Financial Institutions Need a Geospatial Lens on Deforestation Risk
May 5, 2026
Many financial institutions need to update how they assess their exposure to deforestation and land-use change emissions, and the update points in one direction: a geospatial lens on what is actually happening across the land their portfolios finance, as new net-zero standards are about to require banks and asset managers to measure and disclose the emissions embedded in their portfolios, including those tied to forests, land, and agriculture. The latest Forest 500 data shows most institutions are nowhere near ready, with weak or absent policies and capital still flowing to companies that have made no deforestation commitments at all. Closing that gap means moving past client self-reporting, which was never built to capture land-use change, toward spatially explicit, satellite-based evidence.
FINZ raises the bar from operational emissions to financed emissions
In July 2025, the Science Based Targets initiative released its Financial Institutions Net-Zero Standard (FINZ), which becomes mandatory for new targets from 2027. For the first time, banks and asset managers will be required to set science-based targets covering financed emissions, not just their own operations, but the emissions embedded in their lending and investment portfolios.
Under FINZ, forest, land, and agriculture fall into Segment B, the second-highest priority tier alongside energy and transport: institutions with significant agricultural exposure will need to measure land-use change emissions and removals tied to their clients, set reduction targets, and disclose their deforestation exposure by 2030. Where that exposure is significant, they must also publish an engagement plan to address it: the bar has moved from operational footprint to what the portfolio is actually doing on the land.
Forest 500 shows most institutions are materially exposed and underprepared
Global Canopy's latest Forest 500 Finance Report quantifies the gap: the 150 financial institutions most exposed to deforestation risk channeled $8.9 trillion into the 500 companies with the greatest influence over global deforestation in 2024 alone. That may be a fraction of overall balance sheets, but it is enough to bring these institutions under scrutiny, particularly given how little of that capital is governed by a credible deforestation policy.
Sixty percent of assessed institutions have no deforestation policy at all. Among the minority that do, implementation is thin: only 27 of 60 have systems to screen and monitor clients, just 17 include time-bound divestment measures for non-compliance, and only three (BBVA, Deutsche Bank, and Lloyds Banking Group) monitor across all high-risk commodities. The starkest figure is the $864 billion directed to companies with no public deforestation commitments whatsoever, financing cocoa, soy, palm oil, and cattle in the landscapes where deforestation pressure is highest.
Under FINZ, this is the foundational gap: sixty percent of institutions without a policy means sixty percent without the governance in place to even begin a FINZ-aligned assessment, let alone disclose exposure or set targets against it.
Closing the gap requires spatial data, not client self-reporting
At its core, this is a measurement problem. The same gap that prevents companies from verifying what is happening across their supply chains now faces their lenders, and it cannot be closed through client self-reporting: sustainability questionnaires and annual disclosures were never built to track land-use change. Doing it properly requires spatial, verifiable data, typically satellite-based, which has never been standard in financial sector practice.
A company's deforestation commitment has never been a reliable indicator of what is actually happening on the ground: Forest 500's methodology now weights implementation evidence at 75% of a company's score, pushing past disclosure toward demonstrable action. For financial institutions, the practical implication is simpler: if you cannot independently verify what is happening on the land your portfolio finances, you cannot set credible targets against it, and FINZ will require you to.
Palm oil is the precedent: it was once among the worst drivers of tropical deforestation, and progress came when accountability, mandatory standards, and credible verification aligned, not from voluntary commitments alone. The same logic applies to agricultural finance more broadly.
Deforestation is now one of the most data-rich areas of nature-related risk, with better guidance than almost any other nature topic. The measurement tools exist. The regulatory direction is set. The question is which institutions build the capability now, and which wait until they are reacting under pressure.
We recently published a technical framework with SustainCERT on what this measurement infrastructure looks like under the GHG Protocol's Land Sector and Removals Standard. The short version: the shift from generic emission factors to site-specific, satellite-based measurement is not just preferable. The Standard effectively requires it for credible land-sector accounting.
Where Chloris comes in
Chloris Geospatial provides satellite-based, plot-level data on biomass and land-use change across the supply chains most exposed to deforestation risk: cocoa, coffee, palm oil, soy, and timber. The data is spatially explicit and independently verifiable, the kind of evidence FINZ compliance will require.
If you are a financial institution trying to understand what that exposure means for your portfolio, and what it takes to build the systems needed for disclosure and target-setting, we would be glad to talk.