The agri-food sector has been identified as a primary driver of global forest loss over the past two decades. While the focus often falls on the companies involved, recent studies are highlighting the crucial role of banks in fueling this expansion and the resulting deforestation.

Global banks poured $72 billion into high-risk agricultural supply chains tied to deforestation over the past 18 months. A recent report by the Forests & Finance coalition of non-governmental organizations says the money flowed to sectors such as beef, soy, palm oil, pulp, and paper, all major threats to forest ecosystems.

The report, “Banking on Biodiversity Collapse 2025: After Ten Years of Paper Promises, It’s Time to Regulate Finance,” published on Nov. 5, found that institutional investors also held $42 billion in stocks and bonds across 191 companies that endanger forests and forest-dependent communities in Southeast Asia, West Africa, Central Africa, and parts of South America.

Failure of Voluntary Action

Most of the financing came from the United States, Malaysia, Brazil, Japan, and the United Kingdom, heavily concentrated in the pulp, paper, and palm oil industries.

The authors said the figures highlight the global financial sector’s lack of commitment, even though the 2015 Paris Agreement recognizes forests as crucial to combating climate change, both as carbon sinks and natural buffers.

Between 2016 and 2024, banks extended $429 billion in loans and bond underwriting to companies linked to forest-risk commodities, a 35% increase. The world’s 30 largest banks accounted for $327.3 billion of that total.

“Much of this finance has been extended without adequate forest and human rights protections. Our assessment of bank policies for these sectors shows persistent weaknesses, vague commitments and glaring loopholes on policy scope and coverage beyond project finance,” the report said.

Call for Regulatory Overhaul

The coalition urged regulators to make biodiversity and human rights part of central banks’ and financial watchdogs’ core mandates. It also called for mandatory disclosure of banks’ and investors’ portfolios and exposure to biodiversity risks, and for central banks to prioritize green bonds.

The group proposed integrating biodiversity risks into anti-money laundering frameworks, introducing legal liability for financing environmental harm or rights abuses, and imposing stiffer penalties on violators.

“Voluntary approaches have failed,” the report concluded. “Despite better data, improved disclosure, and enhanced risk frameworks, major financial institutions are still banking on biodiversity collapse.”

Released just ahead of the 30th U.N. Climate Change Conference (COP30) in Belém, Brazil, the publication underscores the persistence of global deforestation. A separate report released Oct. 14 found that 8.1 million hectares of forest were lost in 2024, the second-highest level in a decade.

Espoir Olodo