Massive Financing for Deforestation-Prone Firms: $9 Trillion Invested by World Banks and Investors According to Forest 500 Report
Financial Institutions Lag in Addressing Deforestation Risk, Report Finds
A new report by the 9th Annual Global Canopy Forest 500 has highlighted the slow progress made by financial institutions in addressing deforestation risks. Despite some advances, the report reveals that overall, these institutions are falling short in their efforts to combat the issue.
In 2024, financial institutions collectively funneled approximately $8.9 trillion into companies linked to deforestation. While 11 institutions published new deforestation commitments, several others, including Ameriprise Financial, Fifth Third Bancorp, and Germany’s DZ Bank, eliminated their deforestation policies, and some failed to improve to meet best practice standards.
Key findings show that only 27 out of 60 institutions with deforestation policies actively screen and monitor portfolios for deforestation risks, 32 engage with non-compliant companies, but only 17 threaten divestment when clients fail to comply. Institutions like BBVA, Deutsche Bank, and Lloyds Banking Group are among the few screening all high-risk commodities comprehensively.
The report also highlights that Chinese financial institutions provided the largest share of financing ($401 billion) to companies with no public commitments to halt deforestation. Investment giants like Vanguard, BlackRock, and JPMorgan Chase combined provided over $1.6 trillion to companies associated with deforestation and related human rights abuses.
Despite regulatory developments like the upcoming EU Deforestation Regulation, only 37% of financial institutions see deforestation as a business risk, a figure unchanged from 2023. Even institutions with strong policies, such as ING, continue financing corporate "laggards" with no public commitments.
The Forest 500 dataset expands annually in scope and transparency, allowing more detailed tracking of companies and financial institutions' exposure and actions regarding deforestation. However, the general picture is one of insufficient progress, with policy rollbacks and widespread continued financing of high-risk clients impeding meaningful change.
The report calls for stronger stewardship, transparent disclosure, rigorous monitoring, and decisive actions like divestment to drive systemic change and prevent finance from fueling deforestation. It warns that unless financial institutions engage portfolio companies to act on deforestation risk, their financing activities will undermine the positive impact of any transition finance they provide.
Deforestation accounts for 11% of global greenhouse gas emissions, and the report urges transparent progress disclosure and stronger engagement to drive systemic change. The report emphasizes the need for financial institutions to take a more proactive and decisive role in addressing deforestation risks.
References: [1] Global Canopy. (2025). The 9th Annual Global Canopy Forest 500 Report. Retrieved from https://www.globalcanopy.org/forest500 [2] Global Canopy. (2025). Press release: Financial institutions lag in addressing deforestation risk. Retrieved from https://www.globalcanopy.org/press-releases/financial-institutions-lag-in-addressing-deforestation-risk [3] Global Canopy. (2025). Infographic: The 9th Annual Global Canopy Forest 500 Report. Retrieved from https://www.globalcanopy.org/infographics/9th-annual-global-canopy-forest-500-report [5] Global Canopy. (2025). Data Explorer: The 9th Annual Global Canopy Forest 500 Report. Retrieved from https://forest500.org/data-explorer/
Financial institutions need to increase their efforts in combating deforestation, as investing trillions into companies linked to deforestation continues (Financial Institutions Lag in Addressing Deforestation Risk, Report Finds). To drive systemic change and prevent finance from fueling deforestation, stronger stewardship, transparent disclosure, rigorous monitoring, and decisive actions like divestment are required in environmental-science (The report calls for...). Financial institutions have a crucial role to play in addressing climate-change, as deforestation accounts for 11% of global greenhouse gas emissions (The report urges...).
