At more than 2 million square kilometers, the Cerrado savannah in central Brazil is the largest grassland in the world. The size of Germany, France, England, Italy and Spain combined, it is also home to 5 per cent of all species on Earth, say researchers.
But the Cerrado is more than just an eye-catching landscape. According to one study, its grasses, plants and trees store 13.7 billion tonnes of planet-warming carbon, which if released could supercharge the climate crisis.
Despite that, the Cerrado is quickly disappearing, with much of it cleared to make way for soya bean plantations.
The Responsible Commodities Facility (RCF), a unique financing scheme supported by the United Nations Environment Programme (UNEP) and other organizations, is aiming to change that. It is working with soya farmers to halt deforestation, protect the unique ecosystem services of the region, maintain carbon stores and improve the profitability of farms.
Launched in 2022, the fund provides loans to farmers at interest rates up to 20 per cent lower than those offered by commercial banks. Farmers use the financing to buy seeds, fertilizer and other crucial inputs. As part of the bargain, farmers must agree to protect more than 35 per cent of their land from deforestation. “The RCF provides financing to farmers that is protecting 50 per cent of forests on average,” says Pedro Moura Costa director of Sustainable Investment Management, a financier, and BVRio, a non-profit group leading the initiative.
Since its launch, the RCF has disbursed US$69 million to farmers, who are chosen based on strict criteria that include financial and environmental checks.
“We see that when we make the financial incentives attractive enough, farmers will help protect their land,” says Ivo Mulder, UNEP’s Acting Head of Climate Finance. “This scheme shows how finance can help stop deforestation.”
Brazil is one of the largest soya producers in the world, according to the International Institute for Sustainable Development. But to make room for the crop, farmers often cut down native grasses and trees, a problem expected to get worse as demand for soya grows.
Since 2022, the RCF has helped protect nearly 15,000 hectares of native vegetation. That kept the equivalent of 18 million tonnes of carbon dioxide locked in plant life.
The RCF is aiming to reach US$150 million in funding by the 2025-26 growing season, with the goal of “significantly increasing the impact on the Cerrado landscape,” says Moura Costa.
With additional financing the scheme, he says, could lend to farmers who regenerate fields lying fallow. This would allow farms to expand without having to deforest land.
Private-sector-led models
The RCF grew out of the Cerrado Manifesto and the statement of support which was signed by around 160 fast-moving consumer goods companies. The manifesto calls for voluntary pledges by companies to help halt deforestation and native vegetation loss in the Cerrado. While 160 companies have signed the manifesto, only three have committed to the RCF fund. While the fund has had success, it needs to reach a critical volume of funding if it’s going to make deforestation-free farming mainstream, Mulder says.
Private-sector-led financing models are considered crucial to helping the world counter the triple planetary crisis: the crisis of climate change, the crisis of nature and biodiversity loss, and the crisis of pollution and waste.
UNEP’s State of Finance for Nature report found that investments in nature-based solutions remain low. Current finance flows to are US$200 billion annually, only a third of levels needed to reach climate, biodiversity and land degradation targets by 2030. Private finance only accounts for 18 per cent of current investments.
Mulder says programmes like the RCF could be scaled up if more supermarket chains, commodity traders and consumer goods companies were willing to invest in deforestation-free products. He says sustainable practices are the only way to head off a future crisis in humanity’s food systems.
“Right now, we’re not paying the true cost of the food we eat,” says Mulder. “We’re taking far too heavy a toll on the environment and if we continue to do that, it will come back to haunt us in terms of higher food prices in the future due to environmental break-down.”
The Sectoral Solution to the climate crisis
UNEP is at the forefront of supporting the Paris Agreement goal of keeping global temperature rise well below 2°C, and aiming for 1.5°C, compared to pre-industrial levels. To do this, UNEP has developed the Sectoral Solution, a roadmap to reducing emissions across sectors in line with the Paris Agreement commitments and in pursuit of climate stability. The six sectors identified are: energy; industry; agriculture and food; forests and land use; transport; and buildings and cities.
