Nearly 100 financial institutions risk funding deforestation with $2.7 trillion

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Planned legislation requiring companies to tackle problem a step forward, but must cover finance sector

BlackRock is one of nearly 100 major financial institutions that are ignoring tropical deforestation in their public policies, while providing $2.7 trillion that risks fuelling the climate and biodiversity crisis, reveals Global Canopy’s annual Forest 500 report released today.

They are among 95 of 150 top banks and institutional investors that have published no policies to ensure that the companies they finance are not contributing to deforestation.1 They include four of the world’s five biggest asset managers Vanguard, Fidelity Investments and State Street as well as BlackRock.

Vast amounts of tropical forests are being cleared every year to meet global demand for palm oil, soy, beef, leather, timber, and pulp and paper. And the report finds that a third of the companies driving trade in these commodities have made no public commitments to avoid deforestation, while only a quarter have policies for all the commodities they are exposed to.2

Millions of everyday products from companies without policies could be contributing to deforestation, from Versace and Jimmy Choo fashion labels owned by UK- and US-based Capri Holdings, to President cheese from France’s Groupe Lactalis, sold in 160 countries, and footwear from Switzerland’s Bata, the world’s leading shoemaker by volume.

Niki Mardas, Executive Director of Global Canopy, said:

“There is no solution to climate change without a solution to deforestation. Yet a great majority of the world’s largest financial institutions are looking the other way on this vital issue. Some are making big announcements on climate change, while failing even to have a deforestation policy in place.

“This doesn’t add up, and it sends a terrible message to the market. Strong policies are a basic first step, setting clear expectations for the companies they finance, and demonstrating a strategic approach to the climate and nature crisis. Emerging due diligence legislation will favour early movers, and must include the finance sector in its remit, with sanctions for those who fail to act.”

In the 2014 New York Declaration on Forests, governments and companies committed to deliver deforestation-free supply chains by 2020. Since then, average tropical forest loss has accelerated by 44%, with an area larger than the UK lost each year, and the main cause is agricultural expansion.

Deforestation and land use change account for about 13% of the world’s greenhouse gas emissions while destroying biodiversity and threatening the rights and livelihoods of local communities. The World Economic Forum has calculated that $44 trillion – more than half of global GDP – is at significant risk from escalating nature loss.

The Forest 500 rankings provide data on the 350 companies that produce, trade, use or sell the largest amounts of the key commodities linked to deforestation, and the 150 biggest institutions that finance them through bonds, loans and shareholdings worth $5.5 trillion, increasing transparency and accountability. It ranks the strength and implementation of their commitments on deforestation based on publicly available information.

Responsible financial institutions should use their influence to end deforestation

Banks, asset managers, pension funds and insurance companies can have huge influence over the global supply chains driving deforestation. The report argues that financial institutions that are serious about climate change should set policies covering all key commodities, monitor and engage with companies to drive progress on deforestation, and divest from those which fail to act.

But it finds that 95 financial institutions that have no deforestation policies are providing $2.7 trillion of finance to these 350 companies. BlackRock is one of the most exposed even though CEO Larry Fink has pledged “to place sustainability at the center of our investment approach.” Nine of the ten biggest funders without policies are US institutions.

Top 10 Forest 500 financial institutions with no deforestation policies

Financial institutionHQ CountryTotal funding for Forest 500 companies (US$ billions)
State StreetUSA209.5
Capital GroupUSA148.7
Wells FargoUSA111.6
Fidelity InvestmentsUSA106.7
T. Rowe PriceUSA77.0
Royal Bank of CanadaCanada72.9
Geode Capital HoldingsUSA67.8
Northern TrustUSA65.8
TOTAL 1671.8

Only 55 of the 150 financial institutions have deforestation policies and there are problems with the way many are implemented. HSBC, Santander, Deutsche Bank and BNP Paribas all have policies but jointly provide at least $6.4 billion to companies with no published deforestation commitments.

Goldman Sachs, Standard Life Aberdeen and BTG Pactual are among nine that have not disclosed how they identify and deal with companies that do not comply with their policies.

One fifth of the 150 financial institutions with the greatest influence on tropical deforestation, including Rabobank and UBS, have published policies for all key forest-risk commodities, demonstrating that they recognise this issue as a priority.

Legislation essential to drive action on deforestation

Momentum is now growing for action to curb deforestation. It will be high on the agenda this year at the UN Biodiversity Summit in China and the UN Climate Summit in the UK.

The UK government has announced plans to introduce due diligence legislation in the forthcoming Environment Bill which is a major step forward, although current proposals do not go far enough. The European Union, the world’s second biggest market for tropical forest-risk commodities, is also reviewing legislative options.

The report says due diligence laws are now essential to accelerate progress. To be effective they must:

  • Require standardised reporting – so companies can be held accountable and benchmarked against peers, and so financial institutions can understand their exposure to deforestation.
  • Include all forms of deforestation – not just illegal deforestation as in the proposed UK legislation. Ideally, they should cover conversion of any ecosystem for agriculture.
  • Include human rights – tackling risks closely associated with deforestation. Just three of the 350 companies have comprehensive commitments for all their commodities.
  • Apply to financial institutions – so they are required to identify and address their exposure to deforestation risk through the companies they finance.
  • Have sanctions for non-compliance – so there are consequences for companies that fail to address deforestation risk in their supply chains.

Well-known brands lack commitments

More than a third of the companies assessed (134) are exposed to risk because their products use meat, fish, dairy and egg from animals raised on soy, a common ingredient in animal feed. The vast majority (107), fail to recognise this “hidden soy” in their commitments, including Dunkin’ Brands, owner of Dunkin’ Donuts and ice-cream chain Baskin-Robbins, food manufacturer Kraft Heinz, and Starbucks, which uses millions of gallons of milk a year.

Just a quarter (87) of the most influential companies have published deforestation commitments for all the high-risk commodities they are exposed to, among them are Unilever, Marks & Spencer and Colgate-Palmolive.

The report appendix contains a full list of companies and financial institutions identifying those with no public deforestation commitments; those with partial commitments; and those with commitments covering all commodities to which they are exposed.

Full scores and data will be available on 26 January at

Image: © Ulet Ifansasti / Greenpeace

  1. For financial institutions a deforestation policy is defined as a commodity-specific policy focused on forest protection, or a policy to protect primary, intact or high conservation value forests, or a commitment to a credible certification scheme that protects these. ↩︎
  2. For companies, a deforestation commitment is one that commits to zero-gross/zero-net deforestation or zero-gross/zero-net conversion, or at least protects priority forest types including high conservation value forests or commits to a credible scheme that protects these. ↩︎