Finance must be regulated to safeguard Forests and Communities, warns Global Report
As world leaders will soon convene in Brazil for COP30, a new report from the Forests & Finance Coalition reveals that finance for sectors driving tropical deforestation has surged since the Paris Agreement. Global banks have poured USD 72 billion into forest-risk sectors over the last 18 months, while investors held USD 42 billion in bonds and shares.
Titled Banking on Biodiversity Collapse 2025: After Ten Years of Paper Promises, It’s Time to Regulate Finance, the report launches today at the Principles for Responsible Investment (PRI) event in São Paulo. It provides an important update on global investment trends in the forest-risk commodities, such as palm oil, soy, beef, and pulp and paper.
The findings show that half of the world’s top 30 banks have increased their exposure to deforestation-linked sectors since 2016.
Key findings include:
● Since 2016, banks have provided USD 429 billion in credit to forest-risk commodity companies, a 35 percent increase.
● Investors hold USD 42 billion in shares and bonds across 191 forest-risk companies — led by Permodalan Nasional Berhad (PNB) (USD 3.8 billion), the Employees Provident Fund (EPF) (USD 3.5 billion) and Vanguard (USD 3.4 billion).
● Five financial centers dominate this financing: the United States, Malaysia, Brazil, Japan and the UK.
● Some banks have exponentially increased their forest-risk lending — including Scotiabank (+717%) and Banco do Nordeste do Brasil (+295%).
The data show that Malaysian institutional investors (PNB, EPF, and KWAP Retirement Fund) are among the most significant investors in forest-risk commodity sectors. While Malaysia’s substantial financing and investment in forest-risk sectors are closely linked to its broader economic development model, it also emphasises the critical importance of Malaysian financial institutions to adopt and effectively implement robust, responsible investment and financing policies to safeguard the nation’s forest resources and community rights.
In recent years, many Malaysian financial institutions have begun introducing responsible investment and lending policies, including ESG commitments and No Deforestation, No Peat, No Exploitation (NDPE) frameworks.
While this is encouraging, it has yet to reflect the urgency with which we must address the issues. This report finds that despite a decade of net-zero pledges and sustainability promises, voluntary approaches have failed. The concerns and problems of self-regulation or voluntary approaches are widely documented.
One key message from the global report is the growing momentum among civil society movements to call for regulating finance to address deforestation and human rights violations.
The coalition calls on governments to close the “accountability gap” by making biodiversity and human rights protection core to financial regulation. Recommendations include, mandatory due diligence on deforestation risk, capital penalties for high-risk lending, transparent disclosure of portfolios, and legal liability for environmental and social harms.
“This decade of self-regulation has been a political choice — not a technical failure,” the report concludes. “If we want to deliver on the Paris Agreement and the Global Biodiversity Framework, governments must move from paper promises to enforceable rules.”
Meenakshi Raman
President of SAM
On behalf of the Forest & Finance Coalition
Letter To The Editor, 05 November 2025
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About the Forests & Finance Coalition
The Forests & Finance initiative is a coalition of campaign and research organizations including Rainforest Action Network, TuK Indonesia, Profundo, Amazon Watch, Milieudefensie, CED Cameroon, Repórter Brasil, Observatório da Mineração, BankTrack, Sahabat Alam Malaysia (SAM), and Friends of the Earth US. The coalition tracks financial flows to forest-risk sectors and advocates for strong, enforceable financial regulations to protect forests, biodiversity, and Indigenous rights.