Tesco, Sainsbury’s and Waitrose have invested $11m into a new system of financial incentives for Brazilian farmers who commit to deforestation and conversion-free soy cultivation.
The trio are leading a new food sector project called the Responsible Commodities Facility, which will provide finance to 36 farms producing 75,000 tons of soy per year in the Cerrado region in Brazil. The move would result in the conservation of around 11,000 ha of native vegetation, the RCF said.
The project will initially begin with a 12-month trial phase with farms located in the Cerrado’s Matopiba, Goiás and Mato Grosso regions – areas currently at risk of deforestation and biodiversity loss.
Following the trial, the RCF is expected to be scaled up to include hundreds of farmers across Brazil, helping to protect vast tracts of native Cerrado vegetation and conserving biodiversity, water quality and carbon stocks.
The Cerrado is the world’s most biodiverse savanna and is under risk of deforestation, mostly driven by the expansion of soy cultivation.
”It’s vital we provide practical, financial support to farmers in Brazil committed to the production of zero deforestation soy and the conservation of native vegetation,” said Tesco CEO Ken Murphy.
“To limit global warming to 1.5 degrees and achieve the goals set out in the Paris Climate Change Agreement, it is vital that we protect and restore forests and ecosystems such as the Cerrado in Brazil,” added Sainsbury’s CEO Simon Roberts. “It’s why we are proud to join forces with others to help fund the Responsible Commodities Facility, investing in the sustainable production of soy, using green finance to reward farmers for protecting wildlife and biodiversity in the Cerrado.”
Murphy and James Bailey, executive director at Waitrose, also appealed for more food sector businesses and financial investors to join the initative.
“The scale of the challenge to halt the loss of biodiverse ecosystems like the Brazilian Cerrado requires innovative new approaches,” Bailey added. “We hope this pilot fund will demonstrate the huge opportunity for green finance to incentivise responsible farming practices that ensure we protect our global forests.”
The RCP has also secured sponsorship from US cocoa and chocolate manufacturer Barry Callebaut and design input from international soy buyers.
The initiative is financed through a first-of-its-kind approach: dollar-denominated green bonds (CRAs – Certificates of Receivables from the Agribusiness) registered in the Vienna Stock Exchange. The capital raised will be used to offer low-interest loans to farmers who comply with its eligibility criteria, and commit to zero deforestation of native vegetation, over and above their legal reserves, preventing negative climate impacts and loss of habitat.
There will also be an independent environmental committee that will review and provide input into the management of the facility.
“The scale of the challenge to halt the loss of biodiverse ecosystems like the Brazilian Cerrado requires innovative new approaches,” Bailey said. “We hope this pilot fund will demonstrate the huge opportunity for green finance to incentivise responsible farming practices that ensure we protect our global forests.”
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