BNDES creates matchfunding to invest up to BRL 500 million in forest recovery with support from partners

Nov 16, 2021

The following companies have already confirmed participation in the Living Forest Initiative: Petrobras, Coopercitrus, Heineken Group, Itaipu Binacional — in partnership with the Government of Mato Grosso do Sul — Philip Morris Brasil and Vale, through the Vale Fund

The Bank will participate with up to 50% of the resources applied in the initiative

The reforestation of 16,000 to 33,000 hectares with native species and biodiversity is expected

On Wednesday 10th, the Brazilian Development Bank (BNDES) launched the Living Forest Initiative, which aims to grant financial support to forest restoration projects with native species and with agroforestry systems in the various biomes of the Brazilian territory. The collection will be made through matchfunding, a financing model that brings together non-reimbursable resources from BNDES with those of other supporting institutions. In its first phase, Living Forest will have at least BRL 140 million — up to 50% from the Bank — and could reach BRL 500 million at the end of the second phase.

To enable the initiative, the BNDES met with more than 40 companies. Among these organizations, Petrobras, Coopercitrus, Heineken Group, Itaipu Binacional — in partnership with the Mato Grosso do Sul State Government — Philip Morris Brasil and Vale, through the Vale Fund, have already confirmed their participation. Other institutions are in negotiation to join the project.

“The Living Forest Initiative brings together concrete commitments from our partners and the BNDES to together carry out actions to restore forests and other vegetation physiognomies in Brazilian biomes, contributing to the maintenance of their richness in terms of biodiversity and to carbon capture," explains Petrônio Cançado, director of the BNDES’s Infrastructure Credit Division and responsible for the Corporate Sector Impact Relationship Department. “Furthermore, we will also make an important contribution to the recovery of water basins through the restoration of sources, so relevant to the country, especially when considering the security of water supply to people and businesses that employ thousands of Brazilians. Because of this development mission, clear and relevant, we expect to raise BRL 500 million over seven years, of which up to BRL 250 million will come from the BNDES and the remainder from partners in the corporate or public sector."

According to the Bank's Director of Socioenvironmental and Productive Sector Credit, Bruno Aranha, the Living Forest will help propel the ecological restoration sector and Brazilian companies through the just transition to a carbon-neutral economy. “With this initiative, our expectation is to reforest between 16,000 and 33,000 hectares with native species and biodiversity, with the possibility of capturing about 9 million tons of CO2 equivalent throughout the life of the projects," he says.

A managing partner will be selected for the initiative through a public call, which should occur by the end of 2021. The partner will be responsible for organizing the public selection process for the projects to be supported — with the first call scheduled for the first quarter of 2022. It will also have, among other responsibilities, the attribution of receiving the resources from BNDES and other supporting institutions and passing them on to the approved projects, monitoring their application and results.

To be supported, the projects must be aimed at the ecological restoration of areas falling into one or more of these categories: Nature Conservation Unit (UCs), publicly-owned or in the public domain; Private Natural Heritage Reserve (RPPN) areas, except for those constituted as part of extrajudicial agreements, of conditions/terms of licensing and/or environmental compensation or by judicial determination; Permanent Preservation (APP) and Legal Reserve (RL) areas in agrarian reform settlements and private properties of up to four fiscal modules, duly registered at the Rural Environmental Registry (CAR); and areas in indigenous lands, quilombola territories and other traditional communities.

Each project will receive an investment of at least BRL 5 million. The resources may be used, for example, in the acquisition of seeds, seedlings, inputs, equipment and fences, the implementation or expansion of seedling nurseries, professional training, and in the payment of labor, research, studies and technical services necessary for the execution of the project. The items eligible for support also include activities for the preparation, approval, validation, verification and issuance of carbon credits, when associated with the achievement of the project objectives.

About the BNDES — Founded in 1952 and currently linked to the Ministry of Economy, the BNDES is the main instrument of the Federal Government for promoting long-term investments in the Brazilian economy. Its actions focus on the socioenvironmental and economic impact in Brazil. The Bank offers special conditions for micro-, small- and medium-sized enterprises, as well as social investment lines, directed towards education and health, family farming, basic sanitation and urban transport. In crisis situations, the Bank acts in a countercyclical manner and assists in formulating solutions for the resumption of economic growth.

The BNDES is among the best evaluated companies in the world by Vigeo Eiris (V.E.), a rating agency associated with Moody's Corporation that evaluates the performance of organizations according to environmental, social and governance (ESG) criteria. Among the 4,913 companies participating in the world ranking, the BNDES is in 86th position. In emerging markets, among the 848 organizations analyzed, the Bank is in 4th place.

At the national level, among the largest financial institutions in Brazil, the BNDES occupies the leadership in the socioenvironmental responsibility ranking that is part of the Guide of Responsible Banks. The document is produced by the Brazilian Institute of Consumer Protection (IDEC), in partnership with Instituto Sou da Paz and the NGOs Conectas Direitos Humanos and Proteção Animal Mundial.