IFACC (Innovative Finance for the Amazon, Cerrado and Chaco) initiative announced today at COP 26
The Responsible Commodities Facility is one of the financial institutions and agribusiness that commited $3 billion to accelerate conversion-free cattle and soy production in South America.
BVRio group company, Sustainable Investment Management (SIM), is a key player in executing the historic commitment made at COP26 to commit $3 billion to accelerate conversion-free cattle and soy production in South America.
Eight financial institutions and agribusiness companies announced a commitment worth $3 billion – with more than $200 million in disbursements by 2022 – to soy and cattle production that is free of deforestation and land conversion in South America. In so doing, these companies have become the first signatories of the Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) initiative. The initiative’s goal is to reach $10 billion of commitments and $1 billion in disbursements by 2025. 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. The event also had the participation of a large number of government and business leaders, including Prince Charles, Boris Johnson, Joe Biden, and Jeff Bezos.
Cattle and soy production are among the biggest drivers of deforestation and conversion of natural vegetation in these valuable ecoysystems, so 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, including expansion of production over degraded pasturelands and raising yields – for example, through sustainable intensification of cattle ranching. The Amazon, Chaco and Cerrado face significant risk of conversion, with global demand for agriculture rising at a tremendous rate – more than twice the rate of increase in the human population. At the same time, growing international demand for deforestation-free products, regulatory changes in consumer countries, and investor expectations are also 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.
Pedro Moura Costa, CEO, Sustainable Investment Management, said: “Through the use of innovative financial approaches, Sustainable Investment Management (SIM) aims at providing financial incentives to farmers committed to halting deforestation associated with expansion of soy cultivation in the Brazilian Cerrado. The Responsible Commodities Facility, expected to launch early next year, 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.”
IFACC is an initiative, launched at Glasgow in November 2021, from The Nature Conservancy (TNC), Tropical Forest Alliance (TFA) and United Nations Environment Programme (UNEP) that bring complementary capabilities to scale up financial mechanisms such as farm loan products, farmland investment funds, corporate debt instruments and capital market offerings. Numerous mechanisms are emerging to do this, but the pace of progress is too slow. We estimate a need for as much as $30 billion in these sectors over the course of the decade, versus hundreds of millions available today.
Read more about this initiative.
