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Statement on Deforestation Financing from the Co-Chairs and Vice Chair of GFANZ

The authors highlight deforestation policies as integral to financial institution transition planning.

The world is unlikely to reach net zero by 2050 unless we halt and reverse deforestation within a decade. We therefore urge financial institutions to embed deforestation into their transition planning by developing policies to identify and curtail financing of such activities.

The draft GFANZ Recommendations and Guidance on Financial Institution Net-zero Transition Plans stress that financial institutions should establish policies and conditions on deforestation consistent with the achievement of net zero global emissions  2050.1 In our view, transition plans that lack objectives and clear targets to eliminate and reverse deforestation are incomplete.

Deforestation accounts for 11% of global greenhouse gas emissions, surpassing aviation and cement production.2 Protecting and revitalizing forests, mangroves, peatland, and other natural climate solutions can avoid significant emissions, potentially accounting for nearly 40% of the decarbonization needed by 2030 to limit warming to 2 degrees.3 Most fundamentally, to maintain a safely habitable planet, deforestation must end this decade.4

Forest loss doesn’t just undermine long-term climate progress; it threatens the near-term health and livelihoods of the one-fifth of people who live in these ecosystems: ecosystems that are also home to four-fifths of the world’s plants and animals.5

According to recent studies,6 conservation could also deliver global economic benefits; between 2030 and 2070, researchers estimate that reforestation and reduced deforestation could yield US$6-40 trillion in savings.7

The more immediate financial case for forest conversation will grow as public policymakers introduce more stringent restrictions on deforestation. At COP26, over 140 governments representing 90% of the world’s forests pledged to “halt and reverse forest loss and land degradation by 2030.”8 This government momentum amplifies the legal and reputational risks associated with deforestation.

Though forest conservation would generate net economic gains on a global basis, it could adversely impact jurisdictions that rely on palm oil, soy, cattle, and other commodities often tied to deforestation. We recognize that some emerging market and developing economies (“EM&DEs”) in particular depend on industries with significant associated deforestation risks. For this reason, it is crucial that governments, acting together with financial institutions, direct capital to natural climate solutions to support local communities across EM&DEs in conserving forests. By adhering to relevant third-party standards on sustainable commodity production, agriculture in forested areas can also continue.


Members of the net zero financial alliances that comprise GFANZ should strive to eliminate commodity driven deforestation from their investment and lending portfolios. To achieve this goal, financial institutions should begin to work to: assess exposure to deforestation risk, establish financing policies for forest-risk agricultural commodities, and disclose deforestation mitigation activities. These steps can help put emissions reduction on a pathway aligned with the Paris Agreement. Through its Recommendations and Guidance on Financial Institution Net-zero Transition Plans, GFANZ will continue to support financial institutions in devising credible deforestation policies.

GFANZ will also work with partners to assist EM&DEs in mobilizing private capital to protect forests and other natural carbon sinks, where forest preservation and rehabilitation can be embedded into Country Platforms such as Just Energy Transition Partnerships. These efforts could bolster wider work to scale high-integrity voluntary carbon markets, a necessary tool to address long-term residual emissions. Governments can and should accelerate this capital deployment by introducing additional forest conservation incentives.

Realistically, the world will not reach net zero by 2050 unless we halt and reverse deforestation within a decade. By encouraging the protection and restoration of forests, we can stay within the carbon budget and support local communities in EM&DEs that depend on these ecosystems. As the leaders of GFANZ, we look forward to working with sector-specific alliances, individual financial institutions, policymakers, and other key stakeholders to ensure that deforestation becomes core to transition planning.

Michael R. Bloomberg (Co-Chair of GFANZ)
Mark Carney (Co-Chair of GFANZ)
Mary Schapiro (Vice Chair of GFANZ)

1 GFANZ, Recommendations and Guidance on Financial Institution Net-zero Transition Plans, June 2022.
2 Net CO2 from land use, land use change and forestry, IPCC, AR6 Working Group 3, 2022.
3 Contribution of natural climate solutions in a below 2C scenario, Griscom et al, Natural Climate Solutions, Proceedings of the National Academy of Sciences of the United States of America, October 2017.
4 Diaz et al., Set ambitious goals for biodiversity and sustainability, Science, October 2020.
5 UNFCCC, Financial Sector Commitment Letter on Eliminating Commodity-Driven Deforestation, November 2021.
6 Sabine Fuss, Alexander Golub, and Reuben Lubowski, The economic value of tropical forests in meeting global climate stabilization goals, December 2020.
7 Ibid.
8 COP26, Glasgow Leaders’ Declaration on Forests and Land Use, November 2021.