Questionable Sustainability: The Royal Golden Eagle (RGE) Group continues deforestation despite receiving $4.9 billion in sustainability-linked loans.

MUFG’s Role: Mitsubishi UFJ Financial Group (MUFG) has financed RGE with $630 million, sparking concerns about potential greenwashing.

Global Impact: Major brands sourcing from RGE risk violating new EU regulations due to their connection to deforestation.

New Evidence Highlights Flaws in Sustainable Finance Deals

A report by the Rainforest Action Network (RAN) challenges the validity of sustainability-linked loans given to Indonesia's RGE Group. Despite pledges to halt deforestation, RGE’s palm oil and pulp & paper activities continue to contribute to forest clearance, casting doubt on the effectiveness of the $4.9 billion labeled as “sustainable finance.”

Persistent Deforestation Despite Financial Incentives

The sustainability-linked loans, largely facilitated by Mitsubishi UFJ Financial Group (MUFG), were meant to support environmental goals such as “zero tolerance for deforestation” and “radical traceability and transparency.” However, satellite data commissioned by RAN reveals that over 1,475 hectares of forest have been cleared within RGE’s concessions since the issuance of these loans.

RAN spokesperson Alex Helan commented, “This report underscores critical flaws in the expanding Sustainability-Linked Loans market. MUFG and other banks seem eager to enhance their sustainability image, yet less focused on the actual impact of RGE group’s activities."

MUFG’s Involvement Under Scrutiny

MUFG has been instrumental in structuring and advising on these loans, contributing approximately $630 million since 2016. Nick Yee, an MUFG managing director, highlighted that the bank “utilized its ESG financing expertise to design a custom structure for RGE.” However, critics argue that this partnership has facilitated ongoing deforestation under the pretense of sustainable finance.

Continued Violations and Calls for Accountability

Despite public commitments, RGE subsidiaries such as Asian Agri and Apical have been implicated in illegal deforestation activities, including the clearing of 165 hectares of forest in 2023 alone. These actions directly contradict the environmental promises tied to their loans.

Helan added, “The financial sector has a responsibility to ensure that sustainability-linked loans do more than just greenwash—they must stop financing destruction and drive real positive change."

Global Brands Face Regulatory Risks

Major consumer brands, including Unilever, PepsiCo, Nestlé, and Mondelēz, continue to source from RGE despite its ongoing deforestation practices. Under the new European Union Deforestation-Free Regulation (EUDR), these companies could face significant risks if they persist in sourcing from suppliers linked to deforestation.

A Call for Greater Transparency and Action

RAN’s report calls on financial institutions and consumer brands to reassess their partnerships with RGE, demanding more stringent monitoring and transparency. It urges the suspension of financing to RGE until the company demonstrates a genuine commitment to environmental and social responsibilities.