In the run up to the UN Climate Change Conference COP 27 in Egypt, FMO announces its commitment to build a forestry portfolio of up to EUR 1 billion by 2030. This a core part of our strategy to support climate action and biodiversity.
Besides providing habitats for animals and livelihoods for humans, forests offer watershed protection, prevent soil erosion and mitigate climate change. To stop deforestation and help protect and restore forests globally, large pools of capital are needed. Investing in forests and nature-based solutions in developing markets is critical and highly complex. The market has to grow, the investments need to scale and they require commercial capital. While there is no silver bullet, DFIs and blended finance are an important part of the solution to scaling climate and biodiversity enhancing business models.
FMO has recently announced an updated corporate strategy towards 2030: ‘Pioneer – Develop – Scale’. It includes our aim to build a portfolio of at least EUR 10 billion in SDG 13. The Forestry portfolio will be an important part of the SDG 13 portfolio. We will also increase our forestry portfolio to at least EUR 500 million and with the ambition to increase it to EUR 1 billion.
Our blended finance background as well as our understanding of forestry investments – FMO has started investing in pilot projects in 2011 – have led to setting up the Mobilising Finance for Forests Programme (‘MFF’) with the UK Government. The Programme aims to mobilise private sector finance, providing blended finance solutions, specifically for reducing deforestation in the Global South. MFF itself is a framework that can be scaled up to expand and accelerate our work. Moreover, it is envisaged that all the MFF Investees will require substantial additional investment. We are open to sharing our pipeline of projects.
Our partnership with the UK government has inspired us to expand our forestry strategy beyond plantation business models to include sustainable forestry management as well as non-timber forest products and deforestation free commodities. Through MFF, other blended finance progamme and our own balance sheet, we have already committed USD 58 mln to &Green in 2021 and we are pleased to announce that we will commit USD 2.5 mln to seed Treevive, a new global carbon platform for structuring and developing carbon projects throughout the forestry sector.