Only a quarter of the financial institutions who are members of the Glasgow Financial Alliance for Net Zero (GFANZ) or Race to Zero have at least one deforestation policy for a high-risk commodity, according to a report released Monday.
GFANZ was launched during COP26 in 2021 as a group of financial institutions seeking to accelerate the decarbonisation of the global economy, while Race to Zero is a UN-backed campaign for players committing to net zero targets, covering more than two-thirds of global carbon emissions.
Some of the most powerful companies in the world are among the 536 institutions without a single deforestation policy, including Blackrock, Royal Bank of Canada, Royal London Mutual Insurance Society, Vanguard, and Baillie Gifford, UK-headquartered non-profit Global Canopy said in its Deforestation Action Tracker report.
Global Canopy assessed more than 700 financial institutions with high-profile climate commitments, who are part of GFANZ or the Race to Zero, based on their publicly available information in 2023.
Having a deforestation policy means a financial institution having published a strategy for at least one of the high-risk commodities of cattle, soy, palm oil, or timber.
For these commodities, the policy must be either:
- Deforestation-free
- Conversion free – not from farming converted natural ecosystems
- Zero-net deforestation
- Protect priority forests, or
- A credible certification scheme
Deforestation contributes 11% of the world’s greenhouse gas emissions, is a major contributor to biodiversity loss, and is often associated with human rights abuses, the non-profit said.
“With the start of COP28 only a few days away, and recent UN estimates that the world is set to warm by 3C this century, the case for action on deforestation only grows ever more urgent,” Niki Mardas, executive director of Global Canopy, said.
“The great majority of financial institutions with strong net zero targets have an inexplicable blind spot on deforestation, conversion, and associated human rights abuses.”
The tracker results show change is happening far slower than is required, she said. The move in percentage of companies with a deforestation policy was “minimal”, compared with the previous year, Global Canopy said.
Relatively few financial institutions have acted “despite the clearest of statements from the GFANZ leadership on deforestation, and a wide set of step-wise guidance, tools and data”, Mardas said.
THE GOOD NEWS
However, despite widespread policy lethargy, almost half (44%) of the assessed institutions are members of one or more collaborative initiatives on deforestation, conversion, or associated human rights abuses, Global Canopy said.
Members of one initiative within GFANZ, the Net Zero Banking Alliance, showed above-average performance, with 42% (55) of its members having published at least one commodity-specific deforestation policy.
Out of the companies that have set a deforestation policy, around three-quarters have a target date, in a “promising sign” for future progress, according to Global Canopy.
“While the situation is stark, there is some cause for optimism. A few frontrunners are showing the rest of the pack what good looks like, and how straightforwardly it can be achieved,” Mardas said.
By Thomas Cox – t.cox@carbon-pulse.com
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