In the world of sustainability, planting trees has, arguably, captured the public’s imagination most – and received plenty of attention from financial institutions. Trees provide the planet with oxygen, they sequester carbon, and stabilise the soil so that much of the world’s wildlife can live. To boost the planet’s ever-decreasing stock of trees, a number of banks have made pledges in recent years to finance afforestation projects. These initiatives range in scale from several thousand trees to hundreds of millions.

For Earth Day 2022, Finextra caught up with the likes of Triodos, Lloyds, Starling, and Mastercard to see what progress has been made against their pledges, and why they believe afforestation is so vital in the fight to save the planet.

Consumer support for environmental initiatives is gaining momentum. Insights from the Mastercard Economics Institute reveal that donations to environmentally focused charitable organisations have spiked in recent years. Europe leads in this trend, with donations increasing in United Kingdom (287%), Germany (101%), Belgium (97%), Ireland (86%), and Italy (40%) in the first quarter of 2022 when compared to pre-pandemic 2019 during the same period. Countries like Israel (121%), Canada (56%) and Australia (21%) also experienced significant growth during this time. 

Fortunately, our financial institutions are following suit. Here are some of the key afforestation projects that are being funded by financial players today.

Tree-mendous goals

Triodos Bank: Net-zero by 2035

Ethical bank, and expert in sustainable finance, Triodos, is one of the key institutions to have publicly committed to rewilding and afforestation in recent years. In September 2021, Triodos Bank UK announced that its crowdfunding bond – in association with rewilding charity, Trees for Life – raised £2 million to part-fund the world’s first rewilding centre in the Scottish Highlands. The income from the visitor centre is contributing to the charity’s tree planting goals.

Gwyn Rhodes, head of business banking, Triodos Bank UK, told Finextra: “The crowdfunding partnership with Trees for Life is a landmark project for us and illustrates the clear demand for rewilding projects, with £2m of investment raised in less than 48 hours. The finance is supporting the construction of a visitor centre at the charity’s Dundreggan estate in the Scottish Highlands, due to open in spring 2023, which will educate people about forest regeneration and the natural and cultural heritage of the area.”

“The current woodland cover at Dundreggan is 26%, following substantial planting of over 335,000 native trees since 2008, and the charity wants to increase this to 41% over the next 10 years,” added Rhodes. “There are plans for a further 1,500 acres of planting, which the visitor centre will play a part in helping to fund and support.”

In 2021, Triodos also financed approximately 33,000 hectares of nature and conservation land – representing around 440m2 per customer. Rhodes told Finextra that the bank plans to ramp up this financing in the coming years.

According to Triodos’ 2021 annual results, the bank’s financing of forestry and nature development projects resulted in the sequestration of approximately 15 ktonne CO2e (2020: 14 ktonne CO2e), equal to at least 320,000 mature trees.

“It’s vital that our financial system appreciates the true value of nature, and we are committed to including many more such projects in our portfolio over the coming years,” noted Rhodes. “Investing considerably in nature, including forestry projects, is key to our ambitious 2035 net-zero strategy. Afforestation is, however, not just about hitting carbon targets, but also promoting biodiversity – both of which are central to our mission of positive impact.”

Lloyds Banking Group: 10 million trees by 2030

In February 2021, Lloyds announced it had planted 1 million trees across the UK, in partnership with the Woodland Trust. It aims to plant another 9 million by 2030, predicting that the trees could absorb up to 250,000 tonnes of carbon in their lifetime – equivalent to the emissions of almost 31,000 homes.

A Lloyds Banking Group spokesperson said to Finextra: “We are making great progress with our plan to plant 10 million native trees by 2030. 2 million have already been planted, and a substantial proportion of these were planted by farmers and landowners where the funding we provide brings down the cost of trees and hedges by 75%. These trees can improve biodiversity, prevent soil erosion, and play a part in helping farmers meet the National Farmers Union’s 2040 carbon net-zero goal.” 

Lloyds’ association with the Woodland Trust also involves the creation of 10 new “woods within woods” at existing sites across the UK. Last year, 23,235 trees were planted at the Woodland Trust’s 12.5 hectare Queen Elizabeth Diamond Jubilee Wood in Leicestershire.

“Climate change is one of the biggest issues facing society, and as the UK’s largest financial services business we can make a real difference in tackling it,” Lloyds’ spokesperson added. “That’s why we’ve committed to working with our customers, government and the market to help reduce the carbon emissions we finance to net zero by 2050 or sooner.”

Starling Bank: A tree for a referral

In 2020, UK neobank, Starling, pledged to plant one tree for every successful customer referral. The initiative was introduced in partnership with Trillion Trees – a joint venture between BirdLife International, Wildlife Conservation Society (WCS) and the World Wide Fund for Nature (WWF).

To get the ball rolling, Starling made a one-off donation to Trillion Trees for 2,014 trees to be planted. The bank chose this number to after the year 2014, when its journey began.

A spokesperson at Starling told Finextra that as part of its push for afforestation, the bank supports the planting of 10,000 trees per quarter. To date, Starling has planted 60,000 trees.

“Another point of interest is that the Reforest Fund supports ongoing monitoring of the trees being grown supported by Starling and these are showing a mean 80% survival rate across all its projects,” noted a bank spokesperson.

Mastercard: 100 million trees by 2025

This month, in April 2022, Mastercard announced that it is expanding the Priceless Planet Coalition’s forest restoration effort, to include 15 new projects – for a total of 18 globally. These projects will help accelerate progress toward the Coalition’s goal of restoring 100 million trees by 2025.

The Priceless Planet Coalition unites companies, communities and consumers in climate action and now includes over 100 partners globally, including sustainably minded merchants, fintechs and global banks. Each partner, including Mastercard, is helping to fund the forest restoration through consumer engagement and donation campaigns.  

“The Priceless Planet Coalition is focused on addressing the urgent global climate crisis by restoring the right trees in the right places,” says Jorn Lambert, chief digital officer, Mastercard. “By collaborating with our global network of coalition partners, we are able to further scale our forest restoration work and create collective action for the planet.”  

The Coalition is also focused on re-growing forests in places with the greatest need and the most potential to have positive impact on climate and biodiversity goals. The Coalition employs science-based practices to identify new project sites, select the appropriate tree species, and ensure long-term forest health through ongoing monitoring.  

“There’s growing acknowledgement that investing in the preservation and restoration of the natural world around us is critical to tackling climate change,” noted Bo Lidegaard, historian, diplomat, former climate change negotiator, and advisor to the Coalition. “The Priceless Planet Coalition is designed in a way to maximize impact for the planet, rooted firmly in the best science and quality planning and monitoring.” 

The root of the issue

So how exactly does reforestation help preserve the natural world, and reverse climate change? What improvements can we reasonably expect?

Terraformation, a firm set up by the former head of Reddit – which partners with communities across the globe to accelerate and scale their restoration projects – says that “global native forest restoration is the lowest cost, lowest risk, and most politically feasible carbon drawdown solution available.” As such, it is working to plant a trillion trees around the world.

In a recent Intergovernmental Panel on Climate Change (IPCC) report briefing, however, Kelley Kizzier, vice president, global climate, Environmental Defence Fund, argued trees are more about managing the high temperature peaks that will accompany climate change, as we go through the century.

“I'm certainly not discouraging people from planting trees,” she clarified, “but I would point out that it's probably more important to protect the forests we have, as a priority, because of how long it takes for new trees to grow. We need to protect the loans of the world – our capital before us. Because if we don't, we're not going to hit those max temperature goals that are outlined in the Paris Agreement.”

Kizzier shouted out some other “easy wins” for financial institutions, including the reduction of methane emissions from oil, gas, and agriculture, to further reduce “maximum temperatures.”. This is something “we can do now, and substantially, in this decade,” she argued.

Peter Boyd, resident fellow and lecturer, Yale added: “As for the deforestation piece, we must keep the ones we've currently got up or stop their destruction. Slow, stop, reverse – that's what we need to be paying for. 30% of emissions reductions could come from preserving forests, 25% of our medicines come from forests, and over a billion people depend on forests for their livelihoods.”

Branching out

Finextra’s research for Earth Day 2022 has shown that many institutions are not just on track to meet their reforestation pledges – they are likely to surpass them. With trillions of trees likely to spring up in the coming years, the hope is that they reach maturity fast enough to sequester the volumes of carbon necessary to stop global temperatures exceeding 1.5°C.

But afforestation is just one move in the bigger battle for climate stability. Financial institutions must back up their tree planting activities by cleaning up their own portfolios, reducing their carbon footprints, and supporting cutting-edge green projects. The commitment of all stakeholders holds the keys to a truly net-zero future.