CDP, the global environmental disclosure platform, has recently published a new report showing that global companies may be unknowingly exposing themselves to US$279 billion in financial risk due to the ongoing pace of deforestation globally.
Due to limited supply chain transparency, companies and financial institutions may be inadvertently financing or sourcing from deforestation-linked firms. The sectors most affected include Food, Beverage & Agriculture, where companies rely on forest-risk commodities for up to 76% of revenues.
But the report also finds that disruptions caused by deforestation could have wider economic consequences, from commodity price spikes to increased credit risk. Risks identified in the report include:
- Companies estimate they are exposing themselves just US$77bn in deforestation risks, but CDP’s analysis shows the true figure is US$279bn
- Nearly 50% of businesses identify deforestation-related risks, but only half can quantify the financial impact
- 129 financial institutions managing trillions in assets say they do not know if they finance deforestation-linked companies
- Market impacts are already visible: extreme weather and cocoa shortages linked to forest loss contributed to Hershey’s recent credit downgrade
Deforestation poses growing financial and systemic risk. Direct and indirect consequences are disrupting supply chains, driving climate instability, and eroding the natural capital that underpins the global economy. Data from CDP reveals that companies are underreporting the financial risks to their businesses from deforestation, leaving a US$279 billion blind spot in global markets.
Drawing on corporate and financial institution disclosures, this report uncovers critical gaps in transparency and estimates the forest-related risks left unquantified. It calls for stronger dependency, impact, risk and opportunity (DIRO) assessments to support the transition to deforestation and conversion-free supply chains. This report also offers valuable insights to help investors, banks, insurers and regulators understand and address the true value at risk from nature loss.
