Global finance giants under fire for fueling an $8.9 trillion ‘deforestation economy’ in 2024

A new report by Global Canopy has revealed that 150 of the world’s largest financial institutions invested nearly $9 trillion in industries tied to deforestation in 2024. The Forest 500 report sheds light on where this money is going and how little is being done to mitigate the damage.

The analysis examined investments in commodities such as palm oil, soy, and beef. It also examined links to other high-risk industries such as mining and paper products. What stands out most is the lack of responsibility from financial institutions. Six out of ten firms reviewed have no publicly stated policy on deforestation.

While there has been a slight improvement compared to the previous year, when two-thirds of companies had no such policies, progress remains painfully slow. Even now, fewer than four in ten institutions openly acknowledge that deforestation poses a business risk.

Where the Money Flows

Global Canopy tracked a staggering $8.9 trillion of direct and indirect financial support for 500 companies exposed to forest-risk commodities. The assessment covered nine major products: beef, cocoa, coffee, leather, palm oil, pulp and paper, soy, rubber, and timber.

A significant portion of this funding lacks safeguards. Almost one in every ten dollars, close to 864 billion, went to businesses that have made no public commitments to tackle deforestation. Three financial titans, Vanguard, BlackRock, and JPMorgan Chase, alone were responsible for more than one-fifth of the total. Together, they accounted for $ 1.6 trillion.

China and France also emerged as central hubs of financial flows into deforestation-linked industries, alongside the United States. Global Canopy argues that if these big players set ambitious policies, they could trigger rapid change across the global financial system.

The report states: “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.”

The Push for Change

Pressure is only going to mount. As of December 30, the European Union will ban large businesses from importing beef, cocoa, coffee, palm oil, natural rubber, soy, or wood if these products are linked to deforestation. Over time, the ban will also extend to small businesses.

This shift means financial institutions must urgently redesign their approach. Without robust policies, they will find themselves backing companies that are locked out of key markets.

What Strong Policies Look Like

The Forest 500 report highlights a handful of banks that are ahead of the curve. Banco Bilbao Vizcaya Argentaria, Deutsche Bank, and Lloyds Banking Group were the only institutions shown to be screening and monitoring all the highest-risk commodities. Their practices provide a blueprint for others to follow.

According to Global Canopy, a credible deforestation policy needs to go well beyond a vague pledge. It should include clear standards for screening clients and portfolio holdings, active engagement to bring non-compliant firms into line, and strict deadlines for divestment if companies fail to improve. Transparent reporting of progress and commitments to human rights safeguards are also essential.

The takeaway is clear: the financial sector has immense influence over whether deforestation is curbed or allowed to spiral further out of control. The money already flowing tells a troubling story, but with the right commitments, banks and investment firms could become powerful drivers of change.