New York, NY – 24 September 2024 – The UK government and FMO, the Dutch entrepreneurial development bank, announced today a $55 million commitment to reforestation in Latin America, including in the Cerrado biome, one of the most biodiverse ecosystems in Brazil. The investment with the BTG Pactual Timberland Investment Group (BTG Pactual TIG) – one of the world’s largest timberland investment management organizations – focuses on the conservation, restoration, and planting of deforested and degraded properties.
The UK government and FMO expect their $55 million commitment to help mobilize the $1 billion targeted by BTG Pactual TIG’s Latin American reforestation strategy. Conservation International serves as Impact Adviser to help BTG Pactual TIG achieve positive environmental, climate, and social impacts.
The announcement was made during an event at the Nature Positive Hub during New York Climate Week.
By investing in projects that are dedicated to sustainable commercial tree farms across half the strategy’s footprint, and the protection and restoration of native ecosystems across the other half, BTG Pactual TIG seeks to integrate the protection and restoration of important habitats with sustainable commercial production. This forward-leaning approach targets deforested and degraded land. Reforesting this land seeks to integrate commercial, social, biodiversity, and greenhouse gas sequestration goals into a single strategy.
The transaction is expected to generate carbon credits through carbon removal projects, support climate mitigation efforts, and strengthen sustainable forest management practices in Brazil. These efforts also seek to foster jobs and expand economic opportunities in rural areas of the country.
The commitment is funded via a combination of the UK-funded “Mobilising Finance for Forests (MFF)” programme and FMO’s own balance sheet. The MFF programme, which launched in 2021 with up to £152 million of funding from the UK government, is aimed at unlocking private sector investment in projects that protect and restore tropical forests across Africa, Asia and Latin America. The initiative is managed by FMO, which is one of the global leaders in forestry investments among Development Finance Institutions (DFIs).
The MFF portion of the commitment is structured to benefit early investors by providing both downside risk protection and potential return enhancement in relation to the emerging markets portion of the portfolio, and thereby seeks to catalyze greater private sector participation in the reforestation strategy.
Huib Jan de Ruijter, Co-Chief Investment Officer at FMO, said, “We are extremely proud that our partnership with the UK government and with TIG, one of the world’s largest timberland investment management organizations, has resulted in our largest single forestry investment to date. This is fully aligned with our forestry strategy which is geared towards substantial climate mitigation and broader ecosystem benefits, alongside potential attractive financial returns. We look forward to continuing to attract much-needed institutional capital to the sustainable forestry sector with innovative blended finance structures”
Mark Wishnie, BTG Pactual TIG’s Chief Sustainability Officer, said, “Governments and development finance institutions have a critical role to play in catalyzing private investment into natural climate solutions at the scale needed to make a difference for climate. The provision of concessionary finance, and the environmental and social rigor associated with their investments, help build confidence among private investors new to the asset class. The $55 million of patient capital from MFF and FMO will be critical for our reforestation strategy to reach scale and deliver impact. I commend these partners for sharing our vision for this strategy and helping make it a reality.”
Dr. M. Sanjayan, CEO of Conservation International, said, “The joint commitment from the United Kingdom and FMO further strengthens the credibility of the guiding principle behind this reforestation strategy: We don’t have to sacrifice environmental protection in the name of production. We can protect and restore forests, secure biodiversity, and strengthen local economies at the same time. Together, the United Kingdom, FMO, and BTG Pactual are leading us into a new era of conservation, where public-private partnerships bring big ideas to life, then bring them to the world.”
With Conservation International’s support advising on environmental and social impact, the strategy aims to protect and restore approximately 135,000 hectares (more than 330,000 acres) of natural forests in deforested landscapes. The strategy also seeks to plant millions of trees in sustainably managed commercial tree farms, independently certified to Forest Stewardship Council™ standards, on another approximately 135,000 hectares of previously deforested and degraded land. To date, BTG Pactual TIG has invested in 37,000 hectares, and has already planted more than 7 million seedlings and initiated restoration of approximately 2,600 hectares of natural forest.
This announcement follows announcements that the U.S. Development Finance Corporation (DFC) and International Finance Corporation (IFC), a part of the World Bank Group, have committed $50 million each in debt financing to the strategy.
ABOUT MFF
Mobilising Finance for Forests (MFF) is a blended finance programme which aims to combat deforestation and other environmentally unsustainable land use practices which drive climate change and biodiversity loss globally. Launched by FMO and the UK in 2021, the programme has been investing in innovative forestry and sustainable land use funds and businesses across selected regions in Latin America, Africa and Southeast Asia. Investments over time will contribute to a reduction in deforestation rates by stimulating the growth of private sector investment in markets that create value from standing forests and incorporate forest protection and restoration into sustainable agricultural production of commodities like timber, soy, cattle and palm oil. MFF is expected to leverage £850m of private sector investment, generate 2.1 million hectares of avoided deforestation and degradation and abate 28 million tonnes of CO2 over it’s 15 year lifetime. For more information: please visit https://www.fmo.nl/mobilising-finance-for-forests
ABOUT FMO
FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50+ year proven track-record in empowering entrepreneurs to make local economies more inclusive, productive, resilient and sustainable. FMO focuses on three sectors that have high development impact: Agribusiness, Food & Water, Energy, and Financial Institutions. With a total committed portfolio of EUR ~13 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. For more information: please visit www.fmo.nl
ABOUT BTG PACTUAL TIG
BTG Pactual (BPAC11) is the largest investment bank in Latin America, with a market capitalization of approximately $25 billion, offering a diverse range of services, including investment banking, corporate lending, sales and trading, asset management, wealth management, and banking. BTG Pactual Asset Management is a division of BTG Pactual with an international presence and $166 billion in assets under management and administration (as of Q2 2024). BTG Pactual Timberland Investment Group (BTG Pactual TIG), a division of BTG Pactual Asset Management, is one of the world’s largest timberland managers with $7.2 billion assets and commitments and nearly 3 million acres under management throughout the United States and Latin America (as of Q2 2024). BTG Pactual TIG’s team of more than 160 professionals has an on-the-ground presence through 21 offices, bringing local, regional, and global experience to bear on the management of client investments. For more information, please visit www.timberlandinvestmentgroup.com.
ABOUT CONSERVATION INTERNATIONAL
Conservation International protects nature for the benefit of humanity. Through science, policy, fieldwork and finance, we spotlight and secure the most important places in nature for the climate, for biodiversity and for people. With offices in 30 countries and projects in more than 100 countries, Conservation International partners with governments, companies, civil society, Indigenous peoples and local communities to help people and nature thrive together. Go to Conservation.org for more, and follow our work on ConservationNews, Facebook, Twitter, TikTok, Instagram, LinkedIn and YouTube.