Over the past twenty years, global forest loss has consistently mounted to three to four-million hectares per year on average – with a significant proportion of this linked to commodity-driven deforestation. Despite mounting corporate pledges and regulatory efforts such as the EU Deforestation Regulation (EUDR), a new report warns that without a shift in economic incentives, deforestation will remain embedded in global trade.

The report, released by the Mobilising Finance for Forests (MFF) Learning, Convening and Influencing Platform (LCIP), a program delivered by Palladium and Systemiq, outlines a bold and actionable roadmap to transform global agricultural supply chains and reverse rising deforestation trends.
Titled “Deforestation-Free Commodities: Investing in Deforestation-Free Supply Chains as a Strategic Imperative,” the paper calls for a systemic overhaul of how capital is mobilised, coordinated, and deployed across forest-risk commodities like cocoa, soy, and palm oil.

“We’re facing a US$210 billion annual investment gap through 2030,” says Isabella Shraiman, Research and Communications Manager of the LCIP. “Closing this gap isn’t just about more money—it’s about smarter, coordinated investment across the entire supply chain.”

Unlocking Private Capital

The report identifies key entry points for private investors at every stage of the value chain. Upstream, carbon markets offer a promising avenue. “Carbon removal units are verifiable, tradable, and increasingly trusted,” said Dominic Strano, co-author. “They provide a clear path for venture capital and impact investors to engage.”

Midstream, the focus shifts to traceability and certification technologies. Platforms like blockchain-enabled monitoring and geospatial tools are gaining traction. “These tools offer attractive risk-return profiles and are accessible to investors unfamiliar with agriculture or nature-based assets,” adds Shraiman.

Systemic Change Beyond Capital

Beyond finance, the report emphasises the need for structural reforms. “We must build a business case for forest retention,” Shraiman. “That means material incentives for landowners, better regulations, and stronger enforcement.”

The report also calls for harmonised compliance standards, affordable monitoring systems, and collaborative platforms that bring together producers, financiers, and buyers. It also highlights the importance of aligning national regulations with international market requirements to avoid excluding smallholder farmers, who currently make up 84% of global farms but receive less than 1% of climate finance.

Lessons from the Field

The report draws on successful case studies to illustrate scalable solutions. The Responsible Commodities Facility (RCF) in Brazil, for example, is financed the production of over 180,000 tons of deforestation-free soy in the past year, conserving 43,000 hectares of native vegetation.

“Green bond capital was key,” said Mauricio Moura Costa of SIM Investment Management, featured in one of the case studies. “It helped us attract commercial investors and scale operations.”

Rabobank’s Acorn platform offers another model, enabling smallholders to earn income from carbon markets. Farmers retain 70–80% of the revenue from carbon removal units, with the rest funding the operational costs of the implementing local partners and Acorn. “Trust and long-term relationships are essential,” said Emma Van de Ven of Rabobank in the report. “But to scale, we need more pre-financing to help farmers adopt agroforestry practices.”

Next Steps

Following the report’s release, the LCIP team convened a technical working group during London Climate Action Week. The session, titled “Financing Deforestation-Free Commodities: From Corporate Demand to Investment Action,” brought together investors and corporate stakeholders to discuss implementation.

Key takeaways included the need for stronger financial incentives, better access to capital for farmers, and scalable, de-risked project models. “We’re not stopping here,” adds Shraiman. We’ve launched a long-term workstream to foster collaborative action and turn these recommendations into reality.”

As the climate clock ticks, the report offers a timely and practical solutions for aligning finance with forest stewardship. The message is clear: the tools exist, there are models that work, and the time to act is now.

The Mobilising Finance for Forests (MFF) program is funded by the UK government and the government of the Kingdom of the Netherlands. MFF was established in 2021 by the UK government and FMO as a blended finance investment program to combat deforestation and other environmentally unsustainable land use practices contributing to global climate change. The Netherlands’ Ministry of Foreign Affairs joined MFF as a second funder in 2024.