Political parties undermining forest protection law have received donations linked to illegal deforestation

• Companies and individuals profiting from goods covered by the EU Deforestation Regulation (EUDR), a European law curbing trade in commodities produced from deforestation, have made donations of over €1.7 million since 2018 to European political parties that are trying to gut the law
• Members of Austria’s ÖVP and Germany’s CDU have pushed for the EUDR to be delayed and watered down. These two parties are part of the EPP – the most powerful voting bloc within the European Parliament– which has proposed amendments that would dramatically weaken the law
• The CDU has received donations from car company Mercedes-Benz and the major shareholders in BMW, both of which have been linked to illegal deforestation in their leather supply chains
• The ÖVP and related organisations have received sponsorship and advertising payments from branches of supermarket chains Spar, Adeg, and Metro, furniture giant XXXLutz and the Raiffeisen Banking Group, all of which are exposed to forest-risk commodities
• The European Parliament is set to vote on 14 November 2024 on proposals to delay and weaken the EUDR, which is vital to protecting the world’s remaining forests

The campaign against the EUDR

On 6 November 2024, the conservative European People’s Party (EPP), the most powerful voting bloc within the European Parliament, put forward a series of amendments to de-fang the European Union Regulation on Deforestation-Free Products (EUDR) and delay its implementation by two years. The EUDR bans the import or trade within Europe of palm oil, beef, leather, cocoa, coffee, soy, rubber and timber produced illegally or on land deforested since 2020. The EPP’s proposals open up a series of loopholes that would facilitate laundering of illegally produced commodities into Europe and allow 4,600 sq km of forest to be bulldozed. 

This is the latest assault in a concerted campaign waged over the last nine months by industry associations representing a range of companies complicit in deforestation, overseas governments representing the interests of their own agribusiness giants, and conservative politicians in Europe. 

One of the early prominent opponents of the EUDR within European governments was the Austrian Minister for Agriculture, Norbert Totschnig, a leading figure in the conservative Österreichische Volkspartei (ÖVP). As well as a major party within Austria, the ÖVP also supplies the Austrian contingent of the EPP. 

In March 2024 at a meeting of EU agriculture ministers, Totschnig spearheaded a call for the law to be temporarily suspended and revised, following this up with a joint letter to European Commission President Ursula von der Leyen, along with his economic counterpart.

Again, in July, Totschnig presented a note to the EU’s Agriculture and Fisheries Council extolling the virtues of the European agriculture and forestry sector, commenting that these sectors are “the backbone of vital rural areas that are core to the European way of life, identity and cultural traditions.” The note called on the Commission to “firmly reconsider the time frame for the application of the deforestation regulation and adequately address serious concerns related to its implementation.”

Across the border, German members of EPP from the Christlich Demokratische Union Deutschlands (CDU) have also been loud critics of the EUDR. Despite previously being a supporter of the law, CDU’s Peter Liese, the EPP’s environment coordinator, has repeatedly referred to the law as a “bureaucratic monster” and called for its delay and amendment. Another CDU and EPP member, Christine Schneider, was the sponsor of the EPP’s legislative proposals to weaken the law. The head of the EPP, Manfred Weber, is a member of CDU’s sister party, the Christlich-Soziale Union in Bayern (CSU), and has been a staunch critic of the law. After the Commission agreed to propose a delay, he posted on X: “I am pleased that Ursula von der Leyen has followed my initiative to postpone the #Deforestation Regulation. Together with our farmers, we are protecting the environment & avoiding a bureaucratic monster.”

Following the money

While the Austrian and German politicians calling for a delay and weakening of the EUDR have cited  “cutting red tape” as their aim, they may have another possible incentive to oppose the EUDR: a number of their political donors are linked to illegal deforestation or exposed to forest-risk commodities in their supply chains.

Earthsight’s analysis of the ÖVP’s political donations reveals that the party has received more than €600,000 since 2018 from companies that import, sell or trade forest-risk commodities covered by the EUDR.¹ Unlike the farming cooperatives that are “core to the European way of life, identity and cultural traditions,” many of these businesses are large multinationals with exposure to the commodities driving destruction of rainforests in Brazil, Indonesia and other countries.

In Germany, the CDU and CSU parties have also received more than €1.1 million since 2018 from companies (or their shareholders) that have exposure to forest-risk commodities covered by the EUDR in their supply chains.² These donations primarily came from automotive manufacturing companies (or their shareholders) that have been linked to deforestation in South America via their use of bovine leather for car seats.

A web of exposure to deforestation

A close examination of the ÖVP’s political donors reveals donations and sponsorship payments from companies (or individuals linked to companies) that sell products whose supply chains will be affected by the EUDR, from iced coffee to chocolate and timber. 

In 2019, the ÖVP received a €45,000 donation from MHA Müller Handels GmbH, a large retail chain selling groceries, homewares and pet products including chocolate, coffee, paper goods, printed books and wooden household items – all covered by the EUDR. On top of this, the chain also stocks a brand of pet food that was found in a 2022 Earthsight investigation to be using chicken products that had been linked to illegal Brazilian soy. 

In the same year, another €45,000 donation came from global trading group PISEC Group GmbH. Unpublished findings of an Earthsight investigation found evidence that PISEC exported timber from Ukraine during a period (2011-14) in which corrupt forestry officials were running a bribery scheme. Under the scheme, overseas firms were required to make payments under an ‘agency agreement’ in order to access Ukrainian wood. Court documents from the time suggest PISEC was approached to enter into such an arrangement, although there is no confirmation that payments were made. A Ukrainian MP who was involved in the timber industry at the time alleged that all foreign companies operating in Ukraine at the time were aware of these arrangements.³

Our research also uncovered that, during 2016 and 2017, when the Ukrainian government had banned the export of logs from the country, PISEC was one of eight EU companies that continued to receive large volumes of logs from Ukraine which had been falsely declared as ‘fuelwood’ at export. Earthsight analysis suggests the wood may have been misdeclared in order to illegally circumvent the export ban. Evidence seen by Earthsight suggests that, on at least one occasion, shipments of these logs bound for PISEC were halted at the Ukrainian border by Customs authorities, who alleged that they were illegal.

In addition, Raiffeisen Ware, a wholesale business that supplies the Lagerhaus home improvement chain, delivered €60,000 in reportable sponsorship payments to ÖVP-related group Austrian Young Farmers in 2019-2020. The company and its subsidiaries are exposed to forest-risk commodities covered by the EUDR through its timber products – which include imported and Austrian timber – and its ownership of an animal feed business which uses imported soy.

The company’s own 2023 sustainability report mentioned the EUDR twice as a factor affecting its imports of timber and soy. In discussing the law’s implications for timber imports, the report noted the EUDR’s original start date at the beginning of 2025, but claimed “this date is still under negotiation.” At the time of the report’s publication, the EUDR’s start date was not under negotiation – it was enshrined in law, but being feverishly undermined by corporate lobbying. In a response to Earthsight, Raiffeisen Ware noted that suggestions for postponement had been published in the beginning of 2024 and “we were clearly not precise enough in the wording of our report.”

The finance connection

One regular financial supporter of the ÖVP is the Raiffeisen Banking Group. Between 2018 and 2021, the party received more than €356,000 from different arms of the bank. The funds came as sponsorship payments (for example, paying to have a branded stall at a party-led event), advertising revenue (to place ads in ÖVP-owned publications) and donations to organisations related to the ÖVP. On top of this, Austrian political transparency website Meine Abgeordneten (My representatives) has revealed that 25 current and former ÖVP members have had a close relationship with Raiffeisen group in the past 10 years. In contrast, only three members of all other political parties combined have held such a relationship. 

While banks do not generally have obligations under the EUDR, Raiffeisen appears to be exposed to deforestation risks in several ways. Raiffeisen Banking Group is a shareholder, bondholder and creditor of agribusiness giant Bunge' Bunge has a well-established reputation for sourcing soy from lands linked to illegal deforestation. Earthsight's latest investigation traced that tainted soy to large supermarket chains in Europe. 

Raiffeisen Bank has also been under fire for continuing to do business in Russia despite numerous other banks having exited the market following the invasion of Ukraine. Reports suggest the bank may be exposed to deforestation through this connection. Two members of the Raiffeisen Banking Group, AO Raiffeisenbank and Raiffeisen Bank International AG, were reportedly part of a syndicate that provided a five-year €383.6 million secured credit facility to Segezha Group in 2016. Earthsight has previously reported how, in 2022, Segezha was criticised for logging centuries-old Taiga forest.

This was not the bank’s only exposure to the timber industry. In 2021 Raiffeisen Bank International reportedly arranged a syndicated loan of €315 million for the Kronospan group of companies, a manufacturer of wood-based panels and manufactured flooring. In 2024, Danish newspaper Borsen published an investigation alleging that a Kronospan employee had offered to supply timber from Belarus to a Danish purchaser in violation of sanctions. Kronospan denied that the individual was acting on its behalf and claimed to have ended its operations in Belarus.

Does it pay to advertise?

There is also evidence that the ÖVP received over €100,000 in advertising revenue between 2018 and 2021 from companies that import or sell forest-risk commodities covered by the EUDR. This advertising revenue is likely to come from companies paying for advertisements in newspapers, magazines or online media owned by the party. 

Our research found that the ÖVP had received advertising revenue from supermarket chains Adeg Österreich Handelsaktiengesellschaft, Metro Cash & Carry and Spar, and from furniture retailer XXXLutz. Each of these companies has exposure to forest-risk commodities covered by the EUDR – from timber to coffee, chocolate and paper goods. More than this, in 2021, Mighty Earth found that the German arms of Metro Cash & Carry and REWE (Adeg’s parent company) were both exposed to Brazilian soybeans from Cargill and Bunge in their supply chains. Earthsight has previously linked Bunge’s and Cargill’s soy to illegal deforestation and human rights abuses. Cargill and Bunge were the worst performing soy traders in Mighty Earth’s Brazilian soy deforestation tracker. Earthsight has also traced illegally-grown soy from Brazil into the supply chains of a pet food brand sold by REWE.   

An advertising relationship is not a political donation, and companies choosing to place ads in party-owned publications may be more focused on reaching a party’s audience than supporting its political goals. However, it still represents a source of funding for the party, raising questions about whether the party would feel comfortable to oppose the interests of its advertisers.

From car seats to parliamentary seats

In Germany, the CDU  also has a long list of political donations from companies that have been linked to illegal deforestation or have exposure to forest-risk commodities, or their individual shareholders. Our research found that the CDU has received over €1 million since 2018 from the two largest shareholders in car company BMW. The two shareholders, brother and sister Stefan Quandt and Suzanne Klatten, together own 48.5 per cent of shares in the automotive company and sit on its board. 

BMW’s dependence on leather linked to deforestation and land grabbing has been well-documented. A documentary aired by German broadcaster ARD in March 2024 linked leather car seats used by German automakers – including BMW – to cattle-driven deforestation in the Amazon. In 2020, Earthsight traced leather from illegally cleared forests in Paraguay inhabited by the Ayoreo Totobiegosode – the sole indigenous people living in voluntary isolation anywhere in the Americas outside the Amazon – to major European car manufacturers, including BMW. BMW has denied any links to illegalities in its Paraguayan leather supply chains. 

Mercedes-Benz has also donated to the CDU, contributing €100,000 to the party in 2018 (on top of over €3 million in donations since 2001). Like its competitor BMW, Mercedes has also been linked to deforestation for seat leather. A 2022 investigation by the Environmental Investigation Agency traced cattle from farms with illegal Amazon deforestation to the supply chains of Brazil’s largest leather manufacturers, which in turn had supply chain links to the Daimler group (now Mercedes-Benz AG).    

The CDU has also benefited from donations from retail companies with exposure to forest-risk commodities in their supply chains. This includes: 

• €12,990 in 2022 from the CITTI group of companies, which owns a chain of grocery stores selling chocolate, coffee and South American beef; 
• €13,000 from a company in the PHW Group, a poultry producer which sources soy from Brazil as part of its chicken feed.

Who benefits from ‘simplifying’ the EUDR?

Asked about donations or sponsorship payments, parties will often protest that they are not influenced by the money supplied by their donors, and that such funding is necessary to support the democratic process. However, it is also a fact that the EPP’s proposals to delay and weaken the EUDR are likely to benefit a number of political donors to its members in the ÖVP and CDU.    

In particular, the EPP’s proposed amendments to the EUDR would exempt downstream traders, such as supermarkets and retail stores, from many of the requirements of the law. The amendments would mean that as long as a company is not the first to place a commodity on the European market (for example, because it is purchasing from a European-based importer), it would not have to comply with the due diligence requirements in the EUDR. This exemption removes an important safeguard for the law and lets businesses selling large quantities of forest-risk commodities get away with not knowing how the products on their shelves were produced.  

Another EPP proposed amendment would see products from a new category of ‘insignificant risk’ countries exempted from the law’s zero-deforestation and due diligence requirements. Businesses sourcing relevant goods  from insignificant risk countries would no longer need to collect geolocation data or lodge a due diligence statement. Our analysis suggests this could open up a massive loophole that could lead to laundering of risky commodities and make the law much harder to enforce.  

These moves to amend the EUDR would likely be in the interests of several of the CDU and the ÖVP’s political donors, sponsors or advertisers – many of whom would be exempt from the bulk of requirements under the law if the amendments go ahead.  

But these amendments will be to the detriment of the world’s forests. With European consumption responsible for the loss of 2,300 sq km of forest each year – or a football field every minute – European politicians cannot afford to be distracted by self-interest from the vital task of ending Europe’s complicity in deforestation.

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Company responses

In response to requests for comment, BMW stated that it is “committed to halting deforestation and the conversion of natural ecosystems in supply chains” and expects its suppliers “not to contribute to the changing, deforestation, or damage of natural woodland and other natural ecosystem.” BMW shareholder Stefan Quandt noted that his donations “are by themselves without any specific purpose or personal interest” and noted that political donations contribute to the functioning of the democratic system in Germany.

Mercedes-Benz commented that it supports international regulation against deforestation but believes the EUDR “in its current state” is not ready to come into force “since many details are yet to be clarified, and relevant prerequisites are not on place.” Mercedes pointed to its Responsible Sourcing Standards and emphasised that supply chains for products it sources must be free from any form of illegal deforestation and do not contribute to the endangerment or loss of high conservation forests. It noted that only approximately 5 per cent of leather in its supply chains comes from Brazil, that more than half of these hides are sourced from farms with traceability, and that work is being done on traceability for the remaining hides. Earthsight notes that this statement suggests that up to half of Mercedes’ Brazilian leather remains untraceable.

The PHW Group emphasised its commitment to sustainable sourcing of soy meal and that it has voluntary guidelines to ensure its compound feed is free of deforestation with regard to soy and palm oil for poultry produced in Germany. It pointed to its adherence to several certification schemes and stated it supports “binding legal certainty” for the EUDR.

Raiffeisen Banking Group stated that it does not make donations to political parties and that all sponsoring and advertising activities are in line with compliance regulations and the law. It emphasised that “sponsoring and advertising activities have nothing to do with deforestation acts and serve exclusively for the bank’s advertising presence”. It did not respond to questions and allegations put to it regarding its connections with OVP.

Raiffeisen Ware noted that it is preparing for EUDR but has come across “significant implementation issues that could not be answered in particular without updated FAQs and guidelines from the EU.” It commented that no payments were made to ÖVP and that its sponsorship agreements were with the Austrian Young Farmers’ Association.

XXXLutz stated that it never supports any political party.

Company responses are available in full here. 

No responses were received from: Adeg Österreich Handelsaktiengesellschaft, CITTI Handels GmbH & Co., METRO Cash & Carry Österreich GmbH, MHA Müller Handels GmbH, PISEC GmbH, SPAR Österreichische Warenhandels-AG, Susanne Klatten (BMW Shareholder), ÖVP or CDU.

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References

¹ Information on financing of the ÖVP is sourced from donations reported on the Austrian Court of Auditors website:  https://www.rechnungshof.gv.at/rh/home/was-wir-tun/was-wir-tun_5/was-wir-tun_5/Parteispenden/Parteispenden_2024.html, and information on sources of party income included in the ÖVP’s Annual Reports: https://www.rechnungshof.gv.at/rh/home/was-wir-tun/was-wir-tun_5/was-wir-tun_6/Kontrolle_der_Parteien.html. Annual reports are only available to 31 December 2021. While individual donations are reported on the Court of Auditors website up to mid-2024, these reports do not include non-donation payments such as sponsorships and advertisements.

² Information on political donations to the CDU was sourced from party annual reports (available up to and including 2022), and the Bundestag website (which reports large donations up to 2024). See: https://www.bundestag.de/parteienfinanzierung 

³ Earthsight interview with Ukrainian MP Ostap Yednak, September 2017. For more information and context, see Earthsight (2018) Complicit in Corruption: How billion-dollar firms and EU hypocrisy are fuelling illegality in Ukraine’s forests, London: Earthsight, available at: https://www.earthsight.org.uk/news/investigations/complicit-in-corruption-report