While financing of deforestation has been business-as-usual for decades, there are signs of change. Leading financial institutions are beginning to chart a way forward, while laggards ignore escalating risk at their peril.
This risk ties back to negative impacts on the ground. When exposed to environmental and social harms in their operations or supply chains, companies can face legal, market, operational, regulatory and reputational risks that threaten financial performance. For financial institutions, having risky companies in their portfolios can translate into negative returns on investments, defaults on loans or losses due to stranded assets.
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