COP26: Eight groups commit to invest US$3 billion in deforestation-free soy production and cattle raising

RIO DE JANEIRO, BRAZIL – The Dutch impact fund &Green Fund, the AGRI3 fund (managed by Dutch Rabobank), fintech DuAgro, Gaia Group, JGP Asset Management, input giant Syngenta, consultancy Sustainable Investment Management (SIM), and VERT securitization company signed the commitment.

The commitment is part of the Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) initiative, created by The Nature Conservancy (TNC), Tropical Forest Alliance (TFA) and the UN Environment Programme (UNEP).

With the 8 signatory institutions, over US$200 million have been committed until 2022, and each one of them is yet to present their specific commitments.

The IFACC is looking to attract more signatories. Its creators aim to reach US$10 billion in commitments and US$1 billion in disbursements by 2025. The plan is to encourage financing and investments in the three biomes that accelerate the transition from the current production model, encouraging agricultural production on pastures that are currently degraded and boosting livestock productivity through intensification.

To scale up investments, the initiative is encouraging financial institutions to commit to offering “green credit” to the regions and will work together with signatories to implement and expand the scale of the financing mechanisms created.

The IFACC organizers point out that the Amazon, Cerrado, and Chaco are under strong threat as demand for agricultural products has increased twice as much as population growth. They estimate that US$30 billion are needed for the transition of the productive sector in these biomes, compared to the “hundreds of millions” currently available.

The AGRI3 fund, for instance, intends to contribute to the initiative by providing guarantees to commercial lenders on loans for land use projects. For its part, DuAgro intends to map and unlock green bond issues in Brazil.

According to the fintech’s CEO Fernanda Mello, the company aims to issue at least US$30 million in green bonds next year and ensure that 30% of its operations are aligned with IFACC requirements by 2025, raising this percentage to at least 35% within 5 years.

SIM intends to create a series of debt funds financed by issuing green bonds to direct funding to soybean production in the Cerrado with zero deforestation, according to the consultancy’s CEO Pedro Moura Costa.

For its part, VERT plans to issue at least US$100 million in green bonds next year and “educate” the market by encouraging rural producers to conform to IFACC parameters and promoting the availability of green assets to investors, said the securitization company’s CEO Martha De As.

“We are working on the most difficult and complex commodities, and that’s where we want to have an impact. After all, we want to show that inclusive, sustainable, deforestation-free commodity production can be commercially viable,” said Nanno Kleiterp, chairman of the fund &Green’s board of directors.

“As financial leaders we have a duty to consciously use our ability to transform through capital, acting proactively to accelerate the transition to a green economy,” argued Jose Pugas, partner and agribusiness and ESG leader at JGP.

“In a few years, we will look back and wonder why certain companies didn’t sign the IFACC statement,” added Gaia Group’s CEO João Paulo Pacífico.