Brazil can lead the global transition to a deforestation-free bioeconomy

On the world stage of climate action, Brazil is in the spotlight.

By Isadora Carvalho and Luis Meneses

Texto também disponível em português.

All eyes are on the approaching G20 Summit, with the global climate conference of COP30 following in 2025. With vast natural areas and agricultural sectors, Brazil has some of the biggest stakes and most relevant experience in deforestation-free agriculture. As Brazil brings a transformative vision of the bioeconomy to the world, it has the potential to shape the global conversation on business, finance and forests for the better.

There is a clear need for urgent action. Recent droughts, floods and fires in the Amazon, Rio Grande do Sul and the Pantanal have inflicted devastating impacts on communities and nature. The crisis is also felt in crop yields and balance sheets, as unstable and extreme weather threatens the future of the economy. Scientists estimate that climate-driven changes to rainfall may negatively impact 51% of agricultural land in the Amazon and Cerrado by 2030.

President Lula’s bold pledge of zero deforestation by 2030 is not just an environmental imperative, but a move to secure economic foundations over the longer term.

Debates over the European Union Deforestation Regulation (EUDR) show that even where different stakeholders share the aim of zero deforestation, they may see different ways forward. For instance, importing businesses and countries are often focused on deforestation linked to their own supply chains. But does cleaning up individual supply chains translate into a zero-deforestation outcome overall, or merely a segmented market? Success will require coordinated action across key agricultural sectors and a meaningful partnership between importing and producing countries, including the equitable sharing of costs.

Businesses and financial institutions are increasingly moving forward with climate and nature transition plans in line with international agreements. This involves commitments around removing deforestation, conversion and related human rights abuses from supply chains and portfolios. Brazil can help shape how these stakeholders understand best practice. Not only will this produce better outcomes for nature – in everyone’s interest – but it could also sharpen Brazil’s position of leadership among exporters.

Many pioneering initiatives within Brazil could be central to how international standard-setters think of sustainable agriculture. Brazil has highly advanced land use regulation, including the Forest Code, and some of the most advanced data collection and publication when it comes to transparency of land use and ecosystem monitoring. This makes it possible to demonstrate, for example, that deforestation affects only a minority of producing areas.

In 2020, fewer than 400 of around 3,400 cattle-producing municipalities together accounted for 95% of Brazil’s cattle deforestation. A similar pattern is visible with soy.

This geographic concentration offers an opportunity for targeted action to make these sectors deforestation and conversion-free, and protect human rights. Crucially, committing to transparency to enable monitoring and verification of this action can give Brazil’s agricultural sectors an edge in a world where buyers increasingly seek sustainable sourcing, including due to legislative pressures. Brazil can export not only deforestation-free agricultural produce, but innovative practices and standards that the rest of the global market needs in the transition to a sustainable world economy.

The financial sector has a central role as well. From New York to Frankfurt to Hong Kong, standards bodies and regulators are increasingly turning attention to the nature-related risks and impacts of loans and investments. At Global Canopy, we have a long track record in this space, including as a founding partner of the rapidly growing Taskforce for Nature-related Financial Disclosures (TNFD). And we work closely with major global financial institutions and networks on the data, metrics and frameworks needed to understand and respond to deforestation-related risks in their portfolios.

If Brazil is to lead the world toward zero deforestation, the Brazilian banks and investors need not only to continue their world-leading innovation on investing in nature, but also to closely engage with their portfolio companies that continue to drive deforestation.  Over 20 banks have already committed not to lend to meatpackers and slaughterhouses linked to illegal deforestation.

Banks and forests may not look like obvious natural partners, and exchange between international and Brazilian stakeholders on deforestation will involve encounters between differing frameworks and assumptions. This can generate friction, but we know from our work promoting transparency that this can be productive friction, leading to a better shared understanding. Fundamentally, these spheres are not separate – there will be no economic or financial returns without a flourishing natural world. For the next eighteen months, Brazil is a key agenda setter in a global transformation, and leadership from both its public and private sectors on nature, climate and forests could make a vital difference.

About the authors: Isadora Carvalho is the Sustainable Finance Engagement Lead at Global Canopy. Luis Meneses is Brazil Programme Director at Global Canopy.

Image by Niall Corbet/ Flickr