〉Ahead of COP28, Global Canopy’s Deforestation Action Tracker paints a picture of poor performance on deforestation from financial institutions with high profile climate commitments.
〉In the wake of the UN’s warning that the world is on track to see nearly 3 degrees of warming, the majority of financial institutions that are members of initiatives that make up the GFANZ (Glasgow Financial Alliance for Net Zero) or Race to Zero coalitions do not have a policy on deforestation, conversion, or associated human rights abuses.
〉However, nearly half (44%) of financial institutions are involved in collaborative sector initiatives on deforestation, or advocating for legislation focussed on deforestation, conversion and associated human rights abuses. And some few are going much further.
Global Canopy’s Deforestation Action Tracker published today finds that the vast majority of financial institutions are still failing to take action on deforestation. Three quarters of financial institutions assessed have no public deforestation policy, showing only a small overall improvement (two percentage points) since 2022.
Ahead of COP28, the Deforestation Action Tracker provides an essential stocktake of finance sector action on deforestation, conversion and associated human rights abuses. This year it has assessed more than 700 financial institutions with high profile climate and net-zero commitments.
Deforestation contributes 11% of the world’s greenhouse gas emissions, is a major contributor to biodiversity loss, and is frequently associated with human rights abuses.
There is no pathway to net zero without rapid action on deforestation. This was made clear in a statement by the Co-Chairs and Vice-Chair of GFANZ last year, and action on deforestation is a key pillar in the GFANZ transition guidance. Yet still in 2023 only 21% of the financial institutions with net-zero targets even recognised deforestation as a business risk.
This is despite growing pressure on the finance sector to act on these issues. At COP27 last year, the UNHLEG (United Nations High Level Expert Group) stated that financial institutions need to eliminate agricultural commodity-driven deforestation by 2025 as part of their climate commitments, or be at risk of greenwashing. In December 2022 the world agreed a Global Biodiversity Framework, and related compliance risk is growing for financial institutions in major markets like the EU.
The Deforestation Action Tracker shows that the majority of financial institutions in the initiatives that make up GFANZ (Glasgow Financial Alliance for Net Zero) including Baillie Gifford, Blackrock, Royal Bank of Canada, Royal London Mutual Insurance Society, and Vanguard do not have a deforestation policy.
The outlier initiative within GFANZ is the Net Zero Banking Alliance, which performed above average, with 42% [55] of their members having published at least one commodity-specific deforestation policy, and 55% [72] having published at least one associated human rights policy. Meanwhile, groups like the Finance Sector Deforestation Action initiative, that have made action on deforestation a focus, are doing better still.
Despite the alarming outlook overall, the Deforestation Action Tracker identified that 44% [317] of the assessed financial institutions are involved in a collaborative sector initiative on deforestation or involved in advocating for legislation focussed on deforestation, conversion and associated human rights abuses.
“With the start of COP28 only a few days away, and recent UN estimates that the world is set to warm by 3 degrees this century, the case for action on deforestation only grows ever more urgent. 2025 UN targets are around the corner, yet our Deforestation Action Tracker shows that change is happening at a far slower pace than required. The great majority of financial institutions with strong net-zero targets have an inexplicable blind spot on deforestation, conversion, and associated human rights abuses. This comes despite the clearest of statements from the GFANZ leadership on deforestation and a wide set of step-wise guidance, tools and data ready to go.
While the situation is stark, there is some cause for optimism. A few frontrunners are showing the rest of the pack what good looks like, and how straightforwardly it can be achieved. And more and more financial institutions are joining networks that can help them get going on what they can longer avoid: rapid, transparent action and corporate engagement to move their portfolios away from deforestation as part of an urgent sector-wide transition to net zero.”
-Niki Mardas, Executive Director of Global Canopy
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Global Canopy is a data-driven not for profit that targets the market forces destroying nature. We do this by improving transparency and accountability. We provide innovative open-access data, clear metrics, and actionable insights to leading companies, financial institutions, governments and campaigning organisations worldwide to help them make better decisions about nature, forests and people.
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