Traive and EarthDaily agro partner on Responsible Commodities Facility to create Green Bonds as a source of financing and development of sustainable agriculture in Brazil.
A zero-deforestation soy finance initiative managed by Sustainable Investment Management (SIM) and backed by a ‘green bond’ invested in by three UK supermarket chains has scooped the Green bond initiative of the year award.
The first-of-its-kind $11 million Responsible Commodities Facility (RCF) Cerrado Program was launched in July 2022 and provided finance to 32 farms in the Cerrado region of Brazil. Farms financed through the RCF will voluntarily commit to not clearing tracts of Cerrado land for cultivation that they are legally allowed to convert for soy production. An independent panel decided the award winners, seeking to recognize excellence and innovative initiatives that contribute to the growth of the sector.
The founder of RCF and executive director of SIM in Brazil, Mauricio Moura Costa, commented: “We were satisfied and proud with this recognition. We idealized a transforming market mechanism, which could only be put into practice with the contribution of our partners, the Environmental, and investors. All contributed to the implementation of the initiative, so this award is a recognition to all of us.”
The Green Bond developed by RCF was a pioneer in the sector in promoting the production and trade of “zero deforestation” soy. The low-interest loans to farmers were funded by US dollar-denominated green bonds – in the form of Certificates of Agribusiness Receivables (CRAs) in dollars. The initiative was formally recognized as a financial innovation for the environmental finance market and the sustainable agriculture sector.
This was the first issue of green CRAs denominated in dollars and registered on the Vienna Stock Exchange. For the pilot program, RCF Cerrado 1, green CRAs were underwritten by British supermarkets Tesco , Sainsbury’s and Waitrose , and issued by Opea Securitizadora, which incorporated the pool of agricultural credits granted to 32 farms originated by Traive Capital .
The investment of US$ 11 million made it possible to grant lines of credit with low interest rates to soy producers in the Cerrado who voluntarily committed themselves not to deforest their excess Legal Reserve areas for the cultivation of soy. Thus, the RCF Green Bond offers investors a direct and immediate impact on the conservation of native vegetation and carbon stocks in significant areas of the biome.
SIM and BVRio coordinated the monitoring of environmental requirements and impact, which were independently verified by earth observation data provider EarthDaily Agro. The Environmental Committee – made up of The Nature Conservancy, Conservation International, WWF Brasil, UN Environment, IPAM, Proforest and BVRio – verified the methodologies employed in monitoring and evaluating impacts.
“We thank our partners, the Environmental Committee and the first investors for betting and supporting the realization of this innovative initiative for the sector”, said Pedro Moura Costa, Founder of RCF and Director of SIM. “This award comes to reiterate and confirm our vision regarding the transformative potential of Green Bonds as a source of financing and development of sustainable agriculture”.
EarthDaily Agro VP of Marketing Andrew Mullin commented: “Our team at EarthDaily Agro is grateful for the opportunity to contribute in this initiative in partnership with our anchor customer Traive.”
RCF is a member of the Innovative Finance for the Amazon, Cerrado and Chaco initiative, and an initiative of the Forest Positive Coalition of the Consumer Goods Forum (CGF).
Meet top executives of theEarthDaily Agro team to chat about this initiative at the World Agri-Tech South America Summit this June 20-21 in São Paulo, Brazil.