$8.9 Trillion and the Forests at Risk: Financial Institutions Lag on Deforestation Commitments A staggering $8.9 trillion has been channeled by 150 major financial institutions into companies fueling global deforestation, […]

$8.9 Trillion and the Forests at Risk: Financial Institutions Lag on Deforestation Commitments

A staggering $8.9 trillion has been channeled by 150 major financial institutions into companies fueling global deforestation, according to the latest Forest 500 report by the nonprofit Global Canopy. Alarmingly, 60% of these institutions lack any public policy to address deforestation, a critical environmental issue that contributes 11% of global greenhouse gas emissions.

Among the institutions with the greatest exposure are Vanguard, BlackRock, and JP Morgan Chase, which together provided over $1.6 trillion to companies most reliant on forest-risk commodities. Despite their outsized influence, these financial giants have done little to implement meaningful safeguards. Vanguard and BlackRock have no public deforestation policies, while JP Morgan Chase’s efforts are limited to palm oil.

The 2024 report, which assesses the financial sector’s role in forest loss, found that $864 billion of the total financing went to companies without even a public commitment to halt deforestation. This comes at a time when the World Economic Forum has ranked nature loss among the top four global risks for the next decade, highlighting the urgency of action.

“Unless financial institutions engage portfolio companies to act on deforestation risk – for instance, through strong stewardship – their financing activities will undermine any positive impacts from their transition finance,” the report warns.

Even among the minority of institutions with deforestation policies, action is limited:

• Only 27 actively screen and monitor portfolios for compliance with no-deforestation standards.

• 32 have established processes to engage non-compliant clients.

• Just 17 are willing to divest from companies failing to meet deforestation criteria.

Notably, BBVA, Deutsche Bank, and Lloyds Banking Group stand out as the only institutions that screen all high-risk commodities for deforestation risk.

Despite the impending EU Deforestation Regulation and increasing climate volatility, just 37% of financial institutions recognized deforestation as a business risk in 2024—a figure that remains virtually unchanged from 2023.

Global Canopy calls deforestation “a solvable crisis” and emphasizes its role as a key lever for addressing wider nature-related and climate risks. The organization is urging financial actors to disclose their progress transparently and strengthen engagement strategies to drive systemic, global change. 

Source:  

https://esgnews.com/watershed-stanford-launch-cornerstone-to-protect-and-expand-global-scope-3-carbon-data/