Financial institutions provided nearly US$9tn to ‘deforestation economy’ in 2024

A new report has found that 150 financial institutions provided US$8.9 trillion to the ‘deforestation economy’ in 2024, and 60% of them still do not have a deforestation policy.

The Forest 500 report, published today (August 14) by nonprofit Global Canopy, analyses the 150 financial institutions with the greatest exposure to deforestation risk. In 2024, these gave  US$864 billion of financing to companies that depend on forest products, yet lack a public deforestation commitment. 

Three institutions (Vanguard, BlackRock and JP Morgan Chase) were found to have the greatest potential influence on deforestation, having provided a total of over US$1.6 trillion to the 500 most forest-dependent companies last year.

Yet Vanguard and BlackRock do not have any publicly available policies on deforestation, or associated human rights abuses. JP Morgan Chase only has a no deforestation policy for palm oil companies in its portfolio.

Incomplete deforestation policies

Among the 60 financial institutions with deforestation policies, only 27 have a policy to screen and monitor portfolio clients for compliance with deforestation and conversion-free standards. In addition, just 32 have a process in place to engage with non-compliant clients and bring them into compliance for at least one commodity, and 17 have a time-bound threat of divestment compliance is not achieved – these include Bank Negara Indonesia, Barclays and Schroders.

Just three financial institutions – BBVA, Deutsche Bank and Lloyds Banking group – were found to screen and monitor all of the highest risk commodities covered in the Forest 500 report. 

And despite accelerating global warming and the upcoming implementation of the EU Deforestation Regulation (EUDR), the proportion of financial institutions that recognises deforestation as a business risk in 2024 was virtually unchanged at 37%, compared to 35% in 2023.

“Unless financial institutions engage portfolio companies to act on deforestation risk – for instance, through strong stewardship of investee companies – their financing activities will undermine the positive impact of any transition finance they provide. Conversely, these financial heavyweights could use their investment strategies to drive better practice and transform commodity supply chains for the better. In doing so, they can also unlock new business opportunities that reduce nature loss and scale up investment in restoring or protecting nature,” writes Global Canopy in the report.

EU maintains Deforestation Regulation timeline

On Tuesday (August 12), the EU published an updated guidance document to help companies comply with its upcoming Deforestation Regulation – which requires EU firms to conduct extensive due diligence for all forest products.

In it, the EU maintained the current implementation date of December 30, 2025 – despite recent calls to delay it further by cacao companies such as Mondelez.