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This aerial photo shows a large swathe of Indonesian rainforest destroyed by deforestation in service of palm oil plantations on Borneo. (Photo: Bay Ismoyo/AFP via Getty Images)

An aerial photograph taken on February 24, 2014 shows the destruction of an Indonesian rainforest—the habitat of endangered orangutans, tigers, and other animals as well as plant species—cleared to make way for a palm oil plantation on Borneo Island. (Photo: Bay Ismoyo/AFP via Getty Images)

Big Bank, Corporate Destruction of Forests Worsening Climate Crisis: Report

"Most companies and financial institutions with the greatest ability to halt deforestation are doing little or nothing."

Kenny Stancil

A new report published Thursday details how some of the world's biggest corporations and banks are exacerbating the global climate emergency by fueling the destruction of the world's tropical rainforests.

"Halting agriculture-driven deforestation to halve emissions and reverse biodiversity loss by 2030 is not an option but a necessity."

Forest 500, a project of Global Canopy, asserts that "500 companies and financial institutions have the power to transform cattle, timber, soy, and palm oil supply chains." But according to the group's latest annual assessment, those firms that are well-positioned to eliminate deforestation and related human rights abuses are failing to do so.

Titled A Climate Wake-Up, the analysis finds that 72% of the 350 largest producers of palm oil, soy, beef, leather, timber, pulp, and paper "do not have a deforestation commitment for all of the forest-risk commodities in their supply chains." One-third of the companies "have no deforestation commitments at all," and none have a "comprehensive approach to human rights."

"While 28 companies published a new commitment to address deforestation since last year," the report notes, "just 11 of these have a deforestation commitment for all of the commodities they are exposed to."

Even among the companies that do have deforestation policies, the report points out, many of them do not provide evidence of implementation, such as monitoring their suppliers or their own operations to ensure compliance.

The Forest 500 report also identifies the 150 banks that are driving the deforestation economy by providing more than $5.5 trillion in finance to companies active in forest-risk commodity supply chains.

Ninety-three of the 150 financial institutions most responsible for bankrolling deforestation—including BlackRock, Vanguard, and State Street, the world's three biggest asset managers—"do not have a deforestation policy covering their investments and lending to" the 350 corporations analyzed. Those 93 firms provide $2.6 trillion in finance to companies linked to clear-cutting.

Alluding to the Glasgow Leaders Declaration on Forest and Land Use issued during last year's United Nations climate summit, Global Canopy executive director Niki Mardas said in a statement that more than 140 governments have acknowledged "the urgent need to protect forests" and promised to take action to stop clear-cutting by the end of the decade.

And yet, Mardas added, "most companies and financial institutions with the greatest ability to halt deforestation are doing little or nothing."

Ultimately, the report makes clear, "only mandatory action and reporting will drive market-wide change at the scale required."

The United Kingdom and the European Union are home to a nascent push for deforestation-free imports, and Mardas argued that as more policymakers in rich countries with high consumption rates "start to translate [their] commitments into hard and fast legislation, businesses which have not taken deforestation seriously are woefully unprepared and face real risks."

According to Global Canopy, "Food companies are particularly exposed to deforestation risks, with palm oil a common ingredient in processed foods, and soy used widely in animal feed for pigs and poultry. Yet more than half of companies linked to soy do not have a commitment to ensure their soy supplies are deforestation-free."

Although "banks and institutional investors could be playing an important role by encouraging companies to act on deforestation," the organization added, "most are not using their leverage."

That's why, the report stresses, "regulation is also needed for the finance sector."

Nigel Topping, a U.N.-appointed High-Level Champion for Climate Action at COP26, said that "the time to ratchet up our collective global ambition to deliver on the Paris Agreement is now."

"Halting agriculture-driven deforestation to halve emissions and reverse biodiversity loss by 2030 is not an option but a necessity for companies credibly committed to net-zero in order to fulfill their science-based commitments," Topping continued. "There is no pathway to keep 1.5ºC within reach without that."

"Companies that interact with the food system across the value chain," he added, "need to address deforestation to safeguard their future business and make a difference in protecting forests, and wildlife and the communities that depend on them, contributing to the system shift towards a nature-positive future."

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