This report by Global Witness shows how the 20 biggest banks in the EU have provided billions to companies linked to deforestation since 2016. This review shows that voluntary guidelines and individual commitments by financial institutions are unlikely to stop the financing of forest destruction.
According to Global Canopy, US$6.1 trillion in funding was provided to the 350 companies with the greatest risk exposures to tropical deforestation by some 150 financial institutions in 2023.
Through this exposure, land conversion presents numerous supply-chain risks to firms, namely:
- The reputational risks posed by adverse media (exacerbated further if linked to any human-rights abuses in the context of land conversion).
- The legal risks represented by increasing regulatory and legislative pressures on companies and financial institutions to prevent deforestation.
- The physical risks present, given that most bank-financed businesses and commercial services ultimately depend on natural capital and resources directly or through their supply chains. Aggressive consumption of resources reduces their availability in the long term, undermining sustainable development and creating economic instability. Indeed, the World Economic Forum (WEF) has estimated that at least 50 percent of global GDP is reliant on nature and warned that the impacts of climate change would significantly destabilise global trade.
Click here to access the Global Illegal Logging and Associated Trade (ILAT) Risk assessment tool and to download the Forest Trends User Guide describing the functionality of the ILAT Risk Data Tool.
Click here to access the Cattle Data Tool.