Europe’s Funding of EU-Banned Pesticides

This story was originally published by Lighthouse Reports, a European nonprofit newsroom.

Farmers in the Global South bear the brunt of European public investments in dangerous pesticides outlawed by the EU.

As the climate crisis rages on, one of the key factors defining the future of agriculture is the use of pesticides. Many pesticides - including weedkillers, insecticides and fungicides - can be used safely to stave off pests that thwart farmers’ crops. Others have well-known toxic effects that can have grave consequences on the environment, biodiversity and the health of the farmers who apply them.

This has led the EU to steadily reduce, or outrightly ban, the use of hazardous pesticides over the past decade. Despite resistance by the chemical industry and its allied lobby groups and politicians, the EU aims to reduce the overall use of pesticides by 50 per cent over the next seven years.

But as Europe steers away from pesticides, a new investigation led by Lighthouse Reports shows how public development banks - state-owned financial institutions set up with taxpayer money to support private-sector investments in developing nations - continue to finance projects where hazardous and EU-banned chemicals are used.

Read our factsheet on organic and pesticides

    Over the course of five months, Lighthouse Reports worked with five global media partners to tell the story of how public development banks engage in what critics describe as an act of hypocrisy: banning chemicals at home, but financing projects linked to them abroad.

    People in the global south are being exposed to highly hazardous substances.

    Dr. Marcos Orellana
    UN special rapporteur on toxics and human rights

    After a comprehensive analysis of projects funded by the major public development banks in the US, France, Germany, the Netherlands, and the UK, the team zoomed in on three projects which showed clear signs of questionable pesticide use. These were the Dutch public development bank FMO with its investments in eucalyptus farms in Paraguay, the European Bank for Reconstruction and Development’s (EBRD) loans in cotton farming in Uzbekistan and the Agence Francaise de Development’s (AFD) financing of rubber plantation farms in Ghana.

    Combining paper trails and on-the-ground reporting, Lighthouse Reports and partners were able to confirm that EU-banned pesticides were used in all of these projects. We spoke to farmers on the ground, skimmed through project-specific environmental impact assessment reports and interviewed a dozen environmental and legal experts on the topic.

    The evidence shows that, while public development banks have – to some degree – tried to encourage environmentally sustainable practices by providing training, guidelines, and conducting environmental and social impact assessments, the problem persists. Lack of monitoring by the banks and relaxed EU pesticide regulations on foreign investments mean that countless farmers have been exposed to toxic chemicals that the EU does not allow on its own continent – putting these farmers’ health at serious risk.

    Thousands of smallholder farmers in the Western region of Ghana were involved in a decades-long scheme to farm rubber, under the supervision and assistance of the nation’s biggest rubber plantation company, Ghana Real Estate Limited. The scheme was funded by the AFD and sought to provide rural farmers with employment and direct income, whilst also being environmentally sustainable.

    Several farmers Lighthouse Reports spoke to, however, said they were provided with paraquat, a highly poisonous pesticide that has been banned in the EU since 2007.

    In Uzbekistan, the EBRD made two loans to help modernise a cotton company, Indorama Agro. The company has been subject to intense criticism in recent years after evidence of forced child labour was brought to the world’s attention. Ever since Indorama Agro has pledged to uphold strong environmental regulatory standards.

    Yet, Lighthouse Reports found that pesticide problems persist. Exclusive documents and NGOs monitoring the situation in Uzbekistan found that chemicals like indoxacarb, chlorates, and chlorpyrifos — all banned in the EU — were used.

    As for Paraguay: FMO funded a company called Arbaro Fund, which has investments in two large eucalyptus plantations: Forestal San Pedro and Foresto Apepu. Reports by local NGOs had already expressed concern about the impact these plantations have on wildlife, but further auditing reports of these sites, seen by Lighthouse Reports, show the use of haloxyfop, a substance banned by the EU.

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