Financial Institutions and Agribusinesses Commit $3 Billion to Sustainable Production

Published
01 Nov 2021
2021
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Vidhi Bhatia, Public Engagement, World Economic Forum, +41754041699, vidhi.bhatia@weforum.org

Geneva, Switzerland, 02 November 2021 – The Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) initiative launched by The Nature Conservancy, Tropical Forest Alliance from The World Economic Forum, and The United Nations Environment Programme announced an investment commitment worth $3 billion – with more than $200 million in disbursements by 2022.

With a goal to reach $10 billion of commitments and $1 billion in disbursements by 2025, the initiative brings together eight financial, and agribusiness companies to accelerate deforestation-and-conversion-free soy and cattle production in South America. This initiative aims to protect the land as industry expands.

The companies – &Green Fund, AGRI3, DuAgro, Grupo Gaia, JGP Asset Management, Syngenta, Sustainable Investment Management and VERT – announced their financial commitments, and signing of the IFACC Declaration, at the World Leaders’ Summit at COP26, as part of their plans to shift commodity production in the region to a more sustainable model.

Cattle and soy production are amongst the biggest drivers of deforestation and conversion of natural vegetation in these valuable ecosystems, therefore expansion of investment in ‘forest-positive’ production models is critical.

It complements other efforts such as supply chain sourcing commitments, traceability systems, reform of land-use and trade policies, and jurisdictional approaches.

The finance committed from these private entities will accelerate the flow of capital to farmers to transition to more sustainable business models which include extending production over degraded pasture lands, and, raising yields through sustainable intensification of cattle ranching.

At the same time, growing international demand for deforestation-free products, regulatory changes in consumer countries, and investor expectations, are driving the need for a major transition in food production systems.

New collaborations on finance such as IFACC can help accelerate the change required to meet these emerging trends.

Quotes from Industry

Nanno Kleiterp, Chairman of & Green’s Board of Directors, &Green said: “We’re working on the most difficult and complex commodities, and that’s where we want to make an impact. Ultimately, we want to show that inclusive, sustainable and deforestation-free commodity production can be commercially viable.”

Nick Moss, Director, AGRI3 Fund said: “Scaling business models which promote sustainability and conservation in the land use sector requires the mobilisation of significant amounts of capital. Joining IFACC, we see a huge opportunity to be able to build on our current work, develop new partnerships and initiatives and share knowledge, with the overall aim of mobilising more finance into sustainable land use in the Amazon and Cerrado region. AGRI3 will contribute to the overall aims of IFACC by providing guarantees to commercial lenders to support loans to eligible sustainable land use projects in the region.”

Fernanda Mello, CEO, DuAgro said: “Becoming a signatory to IFACC encourages us to set firm goals regarding our role in this new world. We will use our market experience and our privileged position, of those who deal with the entire agri chain and the investors who finance it, to map and engage green bond issuance opportunities in Brazil. By 2022, we intend to issue a minimum of R$30 million in green bonds. By 2025, 30% of the entire financial volume of our operations will be compliant with the IFACC requirements, and over the next five years, the percentage is expected to reach at least 35%.”

João Paulo Pacífico, CEO, Grupo Gaia said: “We are very honoured to be one of the IFACC's signatories and to contribute to such an important environmental issue. In a few years, we will look back and wonder how some companies have not signed the IFACC declaration, a commitment that is extremely urgent for the world.”

José Pugas, Partner and Head of ESG and Agribusiness at JGP Crédit, said: “We, financial leaders, have a duty to consciously use our capacity for transformation through capital, acting proactively to accelerate the transition towards the green economy. By joining IFACC, we at JGP are investing our efforts in the belief that initiatives like this, which combine the productive stimulus with the need for environmental restoration, will be able to generate the greatest impact and carry out the social function of capital more effectively.”

Pedro Moura Costa, CEO, Sustainable Investment Management, said: “Through our innovative financial approaches, we provide financial incentives to farmers, committed to halting deforestation associated with expansion of soy cultivation in the Brazilian Cerrado. The Responsible Commodities Facility will create a series of debt funds, capitalized through the issuance of green bonds, to direct finance to sustainable agricultural practices in the region, contributing to the objectives of IFACC.”

Daniel Vennard, Chief Sustainability Officer of Syngenta, said: “One of the most impactful transformations we can make in global agriculture is reclaiming degraded farmland. In Brazil, we are working with The Nature Conservancy, farmers, and other stakeholders to recover 1 million hectares of degraded pastureland in the Cerrado, including an affordable credit line for farmers to finance the investment. Achieving our goal will require $2 billion of investment – which is why it is crucial for international groups and investors to collaborate through initiatives like IFACC.”

Martha De Sa, CEO, VERT said: “In addition to setting objective goals, such as the issuance of at least R$100 million in green bonds yet next year, VERT is committed to working for the education of the market in which it operates: on one hand, encouraging the adjustment of rural producers to the parameters of IFACC, and on the other, promoting the availability of good greens for impacting investors.”

About IFACC

IFACC is a collaborative initiative, launched in Glasgow in November 2021, by The Nature Conservancy (TNC), Tropical Forest Alliance (TFA) hosted by the World Economic Forum, and the United Nations Environment Programme (UNEP). The initiative brings together complementary capabilities, to scale up financial mechanisms such as farm loan products, farmland investment funds, corporate debt instruments and capital market offerings. To expedite progress on this front, there is an estimated need for as much as $30 billion in these sectors over the course of the decade, versus hundreds of millions available today. IFACC is working to accelerate financing in two ways:

1. IFACC unites leading banks, companies, investors, asset managers, to signal a collective commitment to lend, and invest more in the area of sustainable production. It also facilitates transparency on individual commitments from each signatory on their contribution towards expanding finance in the key sectors.

2. IFACC works with signatories to implement and scale up new finance mechanisms - including support on environmental and social management; connections to concessional capital groups and other capital providers for the longer-term and patient capital needed for these transitions; sharing insights about industry best practices, and leveraging data and studies on the business case and impacts.

IFACC has been endorsed as a catalytic Initiative by the CEO Principals of the Glasgow Financial Alliance for Net Zero (GFANZ), the global coalition of leading financial institutions committed to accelerating the decarbonization of the economy, chaired by Mark Carney the UN Special Envoy on Climate Action and Finance and anchored in the UN’s Race to Zero campaign.

TNC is a global conservation organization committed to conserving the lands and waters on which all life depends. The organization is dedicated to tackling climate change, conserving lands, waters and oceans at an unprecedented scale, providing food and water sustainably and helping make cities more sustainable. Working in 75 countries and territories, TNC uses a collaborative approach that engages local communities, governments, the private sector, and other partners. The organization is actively engaged in Brazil, Argentina and Paraguay on solutions for sustainable cattle and soy production.

About the Tropical Forest Alliance (TFA) hosted by the World Economic Forum

TFA is a network that brings together partners around the common goal of implementing solutions to tackle deforestation resulting from commercial activities in tropical forest areas. Hosted by the World Economic Forum, TFA works with government, private sector, and civil society, such as indigenous peoples and international organizations, to consolidate high-impact partnerships focused on reducing deforestation and creating a positive future for forests. The TFA network, through its partners, identifies challenges and develops solutions, bringing together experts from around the world to transform ideas into effective actions in Latin America, Africa, China, and Southeast Asia.

Since its inception in 1972, the United Nations Environment Programme (UNEP) has been the global authority that sets the environmental agenda, promotes the coherent implementation of the environmental dimension of sustainable development within the United Nations system and serves as an authoritative advocate for the global environment. UNEP’s mission is to provide leadership and encourage partnership in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations.

Notes to editors

Read more about IFACC and the Tropical Forest Alliance

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