Four years after world governments pledged to align global financial flows with nature conservation goals, a comprehensive new assessment reveals that major financial jurisdictions have largely failed to translate these commitments into binding rules. As a result, banks and investors remain largely free to finance deforestation and ecosystem destruction.
The report, "Regulating Finance for Biodiversity: An Assessment for the Global Biodiversity Framework 2026", was released this week by the Forests & Finance Coalition, a global alliance including BankTrack, Rainforest Action Network, Profundo, Amazon Watch, and Friends of the Earth. The assessment evaluates financial regulations across 11 key jurisdictions: Brazil, Canada, the Central African Economic and Monetary Community (CEMAC), China, the European Union, Indonesia, Japan, Malaysia, Singapore, the United Kingdom, and the United States.
Despite the adoption of the Kunming-Montreal Global Biodiversity Framework (GBF) in 2022, which includes a specific mandate under Target 14 to align public and private financial flows with nature goals, the report found a stark implementation gap.
“Governments made a commitment to align finance with global biodiversity goals, but that promise has failed to reach the rules governing banks and investors,” said Merel van der Mark, Forests & Finance Coalition Coordinator. “Financial institutions are increasingly being asked to disclose nature-related risks, but they are still largely free to finance the destruction those disclosures describe. Transparency matters, but disclosure without rules governing where money flows will not stop deforestation.”
The assessment highlights several critical regulatory failures across the globe:
- Unrestricted Financing for Ecosystem Destruction: None of the 11 assessed jurisdictions comprehensively prohibits financial institutions from financing or investing in companies involved in deforestation or natural ecosystem conversion. Existing restrictions are narrowly limited to specific products, illegal activities, or voluntary guidelines.
- Disclosure Outpacing Accountability: While corporate sustainability reporting requirements are expanding, no jurisdiction mandates full transparency of all financing and investment portfolios alongside comprehensive disclosure of their biodiversity and social impacts.
- Monetary Policy Blind Spots: Although some central banks have begun incorporating climate risks into their operations, biodiversity remains largely absent from collateral frameworks, refinancing operations, and asset purchase programs.
- Missing Just-Transition Safeguards: Financial regulations generally fail to require banks and investors to ensure that transitions in high-risk sectors like agriculture, forestry, and fisheries protect the rights of Indigenous Peoples, local communities, workers, and small-scale producers.
- Regulatory Rollbacks: The report warns that regulatory trajectories are uneven, with some major markets, including the European Union and the United States, experiencing stalled reforms or active rollbacks of sustainability disclosure obligations under the guise of reducing administrative burdens for businesses.
“Based on financial materiality principles, regulators are trying to protect banks and investors from risks caused by nature loss while doing almost nothing to protect nature and people from the impacts of bank and investor financing decisions,” said Jan Willem van Gelder, Director of Profundo, the research institute that authored the assessment. “That imbalance must end. Financing biodiversity destruction should carry real regulatory consequences.”
The report concludes that voluntary risk awareness and product-level disclosures are no longer sufficient. It calls for a decisive shift toward binding, portfolio-level obligations that actively restrict capital flows toward nature destruction and mandate double materiality assessments.
With the 17th Conference of the Parties (COP17) to the Convention on Biological Diversity on the horizon, advocates are urging governments to close the loopholes that allow harmful financial flows to continue unchecked.
“Governments cannot keep financing biodiversity destruction with one hand and expect funding for protection with the other to compensate,” said Tom Picken, Forests & Finance Policy Director at Rainforest Action Network. “The Global Review at COP17 must put harmful financial flows at the centre: regulating the much larger flows driving destruction, while also delivering the finance needed to protect and restore biodiversity.”
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