Deforestation-free finance

A guide on tools and frameworks for financial institutions


12 September, 2023



WBCSD has partnered with the U.S. Department of State to launch the Forest Finance Risk Consortium (FFRC) and hosts its Secretariat. The FFRC brings together financial institutions (banks, asset managers, investors), land-use change monitoring experts and climate- and nature-related financial risk disclosure professionals. This report represents the first deliverable of the coalition, aimed at equipping financial institutions with the essential tools and frameworks needed to comprehensively assess and mitigate their exposure to deforestation-related risks. The report targets sustainability professionals and practitioners within the finance sector, and provides important information needed to leverage the necessary resources to implement and manage a zero-deforestation target within an investment portfolio.

Central to the report are prominent frameworks such as the Ceres Investor Guide to Deforestation and Climate Change and Global Canopy’s Finance Sector Roadmap, which provide clear strategies for eliminating deforestation from investment portfolios. Additionally, the report offers an in-depth analysis of six crucial tools, which empower financial institutions to identify regions, commodities and companies associated with high deforestation risk, along with an overview of seven additional GIS, biodiversity mapping and reputational risk tools. The report includes guidance about the tools’ utility in addressing different use cases relevant for banks and investors, coupled with a decision tree that can help users identify the most applicable resources. Finally, the report explores the role of global frameworks, including the Taskforce on Nature-related Financial Disclosures (TNFD) and the Global Biodiversity Framework (GBD), in assisting financial institutions throughout the process.

Although deforestation represents a significant and persistent challenge, financial institutions have all the resources they need to conduct thorough risk analyses of their portfolios and initiate steps toward deforestation-free financing.