PRI in Person side event: Finance Sector Leadership on Deforestation: From Risk to Action

The COP30 Action Agenda calls for operational, scalable solutions that drive change in forest risk supply chains. The tools, data and guidance needed for deforestation-free finance are available. The challenge now is to ensure that they are used by the finance sector. Global Canopy and partners convened key actors in São Paulo to identify the way forward.

By Luis Meneses

Brazil Programme Director, Global Canopy

The side event, titled Finance Sector Leadership on Deforestation: From Risk to Action, took place during PRI in Person in November 2025 in São Paulo, Brazil. It brought together asset owners, asset managers, banks, civil society organisations and data providers. The discussion focused on how the finance sector can accelerate the shift to deforestation and conversion-free (DCF) supply chains. Global Canopy and WWF-Brazil hosted the event, in partnership with the Accountability Framework initiative and the Institutional Investors Group on Climate Change (IIGCC). 

Participants discussed four themes: 

• development of deforestation/conversion-free policies
• portfolio-level due diligence
• engagement with investee companies 
• system-level stewardship and policy engagement. 

Breakout groups discussed practical experiences, operational challenges and emerging opportunities for finance sector action. The session focused on the practical operational levers for financial institutions, such as the Deforestation-Free Finance Roadmap, Forest IQ, Forest 500, Floresta 250 – Cattle, the Minimum Monitoring Criteria for Deforestation and Conversion-Free (DCF) Products – for Commodities Originating in Brazil and the Net Zero Investment Framework Guidance for Objectives and Targets.

Here are eight essential takeaways and three priority next steps: 

Engagement strategies must be tailored to emerging markets  

• Brazilian and global finance sector perspectives differ 
  • To monitor cattle supply chains, Brazilian financial institutions use granular public datasets – the Rural Environmental Registry (CAR), the Animal Transit Guide (GTA), and the Land Management System (SIGEF) – and sector-specific tools like Floresta 250 – Cattle. In contrast, global investors prioritise standardisation and comparability across regions. 
  • Brazil’s corporate landscape is characterised by concentrated ownership, state-owned enterprises and family-owned businesses. These require engagement based on deep personal relationships. In contrast, global investors use escalation rooted in collective engagement platforms and regulatory frameworks. 
  • Brazilian banks see land-use risks as financially material through credit exposure, whereas global investors focus on portfolio-wide systemic impacts. 
  • Robust global standards enable standard-setting and interoperability, while local context is crucial for implementation on the ground. 

• Domestic banks have pivotal leverage over Brazil’s transition

Given their central role in rural credit and agribusiness finance, Brazilian banks can transform supply chains by integrating deforestation and human rights criteria into lending, monitoring and client engagement.

• Engagement models must adapt to emerging market realities

Traditional stewardship tools, including letters, questionnaires and escalation lists, have limited traction where ownership is concentrated or state controlled. Coordinated investor engagement across both developed and emerging markets would align global influence with local legitimacy, leading to better engagement outcomes.

Interoperable data and aligned indicators 

• Interoperability of public data is key to credible DCF verification

Brazil’s CAR, GTA and SIGEF systems enable scalable traceability, but today they are not well integrated. Better interoperability, along with connections to investor tools such as Forest IQ and Floresta 250 – Cattle, could transform the monitoring of indirect suppliers in Brazil’s cattle supply chains.

• Harmonised indicators are key to scale due diligence

Financial institutions reported that multiple questionnaires, overlapping standards and different disclosure regulations make it difficult for them to engage effectively on deforestation and human rights abuses. The use of simplified, Accountability Framework-aligned indicators that meet the requirements of the Corporate Sustainability Reporting Directive, EU Deforestation Regulation, International Sustainability Standards Board and Taskforce on Nature-related Financial Disclosures would reduce corporate survey fatigue and offer clear direction to all stakeholders.

• Aligning investor asks requires coordination across platforms

There are many investor initiatives such as IIGCC, Investor Policy 

Dialogue on Deforestation, Nature Action 100, Principle for Responsible Investment  and United Nations Environment Programme – Finance Initiative. Financial institutions back greater alignment across these initiatives. In 2026, Global Canopy will launch Deforestation-free Transition (DEFT) Pathway to support financial institutions to better engage with companies on deforestation. The pathway synthesises existing frameworks, guidance and metrics into actionable next steps. This strengthens stewardship messages and enables more effective engagement with companies and governments.

Levers for action 

• Transition finance is needed alongside exclusion to drive change

Exclusion strategies alone do not transform complex land-use systems. There is an urgent need for financing models linked to credible, time-bound improvement milestones, including traceability targets or supplier alignment requirements. DEFT Pathway categorises companies according to their level of progress and highlights priority and timebound next actions. This helps financial institutions incorporate impactful targets into their financing structures.

• Financial materiality is a powerful lever for action

Reframing deforestation as a macroeconomic risk is key to gaining support from investment committees, regulators and policymakers. Deforestation-related impacts could include physical risks such as increased rainfall variability and productivity shocks, leading to supply chain disruptions, price instability and higher sovereign spreads, while transition risks can limit export market access. 

Three strategic priorities for 2026-2030:  

• Develop global collaborative engagement platforms

Global engagement platforms can align expectations and support coordinated stewardship. Developed market investors bring global leverage and visibility, while emerging market institutions – especially Brazilian financial institutions – add local legitimacy, knowledge and influence over companies. 

• Strengthen interoperable data systems and harmonised indicators

Due diligence and monitoring must be both efficient and scalable. Integrating Brazil’s powerful public datasets with global tools like Forest IQ, Forest 500 and Floresta 250 – Cattle would lower verification costs and improve traceability of indirect suppliers. It would also support consistent assessments across regions. This approach aligns with COP30’s call for data-driven, system-wide solutions that can be replicated beyond Brazil.

• Advance transition-finance approaches that address both “green” and “nature-negative” flows

A just and effective transition requires not only mobilising sustainable finance, but also phasing out capital flows linked to deforestation and human rights abuses. Building on the Deforestation-Free Finance Roadmap, financial institutions can accelerate real-economy change by linking capital to clear, time-bound transition milestones, including improvements in traceability, supplier alignment and compliance with minimum monitoring criteria. 

The way forward 

Brazil is uniquely positioned to lead the global drive to end deforestation. It has strong public traceability systems, a sophisticated finance sector and deep exposure to forest risk supply chains. The side event at PRi in Person demonstrated the willingness of Brazilian and global investors, civil society organisations and technical partners to work together. The message from COP30 and the São Paulo dialogues is clear: with coordinated action, harmonised standards and cross-regional collaboration, the finance sector can deliver DCF supply chains by 2030.

DEFT Pathway was developed by Global Canopy, the UN Climate Champions, Global Optimism, the Accountability Framework initiative, the Tropical Forest Alliance, Proforest and ZSL, in consultation with leading finance sector networks including Ceres, IIGCC, PRI and the former Finance Sector Deforestation Action Group.