Forest Declaration Assessment

The 'Transforming forest finance' special report by the Forest Declaration Assessment outlines five priority actions to align the global financial system with forest and sustainable development goals by 2030. It argues that simply increasing funds is insufficient; systemic transformations are required to address the socio-economic and political drivers of deforestation, including the reform of multilateral finance, sovereign debt, harmful subsidies, and financial regulatory frameworks.

• The current international financial system creates barriers for developing countries to balance economic growth with environmental goals, often forcing a prioritization of export-led industries over forest health due to short-term pressures like debt servicing.
• Existing forest finance mechanisms, specifically REDD+, have failed to provide the necessary scale of funding. Payments for jurisdictional REDD+ typically range from USD 5-10 per metric ton of CO2e, which is significantly lower than the estimated USD 30-50 required for cost-effective implementation.
• Private sector financing continues to drive tropical deforestation, with private financial institutions holding USD 6.1 trillion in active financing to high-risk companies in 2023. Many institutions still lack investment safeguards and treat forest-related risks as immaterial.
• Multilateral Development Banks (MDBs) and the IMF need to reform their capital and allocation systems. The report notes that in 2022, low-income developing nations received only 1.4% of Special Drawing Rights (SDR) allocations, while richer industrial countries received up to 60%.
• Sovereign debt burdens in developing countries—estimated at USD 11 trillion in total debt plus USD 3.9 trillion in servicing—pressure nature-rich nations to engage in extractive activities. The report recommends restructuring debt and recognizing natural capital as an asset in debt management frameworks.
• Harmful agricultural subsidies distort markets and drive ecosystem collapse. Redirecting these perverse subsidies toward regenerative practices could potentially cover 40% of the USD 700 billion needed to reverse the global biodiversity crisis.
• Financial regulatory frameworks must be updated to include nature-related risks. The report highlights a trend of banks abandoning voluntary commitments, such as six U.S. and five Canadian banks leaving the Net Zero Banking Alliance by early 2025.

APA

Forest Declaration Assessment (2025). Forest Declaration Assessment. https://forestdeclaration.org/wp-content/uploads/2025/03/Transforming-forest-finance-2025.pdf

Chicago

Forest Declaration Assessment. Forest Declaration Assessment. 2025. https://forestdeclaration.org/wp-content/uploads/2025/03/Transforming-forest-finance-2025.pdf.

Wikipedia

{{cite report |author=Forest Declaration Assessment |title=Forest Declaration Assessment |date=March 2025 |url=https://forestdeclaration.org/wp-content/uploads/2025/03/Transforming-forest-finance-2025.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{forestdeclarationassessment2025forest, author = {{Forest Declaration Assessment}}, title = {{Forest Declaration Assessment}}, institution = {Forest Declaration Assessment}, year = {2025}, month = mar, url = {https://forestdeclaration.org/wp-content/uploads/2025/03/Transforming-forest-finance-2025.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }