Zero Deforestation Soy Funding Program Seeks to Broaden its Net

0

Loans were granted to all participants who are now planting soybeans on their properties.

“We are convinced of the success of this initiative and we are committed to extending it to a much larger scale”,​ commented Pedro Moura Costa, CEO of Sustainable Investment Management Ltd (SIM), which manages the RCF.

Pilot phase

UK supermarkets Tesco, Sainsbury’s and Waitrose have invested $11 million in what is the proof of concept, pilot phase of the RCF.

This funding finances 36 farms in the Cerrado region of Brazil over four years. These farmers produce 75,000 tonnes of soybeans per year. This stage of the program, the SIM said, will result in the conservation of around 11,000 ha of native vegetation, 4,200 more than the legal reserves.

All the farms in the trial phase are located in the Matopiba, Goiás and Mato Grosso regions of the Cerrado, areas at risk of deforestation and biodiversity loss.

Moura Costa said the hope is that the 12-month trial phase will provide valuable insight into how the mechanism works in practice on farms and inspire other organizations and businesses to lend their support, so the facility can provide low interest financing. to a significantly higher number of farmers in Brazil.

Take off from the ground

While the financial facility was originally launchedIn 2019, it was put on the back burner for about two years due to a lack of an enabling environment on the ground in Brazil, after Bolsonaro’s election, and also as a result of the COVID-19 pandemic, said said Moura Costa to this publication.

The momentum picked up again last year, with November 2021​seeing the relaunch of the RCF – the three UK supermarkets had been involved in designing the scheme to ensure it could meet their environmental objectives.

Tesco, Sainsbury’s and Waitrose invested the $11m via green bonds in late July/early August this year, and the loans were then made available to Brazilian farmers.

Funding model

The initiative is financed by a novel approach: green bonds denominated in dollars (CRAs – Certificats de Debt sur l’Agroalimentaire) listed on the Vienna Stock Exchange.

The capital raised is used to offer low-interest loans to farmers who meet its eligibility criteria and commit to zero deforestation of native vegetation, beyond their legal reserves, preventing negative climate impacts. and habitat loss.

Exam

SIM said the environmental management of the RCF will also be reviewed by an independent environmental committee comprising the United Nations Environment Program (UNEP), The Nature Conservancy (TNC), BVRio, WWF, Conservation International (Brazil ), Proforest and the Instituto de Pesquisa Ambiental. of Amazonia (IPAM).

Commenting in August, when the relaunch of the program was announced, Susan Gardner, director of UNEP’s ecosystems division, said that practical financial solutions like the RCF incentivize farmers to decouple commodity production from deforestation and land conversion practices, leading to improved landscape restoration, climate change mitigation, adaptation and biodiversity protection in line with the UN SDGs.

She urged companies that have signed the Cerrado Manifesto SoS to fulfill their commitment by funding this installation.

Greg Fishbein, director of agriculture finance at TNC, said the RCF will create tangible climate and biodiversity impacts by providing farmers who can legally clear their forests with a clear financial incentive not to. “This is exactly the kind of mechanism we envisioned when we created IFACC​​ – a system that can mobilize commercial finance to support farmers in their transition to climate-friendly production models.

Share.

About Author

Comments are closed.