New report from the Cambridge Institute for Sustainability Leadership (CISL) details how the banking industry can contribute to halting and reversing deforestation
The new report, called ‘Banking Beyond Deforestation’ from the Cambridge Institute for Sustainability Leadership (CISL) sets out a detailed action plan on how banks can respond to the biodiversity and climate crisis.
Despite current global efforts, deforestation remains a significant global concern. The report focuses on the role of financing soft commodities such as palm oil, soy, beef and timber products that are responsible for the majority of deforestation caused by commercial agriculture. With more than 50% linked to services provided by nature, including freshwater, healthy soil and clean air, banks have a key role to play in shaping markets that combat the ecological crisis. By sharing lessons learnt and outlining a structured five-part plan for the banking industry, this publication aims to catalyze further action by banks and stakeholders.
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“By acting together, banks can help rewire the economy, mobilising and structuring finance so that it supports deforestation-free and forest restorative soft commodity production.”
The publication of Banking Beyond Deforestation marks the conclusion of the ‘Soft Commodities’ Compact, a company-led alliance between the Banking Environment Initiative (BEI) and Consumer Goods Forum (CGF), the goal of which was to lead the banking industry to help achieve zero net deforestation by 2020.
Despite this resolution and other global efforts, deforestation has not been halted. Yet because of the public commitment, Compactbanks grew their understanding of deforestation risk and have created leading positions for the industry. Using Technical Guidance developed in consultation with banks and stakeholders, banks established anti-deforestation policies and began reporting compliance levels. Today, Forest 500 ranks Compact adopters amongst the most advanced in terms of ‘policy’ – all are in the top 30 of 150 financial institutions.
In addition to raising banking standards, the Compact committed to financing the transformation of supply chains, with Compact adopters such as BNP Paribas, pioneering the Tropical Landscape Financing Facility, and Rabobank acting as a driving force behind the Agri3 Fund.
Adapted from a CISL article published in January 2021.