Forests & Finance Finds $595 Billion in Bank Funding to Tropical Forest-Risk Industries

Banks provided approximately $595 billion in financing to companies operating in sectors associated with tropical deforestation and ecosystem degradation between 2020 and 2025, according to a new report by the Forests & Finance coalition. Published on 14 October 2026, Banking on Biodiversity Collapse 2026 identifies $351 billion in credit to high-risk agricultural commodity companies and another $244 billion to mining businesses operating in tropical forest regions.

The findings raise concerns about the environmental and social safeguards applied by financial institutions financing activities in South America, Southeast Asia, and Central and West Africa. The report argues that banks continue to support industries associated with forest clearance, land degradation, pollution and community conflicts despite growing international commitments to halt biodiversity loss. The figures measure financing to companies operating in high-risk sectors and do not establish that every financed transaction directly caused deforestation.

 

Agricultural Financing Rises as Forest Protection Faces Pressure

 

Annual financing for agricultural commodities associated with tropical forest risks increased by 71% between 2016 and 2025, rising from $37.9 billion to $64.7 billion, according to the report. Financing associated with the beef industry increased by more than 50%, while soy financing rose 137% and pulp and paper financing increased 157%. The findings highlight the continued financial support available to commodity supply chains that can place significant pressure on tropical ecosystems.

Indonesia is identified as a major area of concern, with banks providing approximately $67.1 billion to its pulp and palm oil sectors since 2020. The coalition links these industries to deforestation and peatland drainage, which can increase the vulnerability of landscapes to fires and flooding. The report comes amid severe wildfire conditions in Indonesia, where smoke pollution has also affected air quality in neighbouring Singapore and Malaysia. The coalition argues that stronger lending conditions are needed to prevent financing from supporting further ecosystem destruction.

 

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Mining Finance Expands Alongside Demand for Critical Minerals

 

The 2026 report expands its assessment to include metal and mineral mining in tropical forest regions. Annual lending and underwriting for mining companies operating in forest-rich countries increased by approximately 55% between 2016 and 2025, from $23.7 billion to $36.7 billion. Financing associated with lithium and nickel production recorded particularly strong growth, reflecting rising demand for minerals used in batteries, electric vehicles and other technologies.

The expansion creates additional challenges for sustainable finance. While critical minerals support electrification and clean energy technologies, extracting them can contribute to forest clearance, water pollution and disruption of local communities when environmental safeguards are inadequate. The report raises concerns that projects associated with the energy transition may still create substantial biodiversity and human rights risks. For financial institutions, assessing these impacts requires examining the practices of individual mining operations rather than assuming that all investments supporting low-carbon technologies are environmentally sustainable.

 

Banking Policies Fall Short on Biodiversity Safeguards

 

The Forests & Finance coalition found that the average policy score for banks financing high-risk agricultural commodities was just 25%. The assessment evaluates the strength of publicly available environmental, social and governance commitments, including provisions related to forest protection, biodiversity and human rights. According to the coalition, many institutions providing substantial financing to forest-risk sectors lack sufficiently strong policies to prevent environmental and social harm.

The report calls for financial institutions to strengthen requirements covering deforestation, conversion of natural ecosystems, peatland development and exploitation of workers and local communities. It also emphasises the need for independent verification of client compliance rather than relying exclusively on corporate commitments. Stronger due diligence could help banks identify projects and companies associated with serious environmental risks before extending financing, while clearer consequences for repeated violations could improve accountability.

 

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COP17 Brings Financial Flows into Biodiversity Negotiations

 

The findings were released shortly before the opening of the United Nations Biodiversity Conference COP17 in Yerevan, Armenia, on 19 October 2026. Under the Kunming-Montréal Global Biodiversity Framework, governments have committed to aligning public and private financial flows with global biodiversity objectives. This includes reducing financial incentives that contribute to ecosystem destruction and increasing investment in conservation and restoration.

Merel van der Mark, Coordinator of the Forests & Finance Coalition, called for stronger oversight of financial institutions. "Financial institutions must strengthen their policies and governments must increase regulation to ensure financial flows are aligned," she said. The coalition wants governments to introduce stronger requirements for biodiversity and human rights due diligence, improve transparency around financing in high-risk sectors and establish accountability where financial activities contribute to environmental damage.

The report highlights a significant challenge for sustainable finance: increasing investment in biodiversity protection will have limited impact if financial institutions simultaneously support activities that accelerate ecosystem loss. Its findings provide evidence of continued financial exposure to high-risk industries, although determining the environmental impact attributable to particular lenders requires more detailed project-level assessment. As governments review their biodiversity commitments at COP17, the relationship between banking regulation, corporate due diligence and ecosystem protection is becoming an increasingly important part of international nature finance discussions.