australia’s second-largest Bank by deposits, last week published its natural capital position statement, which, for the first time, sets environmental, social and governance (ESG) targets for the Bank’s loans to agriculture (dairy, beef and sheep). 

It also includes “a commitment to no deforestation, which provides for no further conversion of natural forest to agricultural land use within farm systems from 31 December 2025 for customers.”

Under the policy, Westpac is committed to “achieve a balance between deforestation and restoration of natural forests,” with an “aim of seeing the area of natural forested land remain stable or increase over time.” 

The leader of The Nationals has urged the Australian Government to step in and protect farmers from Westpac's move to establish 'deforestation' targets on agricultural commercial lending.
The new statement was published on Monday. Click the link to download the new report.

“While we ultimately want to see no clearing of individual forests,” the policy states, “where that is not possible (for example, for building housing or infrastructure), we aim to work with customers to balance these impacts via conservation or reforestation initiatives.”

Global banks are under mounting pressure to clamp down on corruption and money laundering connected to the worldwide trafficking of tropical hardwood timbers.

Yesterday, Wood Central revealed that the UN Office on Drugs and Crime has noted “an alarming increase” in timber trafficking connected to drug trafficking and corruption.

Last week, Wood Central explored “China’s Manufacturing Black Box”, which has seen the Chinese exploit its Belt and Road partnerships to export millions of manufactured timber products via ‘bad actors’ in the African Basin. 

However, illegal forest activity is rampant in Latin America, the Asia Pacific region and Southeast Asia – with concerns that Australian-based hardwood timbers are being substituted with imported timbers to meet surging demand.

“The illegal timber trade is a complex issue, often involving multiple actors in multiple countries,” according to the UN Office on Drugs and Crime.

“Illegal activities can occur at all stages in the timber supply chain and range in complexity from local illegal harvesting to international and highly organised criminal syndicates with established commercial supply chains.”

China's business model, which has seen it become the manufacturing heart of the global timber supply chain. (Source: EIA).
In recent years, China has fuelled a surge in timber trafficking by purchasing logs from Latin America, the Asia Pacific and the African Basin as part of its “Belt and Road Initiative.” The model involves China importing raw logs, manufacturing them into veneer, producing veneer, and selling finished products to Western Markets.

Because timber has complicated supply chains, especially wood-based cabinets, flooring, weather-resistant decks, and wooden furniture, consumers need help tracing where wood comes from and whether it is legal.

“In many instances, these products are made of tropical wood that presents desirable colours, grains, and durability and are in the vast majority of cases sourced outside of the country,” according to a report by the Environmental Investigation Agency.

Under Australian law, banks and financial institutions operating in the country must comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), with the Australian GovernmentGovernment looking to expand powers to crack down on dirty money.

According to the Government, significant legal gaps and vulnerabilities have made Australia an increasingly attractive destination for laundering illicit cash, with a 2016 Task Force warning that large amounts of money are “suspected to be laundered out of China into the Australian real estate market through Australia’s banking system”.

How much of that is connected to Chinese timber trafficked from PNG, the Solomon Islands, and the Congo (China’s top three markets for hardwood imports) remains unknown.


  • Jason Ross

    Jason Ross, publisher, is a 15-year professional in building and construction, connecting with more than 400 specifiers. A Gottstein Fellowship recipient, he is passionate about growing the market for wood-based information. Jason is Wood Central's in-house emcee and is available for corporate host and MC services.


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