A new report reveals billions are still being funnelled into industries driving environmental destruction, urging urgent financial reform to protect forests and combat climate change

A new report released ahead of the International Day of Forests has sounded the alarm over the critical shortage of funding for global forest conservation, warning that current financial support is not only insufficient but is actively contributing to deforestation.

The report, titled Transforming Forest Finance, was introduced by the Forest Declaration Assessment and supported by organisations including the United Nations Development Programme (UNDP) and the Climate and Land Use Alliance. It underscores a stark disparity between the funding needed to combat deforestation and what is currently available, with forest conservation efforts woefully underfunded.

According to the report, an estimated USD 460 billion annually is required to halt deforestation, but financial backing remains far below this target. Worse still, the funds that do exist are often channeled into industries such as industrial agriculture and logging, sectors responsible for much of the deforestation. For every USD 1 spent on forest protection, USD 6 is directed towards destructive activities, the report highlights.

In 2023 alone, private financial institutions invested a staggering USD 6.1 trillion into deforestation-linked industries, while governments continue to provide USD 500 billion annually in subsidies that fuel environmental degradation. Many developing countries, burdened by a collective USD 1 trillion in debt, are often forced to exploit their forests for immediate economic relief, further compounding the problem.

Experts are calling for immediate reform of the global financial system to prioritize long-term sustainability over short-term profits. Imogen Long, lead author of the report, stressed the need for systemic change: “The current financial system rewards short-term profits over long-term sustainability. We need systemic changes to make forests a financial priority.”

Pablo Pacheco from WWF added, “Indigenous Peoples and local communities are the best forest stewards, yet they receive only a small fraction of climate finance. This must change.”

One of the report’s key criticisms focuses on the REDD plus programme, a global initiative designed to pay countries to reduce deforestation. However, it noted that the payments under REDD plus —ranging from USD 5–USD 10 per tonne of CO2—are far below the estimated USD 30–USD 50 per tonne cost of actually reducing emissions, making forest conservation financially unfeasible for many nations.

Despite these challenges, the report also highlights successful funding models, such as the Mesoamerican Territorial Fund and the Podáali Fund, which have demonstrated that providing direct financial support to Indigenous communities yields better conservation outcomes.

The report calls for urgent action, urging governments and multilateral institutions to reform public finance systems to provide more funds for forest conservation, redirect harmful subsidies towards sustainable practices, and increase direct funding to local communities. Strengthening financial regulations, such as requiring banks and investors to account for deforestation risks in their portfolios, is also a critical recommendation.

As the 30th Conference of the Parties (COP30) to the United Nations Framework Convention on Climate Change approaches, the findings from Transforming Forest Finance are expected to play a pivotal role in shaping global discussions on forest conservation and climate sustainability.