Why deforestation and biodiversity loss matter for the finance sector
Deforestation accounts for nearly 30% of global greenhouse gas emissions and driving catastrophic biodiversity loss – trends that carry significant financial implications. Through their lending and investment decisions, financial institutions can influence global commodity supply chains and can either reinforce high-risk practices or help shift capital toward deforestation-free production.
Forests are essential for planetary health – helping to regulate climate, safeguarding biodiversity, and supporting the livelihoods of over 2 billion people. Yet, global forest loss remains alarmingly high, with a record-breaking estimated 30 million hectares of tree cover lost in 2024, the highest figure since records began. The expansion of agriculture, particularly for commodities like cattle, soya, and palm oil – remains the leading driver.
A new EUDR guide to strengthen financial sector action on deforestation
To support this, ZSL has published a new guide to the EU Deforestation Regulation (EUDR), tailored for relationship managers and the wider financial sector. The guide outlines how relationship managers can proactively engage clients on EUDR-related risks and help them understand it, supporting both their clients and the transition to deforestation-free supply chains.
While financial institutions are not directly obligated under the EUDR, they are exposed to deforestation-related risks across portfolios and play a vital enabling role in helping to tackle the problem. The regulation introduces a new benchmark for supply chain due diligence, and with it, an opportunity for the finance sector to lead on nature-positive transition finance.
What the EUDR guide helps financial institutions achieve
Drawing on ZSL’s expertise and experience of tracking corporate deforestation risks through tools like SPOTT and the Living Planet Index, the guide helps institutions to better understand how to assess exposure, engage and support clients, and demonstrate leadership in sustainable finance.
As the world looks ahead to key climate and biodiversity milestones in 2025, aligning financial flows with deforestation-free production is a crucial step towards a nature-positive future.
Partner with ZSL to strengthen responsible finance
ZSL’s Sustainable Business & Finance programme works with financial institutions to integrate biodiversity, deforestation, and nature risk into decision-making.
Cattle ranching is the biggest driver of deforestation