By Mariana Ribeiro
Timberland Investment Group (TIG), BTG Pactual’s subsidiary that manages forestry assets, has Brazil as the main focus of its reforestation strategy in Latin America, seeking to raise US$1 billion in five years.
The country has competitive advantages in the segment, besides a large number of degraded areas or areas managed in a non-sustainable way, says Gerrity Lansing, director of the group.
According to him, the change in government also contributes to attracting foreign capital, especially European, for investments in the area in the country.
“There is a perception that Brazil is more open to interacting, in a global scenario, in a way that maybe it wasn’t before.”
“It seems that there is greater interest, especially from European investors, in the country since the elections,” says Lansing in an interview with Valor.
One of the largest forest asset managers in the world, TIG has US$5.6 billion in forest assets and 3 million acres (1.2 million hectares) under management in the United States and Latin America.
About a third of this volume is in Brazil.
There are 23 offices worldwide, 11 of which are in Brazil.
In late April, the White House informed that the Development Finance Corporation (DFC), an agency of the United States government, is working on releasing a US$50 million loan for the reforestation strategy coordinated by the TIG.
The announcement was made during the Major Economies Forum on Energy and Climate Change, convened by President Joe Biden.
BTG did not detail the next steps until the resources are released, but according to Mark Wishnie, director of sustainability at TIG, the expectation is that the process will be completed in the fourth quarter of this year.
The company’s reforestation strategy, which began about two years ago, basically consists of searching for degraded cattle areas or areas with unsustainable management for reforestation and transformation into commercial forests.
The goal is for half of the portfolio to comprise natural forests.
With this strategy, says Lansing, the company hopes to have a return on land but also to remove CO2 from the atmosphere and generate social impact via, for example, job creation.
According to the company, the goals are to protect and restore about 300,000 hectares of natural forests in deforested landscapes in Brazil, Uruguay, and Chile; plant hundreds of millions of trees in sustainably managed and independently certified commercial forests; improve biodiversity; and support inclusive and equitable community development.
The initiative aims to generate 35 million tons of carbon sequestration over 15 years.
In Brazil, the focus is on the “six or seven” southernmost states. “From Mato Grosso down,” Lansing defines.
Besides the volume of land, the country comes out ahead in other factors in the environmental area.
Commercial forests grow “faster than anywhere else in the world,” Wishnie says.
“That means trees can remove carbon dioxide from the atmosphere faster.”
In addition, the country concentrates technology in the area.
According to the company, more than 24,000 hectares of deforested land in Brazil have already been acquired under this strategy.
The investors are mainly pension funds in Latin America, the United States, Canada, and Europe.
It has been identified that there is yet another group of interested parties, large companies that do not traditionally look at forestry assets, but are looking for investments with positive impacts on the climate, explains Wishnie.
The investments are long-term, but the TIG does not provide detailed information about the timing and return.
“There is, of course, a focus on return, but also on mitigating climate effects and having a high social impact,” says Lansing.
Among the advantages for the investor, he highlights that it is a tangible asset and offers a tangible opportunity to mitigate the climate crisis.
“When discussing renewable energy, for example, the discussion focuses on reducing emissions. But in fact, trees are the only known technology that can remove CO2 from the atmosphere on a large scale.”
TIG closed an agreement with Conservation International at the end of 2021 for the reforestation project in Latin America.
The organization acts as an impact advisor for the strategy.
The company does not disclose how much of the US$1 billion has already been raised, but, as Valor found out, this share is close to 25%.
With information from Valor
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