Banks Turn Into Frontline Defenders of Forests

Brazil has introduced a new rule requiring banks to screen farmers for illegal deforestation before approving loans, using finance as a powerful tool to protect the Amazon.

“We turned every bank manager who handles subsidised credit into an inspector of illegal deforestation,” said Andre Lima, who leads anti-deforestation efforts at the Environment Ministry.

The policy applies to around $53 billion in subsidised rural credit, roughly one-third of Brazil’s total farm lending, and uses satellite monitoring systems with about 93% accuracy to detect land clearing since 2019. Farmers must now prove legal permits for any deforestation to access funding, while those clearing land without approval risk losing access to billions in financial support. The measure builds on earlier rules restricting credit to environmentally non-compliant farms and comes as Brazil aims to end deforestation by 2030. With about 17% of rural lending previously linked to recently deforested land, the reform redirects financial incentives toward sustainable farming while reducing long-term risk for banks and supply chains.