Global forest health has fallen to 'dismal' levels and threatens human well-being, warns damning report it highlights how financial systems are pouring money into land clearing and undermining efforts to reduce destruction.
Since 2021, when world leaders and corporate executives have pledged to halt deforestation, a new study finds that forest loss has increased due to subsidies for livestock farming, monocultures, logging and other extractive industries.
Last year, 8.1 million hectares (20 million acres) of forest were burned, logged or deforested – an area roughly half the size of England – exceeding losses during Cop26 in Glasgow when the target of zero deforestation by 2030 was signed.
According to the latest Forest Declaration assessment, compiled annually by a coalition of civil society and research organizations, the world is now 63% off track to achieve this goal.
“Every year, the gap between commitments and reality grows wider, with devastating impacts on people, the climate and our economy,” said lead author Erin Matson of Climate Focus. “Forests are the undeniable infrastructure of a habitable planet. Continued failure to protect them threatens our collective prosperity.
“We already know what works to stop forest loss, but countries, companies and investors are just scratching the surface. And even these initial efforts face strong resistance from the standard-bearers of an economic system built on deforestation.”
Behind this grim trend is a grotesque imbalance between the finances allocated to extraction and conservation. Agricultural sectors, which account for 85% of forest loss over the past decade, received an average annual subsidy of $409 billion (£307 billion). This is nearly 70 times more than the $5.9 billion in international public funding devoted annually to forest protection and restoration.
“Efforts to protect forests stand no chance as long as our economic system continues to make quick profits from deforestation,” said Franziska Haupt, a partner at Climate Focus. “To truly address deforestation, leaders must work collectively to implement bold, mandatory reforms that will change the system that still richly rewards forest loss.”
A growing cause of concern is the spread of fires, which reached staggeringly high levels in the Amazon last year after record droughts turned swaths of normally wet tropical forest into a tinderbox. Many fires are started deliberately to clear an area and get out of control.
Carbon dioxide emissions from the burning Amazon last year were seven times the average of the previous two years and exceeded Germany's total greenhouse gas emissions. The report's authors said the fires are pushing the forest closer to the point of no return.
Private financial institutions tip the scales even further. A separate report published by Global Witness found that banks have earned $26 billion from financing deforestation companies since the Paris Agreement was signed in 2015 – an average of about $7 million a day.
U.S. banks led by Vanguard, JPMorgan Chase and BlackRock made the most money globally, raking in $5.4 billion, according to the watchdog group's data, based on data from Dutch research consultancy Profundo.
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That report said EU banks, led by BNP Paribas and Rabobank, earned $3.5 billion, while UK banks earned $1.2 billion, with HSBC, Aberdeen Group and Schroders making the biggest profits. Chinese financial institutions also received $1.2 billion, even though the country's green finance policies allegedly limit lending to companies with environmental or social governance concerns.
“We are witnessing big banks financing the sell-off of the world's rainforests,” said Alexandria Reid, head of forests at Global Witness. “And they reap obscene profits from the ashes.
“As long as deforestation remains more profitable than protecting it, the world will miss its 2030 goal of ending deforestation, with disastrous consequences for the climate. If world leaders want to change this, they must act now to turn off the profits fueling this crisis.”
Hopes for change are focused on Cop30 next month in Belemthe first climate summit to be held in the Amazon. Host Brazil has shown in the past that it can significantly slow the rate of deforestation through stricter enforcement of the law. At Cop30, he will also propose a new funding mechanism to save tropical forests forever, which aims to raise $125 billion for countries conserving their existing forests.
“The overall numbers are grim, but the future of forests doesn’t have to be that way,” Mattson said. “New financial initiatives like TFFF are paving the way for transformative change. KS30 delivers on its promise, next year we could tell a very different story – a story of real progress.”
For this to work, financial institutions also need to step up their game. They are expected to buy bonds worth four-fifths of the $125 billion that TFFF hopes to raise. This could help them mitigate the growing criticism against them profiting from destruction.
Elizabeth Hoch, global portfolio manager for Climate & Company, part of the coalition that produced the forest assessment, said only 40% of financial institutions have deforestation policies, even though forests are worth $150 trillion a year in economic value.
“I want companies and financial institutions to stop feeling in police officers, ‘I have to do something or I’m going to lose,’” Hoch said. “The police officer can provide momentum. It depends on whether financial institutions finally have the courage to do something about it.”
