Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) is a new initiative that aims to catalyse innovative finance mechanisms for the expansion of soy and cattle production with deforestation and conversion-free principles in the Brazilian Amazon, Cerrado and the Chaco regions of Paraguay and Argentina.
With already 17% of clearance of the Amazon forest, we are dangerously close to what scientists consider a potential tipping point. Areas that have been particularly affected by deforestation are the Cerrado, which already is half cleared, and the Chaco, which now has lost 25% of its original forest cover. On top of this, the demand for beef and soy, which are two of the primary drivers for deforestation in the Amazon, is expected to increase significantly within the next decades. This means, that under a business-as-usual scenario, a conversion of a large amount of natural habitat would have to take place to satisfy the growing demand for these commodities, posing a severe threat to the survival of the forests, which will have significant impacts on biodiversity and exacerbate the climate crisis.
IFACC’s goal is to work with companies, banks and investors to commit by 2023 to a total of USD 3 billion of investment in beef and soy production models that are decoupled from deforestation and conversion of natural habitat, by focusing on creating the necessary financial incentives and enabling environment to make the transition to sustainable production and the financing thereof compatible with the Paris Climate Agreement and the SDGs. To reach it, the initiative will enable change by:
- Accelerating the flow of capital to farmers from banks, development finance institutions, traders and input companies to move to deforestation-free and conversion-free soy and cattle production.
- Stimulating transactions through organising interactions and dialogues between lenders, investors, agribusinesses and farmer organisations with lessons learned from successful transactions, innovative ideas and insights for overcoming barriers, and connections to concessionary capital groups and other finance partners that can help manage risk.
- Establishing new norms for lending and investing in deforestation/conversion-free (DCF) soy and cattle, aimed at giving greater market transparency and enable the creation of a track record of loans and investments that adhere to the same basic environmental and social impact criteria.
The Nature Conservancy, the Tropical Forest Alliance and the United Nations Environment Program are all leading institutions in this space with highly complementary capabilities, which creates a unique opportunity to achieve the goal of $3 billion in commitments and $200 in disbursements by 2023. IFACC’s initiative is funded by the Moore Foundation.
