• Asset managers who are part of the vaunted Glasgow Financial Alliance for Net Zero (GFANZ) retain forest-risk investments worth an estimated $8.5 billion according to new Global Witness analysis.
  • The figures show a minuscule decline of just over 3% in the size of investments held in the year since COP26, suggesting sluggish progress towards GFANZ deforestation targets.
  • Asset management giants BlackRock, Vanguard, State Street, Deutsche Bank and ABP all appear to have increased their reported exposure to ‘forest-risk’ investments between September 2021 and September 2022.
  • Since COP26 GFANZ investors bought millions of dollars in additional shares in companies with widely reported links to deforestation such as JBS, SLC Agricola and Astra Agro Lestari.

“Deforestation threatens to be the ’new coal’ in investors’ portfolios”, warned the UN's high level Climate Champions just a few weeks ago. This alarm bell came as little surprise. The blame for soaring deforestation rates has been widely laid at the door of beef, palm oil and soy agribusinesses in recent years – agribusinesses who frequently appear in the portfolios and balance sheets of the world’s top banks and managers.

Experts agree that hitting net zero will not be possible without an end to deforestation – currently responsible for up to 11% of global emissions and driven largely by agriculture.

The need to act now should be obvious to members of the Glasgow Financial Alliance for Net Zero (GFANZ), launched a few months before last year’s COP26 and bringing together hundreds of financial firms – together holding capital worth $130 trillion – in a commitment to reach net zero emissions by 2050. As part of this commitment, all GFANZ members are expected to set a target to eliminate deforestation from their portfolios.

But new Global Witness analysis of investment patterns in the year since COP26 suggests that GFANZ members are proceeding with business-as-usual. We found that 360 asset managers participating in GFANZ held forest-risk investments worth $8.5 billion as of September 2022. This sum comes close to matching the $9 billion of US taxpayers’ money pledged by President Biden to fight deforestation at COP26. 


Protestors at COP26 in Glasgow, November 2022. J Sutton-Hibbert via Alamy

While this represented a slight decrease – just over 3% – in GFANZ members’ total forest-risk exposure since the previous year, it is a pitiful reduction compared to the urgency of protecting what remains of the world’s climate critical forests from industry’s ongoing investments in palm oil, beef, soy and other forest-risk commodities. With no legal obligation to check these investments are not fuelling deforestation, insufficient safeguards exist to prevent these funds reaching businesses engaged in deforestation and human rights abuses. The sluggish progress also raises questions about how committed asset managers are to weeding deforestation out of their portfolios.

We found that forest-risk investment was heavily dominated by three large US asset managers: Blackrock, Vanguard and State Street. All three of these firms appear to have made millions of dollars in additional share purchases in forest-risk sectors between September 2021 and September 2022. Known as the ‘Big Three’ they dominate the US asset management landscape and together control an estimated $22 trillion in assets. Despite their exposure, Forest 500 – an index that rates firms’ deforestation policies - found that BlackRock, Vanguard and State Street’s commitments on deforestation are weak or non-existent.

European investors – including asset management subsidiaries of Deutsche Bank and the Dutch pensions giants ABP – also increased their reported forest-risk investments to the tune of several million dollars during the same period.

When approached for comment BlackRock, Vanguard and State Street did not respond. Deutsche Bank’s asset management subsidiary DWS said they had been “in dialogue with some of the companies mentioned … to point out the risks and effects of deforestation” and believe that they can exert positive influence on such firms “most effectively when we are invested.” They added that some of the firms in the Forests and Finance database would not be deemed suitable for DWS’ ESG funds.

An ABP spokesperson told us “We have developed criteria that companies must meet in terms of the environment, human rights and corporate governance. We assess all companies in our equity and corporate bond portfolios on the basis of these factors and only invest in companies that meet our criteria (frontrunners) or companies from which we expect improvement (promises). Furthermore, ABP … votes at shareholder meetings and engages with the companies in order to encourage them to change.”

Our analysis solely focussed on members of the Net Zero Asset Managers initiative (NZAM) and Net Zero Asset Owners Alliance (NZAOA) – two groupings that are part of GFANZ. We analysed investments in forest-risk companies by measuring changes to shareholdings in companies in the Forests and Finance dataset between September 2021 to September 2022. This dataset includes over 300 companies directly involved in beef, soy, palm oil, pulp and paper, rubber and tropical timber supply chains, whose operations may impact natural tropical forests in Southeast Asia, Central and West Africa, and in parts of South America.

A spokesperson for GFANZ told Global Witness that the alliance recognised the importance of deforestation financing, adding “GFANZ is just 18 months into a multi-year process, and our members are now shifting from the initial phase of commitment to operationalization.” The GFANZ response can be read in full here.

Well-known culprits

Amongst the agribusinesses in our dataset were beef, soy and palm oil giants with publicly documented links to forest destruction. The GFANZ members that Global Witness assessed appeared to have maintained - and in certain cases increased - their stakes in some of these agribusinesses.

The infamous Brazilian meatpacker JBS has long been linked with the destruction of the Amazon through its beef supply chains. In 2022, Global Witness found that JBS sourced cattle from 144 ranches in the Amazon state of Pará that contained over 10,000 football pitches of illegal Amazon clearance, contrary to its legal no deforestation obligations. This was coupled with a recurring pattern of land grabbing, slave labour and cattle laundering carried out on certain ranches supplying JBS. In response to these allegations JBS told Global Witness that it was committed to monitoring direct suppliers for deforestation by 2025. It also said of the ranches identified by Global Witness, most were working to improve their compliance with Brazil’s forest laws, while others had areas of deforestation small enough to be permissible under JBS’ commitments. It also blocked the ranchers Global Witness identified that were linked to forced labour, cattle laundering and land grabbing.

Despite a wealth of evidence linking JBS to deforestation, the investors examined by Global Witness appear to have collectively increased their exposure to JBS, acquiring over 10 million additional shares in the company between September 2021 and September 2022, increasing their exposure to the firm’s beef operations by an estimated $129 million. This represented an increase of 8% on the previous year. Amongst those investors ploughing more funds into JBS was Vanguard, who increased their exposure to its beef operations by $12.4 million. Other GFANZ investors who continued to hold shares in JBS as of September 2022 included HSBC, State Street, Blackrock and Deutsche Bank.

Palm oil also remained an attractive investment. Together the GFANZ members we looked at were exposed to the palm oil sector to the tune of $3.7 billion in September 2021. Amongst the firms heavily invested in is Astra Agro Lestari (AAL), reportedly controlled by British-run conglomerate Jardine Matheson. A 2022 report by Friends of Earth accused AAL and its subsidiaries operating in Central and West Sulawesi of being responsible for violent land-grabbing abetted by Indonesian security forces and illegally encroaching on protected forest areas. Nestlé recently announced that it would stop sourcing from AAL, seemingly as a result of these reports. A spokesperson for AAL contested these allegations, telling Global Witness the firm would “never engage in any form of land ‘grabbing’ or human rights violations” and that it was committed to a policy of “No Deforestation, No Peat Exploitation, and Respecting Human Rights.”

Strikingly, the GFANZ members we investigated collectively appear to have increased their exposure to AAL by 31% since September 2021, taking their investment in the company to an estimated $28 million. Over 50 million extra shares in AAL were bought up by GFANZ members during this time period. Amongst those investors that have appear to have bought additional shares in AAL are Vanguard and State Street.

The investors have, as a whole, also increased their stakes in controversial soy producer SLC Agricola. SLC Agricola reportedly cleared more than 30,000 hectares of forest in the Brazilian Cerrado region between 2011 and 2017, an area the size of the Maldives. It reportedly cleared a further 1,355 hectares in the same region between March and May 2019. A spokesperson for SLC Agricola said in September 2020 that the company would cease deforestation by the end of 2020. But implementing this commitment appears to have been delayed until August 2021 with the NGO Mighty Earth alleging that the delay was to allow for planned deforestation to be completed on SLC Agricola’s landbank. SLC Agricola reportedly deforested 668 hectares on the farm Fazenda Parnaiba between November 2020 and May 2021. A spokesperson for SLC Agricola told us it “was the first in the sector to announce its commitment to growth with zero deforestation” and “the opening of areas by SLC Agricola has always been done legally, respecting all regulations and with the appropriate licenses”.

Despite these controversies, GFANZ investors have continued to plough funds into SLC Agricola – buying up over 3 million new shares and taking their exposure to SLC to an estimated $72 million. Deutsche Bank and Dutch pensions giant ABP both increased their investments in SLC Agricola after September 2021, although ABP told us it had since reportedly divested its shares in the firm.

The group of GFANZ investors we examined also increased their investments in Wilmar – once dubbed “the biggest and dirtiest palm oil trader in the world” by Greenpeace. The same group of investors also appear to have increased stakes in the Salim Group of companies, repeatedly accused of being linked to palm oil companies destroying forests on the deforestation frontiers of Papua and West Papua.

When approached for comment by Global Witness a member of the Salim group, the firm Indofood Agri, pointed to a statement on their website saying “we preserve areas of High Conservation Value (HCV) and High Carbon Stock (HCS) within our operations.” A Wilmar spokesperson previously told Global Witness the firm had strengthened its "no-deforestation" policy since Greenpeace’s allegations were published, and that controversial palm oil suppliers had been dealt with through the company’s grievance system.

No more hot air

Our analysis shows there has been no significant shift away from ‘forest-risk’ commodity sectors, and in certain cases investors have even snapped up more shares in companies accused of direct links with deforestation.

Clearly, GFANZ members must take swift action on deforestation to stand a chance of meeting their net zero targets.

In many ways the lack of divestment from forest-risk investments is unsurprising. GFANZ recently chose to split from the Race to Zero – the UN-backed campaign that originally set the targets followed by GFANZ members – after Race to Zero introduced more rigorous standards and threatened to kick non-performers out of the initiative.

GFANZ previously described itself as being ‘grounded’ in the Race to Zero ‘to ensure credibility and consistency’. Now, GFANZ members have no independent body monitoring progress against promises made, demonstrating the weaknesses and lack of follow through inherent in relying on voluntary schemes to reach climate goals. Voluntary zero deforestation initiatives have repeatedly failed.

When approached by Global Witness about our findings, a GFANZ spokesperson said “In the absence of government action, the private sector has led the way on net-zero commitments and transition planning.”

With ‘implementation’ as the key theme of COP27, Global Witness is calling on governments in key financial centres to introduce legislation requiring investors to ensure their portfolios are not contributing to rainforest destruction.

Until new due diligence obligations are introduced in law, financial institutions will be unwilling to turn their back on lucrative deforestation deals. Last year, our findings suggested that financiers made an estimated $1.74 billion from deals with some of the world’s most harmful deforesters in the five years following the Paris Climate Agreement’s adoption in December 2015.

Forests and environmental defenders cannot afford to wait out further hollow promises. We need new laws to prevent money from reaching deforesting companies in the first place. 

Note on Methodology

This research – undertaken by the Dutch non-profit finance analysts Profundo – used Refinitiv to identify investments in shares of companies within the scope of Forests & Finance at quarterly intervals for the period Q3-2021 to September 15, 2022. Share prices of the companies were retrieved at the same intervals. The share prices were adjusted for the segment activities of the selected companies in the relevant forest-risk commodities within the scope of Forests & Finance (see Forests & Finance segment adjusters here). The segment adjusted share prices were then applied to the identified shareholdings to determine a forest-risk investment value per forest-risk commodity. The actual investment values were then compared to 2021-Q3 baseline values at quarterly intervals to determine investment trends. When actual investment values are higher than baseline values, this indicates increased investment in forest-risk equities, while lower than baseline actuals indicate divestment.