Tesco, Sainsbury’s and Waitrose have announced a joint $11 million (£9 million) investment into a new system which will see farmers in Brazil provided with financial incentives to commit to deforestation and conversion free (DCF) soy cultivation.
The investment will be distributed by the Responsible Commodities Facility (RCF) to 36 farms in Cerrado, Brazil, an area under threat from high levels of deforestation, driven by the expansion of soy cultivation.
This money will help to produce 75,000 tons of soy each year, over a four year period and as a result, 11,000 hectares of native vegetation will be conserved.
The system is set to be trialed over a 12-month period, with an expectation that the RCF will then scale up the initiative to provide financial incentives to hundreds of farmers across Brazil.
In protecting native Cerrado vegetation, biodiversity, water quality and carbon stocks will all be conserved.
Financed through dollar-dominated green-bonds registered in the Vienna Bourse, the capital raised will offer low-interest loans to farmers who comply with its eligibility criteria and commit to zero-deforestation of native vegetation.
RCF, which is run by Sustainable Investment Management, a signatory of the Innovative Finance for Amazon, Cerrado and Chaco (IFACC) will also comply with the IFACC Environmental and Social requirements.
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“Crop finance is a key part of soy farmers’ business models and there is a huge appetite and market for green finance. By directing this flow of green finance we can support soy production while rewarding the voluntary conservation of native vegetation,” Sustainable Investment Management CEO, Pedro Moura Costa said.
Commenting on the investment, Tesco CEO Ken Murphy said: “We’ve made a commitment that by 2025 we will only source soy from whole areas verified as deforestation-free.
“To help us meet this goal 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.
“This initiative highlights the need for the whole food industry to come together and support the protection of critical ecosystems like the Cerrado. We urge more businesses and organisations to join us in providing funding for the RCF, to aid its roll-out in future years.”
Waitrose executive director, James 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.
“Achieving this potential, however, will require broader uptake, and I’d therefore appeal to fellow food sector businesses and to financial investors to join us in supporting and investing in this extremely important initiative to help protect the Cerrado, before it’s too late.”
