Making 2025 a year for action

Even though 2024 ended with underwhelming global deals for climate and nature, the economic and political case for action is only getting stronger.

By Darren Mckenzie

Senior Communications Lead

“I had hoped for a more ambitious outcome” were the words of UN Secretary General, António Guterres as the gavel came down on the final deal agreed at COP29 in Baku. But he could equally have been speaking about COP16 the month before in Cali or the UN Convention to Combat Desertification a month later in Riyadh, both of which ended with no overarching agreement. And then there was the US election, with the victory of President Trump, who had taken the US out of the Paris Agreement in his first term. In all, 2024 did not end on a high for global environmental diplomacy. 

But that doesn’t mean 2025 will be the same. Political cycles are finite and so while politics matters, so do economics and public opinion. In recent years environmental collaborations and sustainable practices have developed a momentum of their own; businesses and the finance sector cannot afford to be left behind watching from the sidelines. The biggest climate mobilisations in history happened under the first Trump Administration and with recent polling showing 80% of people worldwide wanting stronger action on climate, public pressure will grow. So there are still ways to drive meaningful change for climate and nature.

Brazil can show global leadership in the nature and climate space

As each year passes in this “critical decade for action”, the next environmental COP becomes more important than the last. In November 2025, world leaders will gather in the Brazilian city of Belém, with just five years left to meet the global target to halt and reverse deforestation by 2030. And currently the latest Forest Declaration Assessment tells us we are way off track.

But COP16 in Colombia did provide a platform to build off. It was the largest biodiversity COP ever held, with more business and finance participation than ever before. In the final text ministers from around the world recognised that climate and biodiversity could no longer be treated as independent issues. They must be dealt with together, a view reinforced by the latest report from the Intergovernmental Platform on Biodiversity and Ecosystem Serves (IPBES). So when COP30 comes to the Amazonian city of Belém, forests will be squarely on the agenda.

“You are the first generation of leaders to truly understand the dual climate and nature crisis, but also the last generation of leaders able to address it in a timely manner.”

From the open letter to Presidents Petro and Lula, signed at COP16

At COP16, Brazil and Colombia were offered support as businesses, investors, scientists, Indigenous Peoples, youth and civil society organisations – including Global Canopy – signed an open letter to President Petro of Colombia and President Lula of Brazil. It calls for “a year of united action on climate, nature and food” from Cali to Belém. The next year offers an historic opportunity for Brazil and Colombia to shape the conversation on business, finance and forests for the better.

And progress is happening in Brazil that must be built on. Official figures show deforestation in the Amazon fell by over 30% in the 12 months to July – to its lowest level in almost a decade. At the same time, in state legislatures and within the soy sector, the well-established Amazon Soy Moratorium is coming under pressure. Political will from leaders – and clear, strong advocacy from civil society – will be vital to hold the line.

Finance sector action

In 2014, just 11% of financial institutions in the Forest 500 had published a deforestation policy. Ten years later our Forest 500 report shows that figure has risen to 45%. This is important progress, although the majority (55%) of financial institutions with the highest exposure to deforestation in their portfolios are still yet to set a single policy. The world cannot afford a leisurely pace. 

At COP16, we saw that many financial institutions are starting to recognise their impacts and dependencies on nature. Financial institutions spoke about their nature journey during our ENCORE day event jointly run with UNEP-FI and UNEP-WCMC. ENCORE is a tool that helps organisations explore their exposure to nature-related risks, and has become the go-to tool for the finance sector with over 6,000 registered users. 

One speaker at ENCORE day was Marie-Claire Franzen-Aerts from Rabobank: “85% of our portfolio is highly or very highly dependent on nature. Combining impacts and dependencies shows which part of your portfolio and which regions are highest risk.”

This matters because scientific studies are increasingly showing that deforestation is a material risk to the finance sector. 90% of deforestation is caused by agricultural expansion for commodities like beef, soy and palm oil.  A new study released in October shows over a 20 year period rainfall in the Amazon Basin where forests have been cleared fell by 40% dramatically affecting soy crop yields.

“Colombia is the second most biodiverse country in the world. Changes in biodiversity and nature are going to affect our economy and our businesses.”

Stephanie Obando, ESG Risks Manager at Banco de Bogotá speaking during ENCORE Day at COP16

Trase analysis looked at similar studies in Bolivia where deforestation driven by soy expansion has also seen soy harvests fall dramatically. Researchers found regional deforestation can amplify local deforestation-induced warming by a factor of four. Deforestation is materially affecting business and finance – not in some far-off future, but in the studies and headlines of today – and the evidence is increasingly hard to ignore.

Making the EUDR work

2025 must also be a year where EU member states, regulated companies, the Commission and producer countries work together to make the European Union Deforestation Regulation (EUDR) effective. After months of uncertainty, we now know it is being delayed by a year. While the delay is disappointing, the EU rejected amendments that would have weakened the law. So for business and finance, the regulatory risks posed by inaction on deforestation remain as live as ever, and in the year ahead stakeholders must prepare for implementation. 

Trase has come up with a series of recommendations to make best use of the additional year. Collaboration by different stakeholders will help minimise any negative consequences and maximise opportunities for wider benefits.

After COP29 UN Secretary-General, António Guterres, said he had hoped for more ambition, but he also said “the agreement reached provides a base on which to build.” And 2025 is about building on that base. Using COP30 as a launchpad for not just words, but action on deforestation. Ensuring the EUDR lives up to its potential and becomes a law that other jurisdictions want to imitate. And making it a year when the finance sector plays a leading role in driving change.