In a major announcement on day two of the UN climate talks (COP26), more than 100 countries — accounting for about 86 percent of the world’s forests — committed to stop deforestation by the end of this decade.
But it’s not just governments that stepped up to the plate: More than 30 financial institutions pledged to eliminate deforestation driven by agriculture from their portfolios and increase investments in nature-based solutions by 2025.
Why stopping deforestation matters
Each year, large swaths of tropical forests are destroyed to make room for palm oil, cattle, soy and other commodity-driven agriculture. But this destruction of nature comes at a climate cost; tropical deforestation accounts for 8 percent of annual emissions, equivalent to those released by the entire European Union.
“Deforestation is at the root of our most pressing crises: water shortages, desertification, landslides, mass extinction, zoonotic diseases, and climate change,” Conservation International CEO M. Sanjayan said in a statement. “Still, we continue to pump money — 40 times more money — into activities that destroy forests, compared to those that restore and protect them.”
Protecting, sustainably managing and restoring forests and other natural lands can provide at least 30 percent of the mitigation and emissions reductions necessary to limit average global temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit), research shows. Yet, nature conservation currently receives only 3 percent of global climate finance.
That’s where the world’s money managers come into play. With more US$ 8.7 trillion in assets under management, financial institutions have the power to help drive the global transition toward a sustainable economy that incentivizes the protection, rather than destruction, of nature. Conservation International and other partners will support these financial institutions as they engage with companies in shifting away from deforestation in their supply chains.
“Today, we turn the tide with this commitment — it will put markets on our side, disincentivize unsustainable practices, and instead reward good behavior,” Sanjayan said.
Tackling deforestation in supply chains is no easy feat, but financial institutions aren’t lacking in motivation: Climate change and biodiversity loss are among the top threats facing the global economy, according to a recent report.
A five-phase roadmap — developed by Conservation International and partners, including Global Canopy and Nature4Climate — will outline detailed guidance for financial institutions to combat the destruction of nature and safeguard human rights, including how to identify and address deforestation risk in their investments.
“We cannot continue to dither, and we cannot afford to destroy any more of our planet’s vital living carbon reserves,” Sanjayan said. “Climate positive finance is a win for communities, a win for investor portfolios, and a huge win for our planet.”
Cover image: The Amazon rainforest, Guyana (© Pete Oxford/iLCP)