As global demand for wood rises, deforestation continues to drive climate change and biodiversity loss, especially in vulnerable communities. Mobilising Finance for Forests (MFF) is tackling this challenge by channeling private capital into responsibly managed forest projects, with a recent evaluation confirming promising early results and offering key insights to strengthen future impact.
Deforestation is one of the main causes of climate change and biodiversity loss, all of which disproportionately and adversely affect vulnerable communities.At the same time, demand for wood is increasing. Hence, there is an urgent need to increase more responsible managed forest plantations. Mobilising Finance for Forests (MFF) is a program designed to bring in more private capital into Forestry and Sustainable Land Use. MFF was launched in 2021 with support from the UK government and the government of the Kingdom of the Netherlands joined in 2024 as a second funding partner. To better understand how MFF is progressing towards its objective of deploying concessional funding and technical assistance into high-risk, high-impact projects in Forests and Sustainable Land Use (FSLU), FMO commissioned the consulting company ADE (Analysis for Economic Decision making) to carry out an early-stage evaluation in 2025. Using a theory-based, mixed-methods approach, findings reveal encouraging early results and critical learnings which are valuable for optimizing future investments and operations in FSLU.
By combining concessional finance, technical assistance, and strategic partnerships, MFF helps to de-risk investments while demonstrating viability, profitability and impact potential of these projects. MFF is also a crucial component of FMO’s broader ambition to build an up to EUR 1 billion forestry portfolio by 2030 and contribute to achieving global net-zero goals by 2050, with an objective to prove that impactful projects which support climate mitigation, biodiversity and local livelihoods can be scalable and commercially attractive.
As a pioneering program operating in complex and underdeveloped markets, it is crucial to monitor MFF’s relevance, effectiveness, and operational performance in a timely manner. The goal of this evaluation was to understand what is working, what can be improved, so that informed decisions can be made based on the lessons learned. The evaluation followed a theory-based approach combining quantitative and qualitative methods, including desk reviews, portfolio analysis, evidence mapping, interviews, and field visits to Ecuador and Colombia.
This evaluation shows MFF’s early-stage implementation is positive. Even though the evaluators acknowledge that FMO needed more time than initially planned to build up the portfolio, the innovative nature of the program has effectively laid the groundwork for future replication and mobilization. This is best exemplified in the two case studies included in the report: Amazonia Nativa S.A.S. is a forestry and agriculture pilot project in Colombia which is advancing people’s knowledge in native forest species management, with plans to scale from 511 to 7,500 hectares by 2030. Ecua America Teak on the other hand shows how sustainable teak can generate non-financial benefits together with healthy financial returns. Both cases show that sustainability can lend itself to financial viability and scaling.
The program aligns with UK climate priorities and FMO’s forestry strategy. Its outputs have met or exceeded goals like stakeholder engagement and developing bankable opportunities. At the time of finalizing the evaluation (December 2024), over USD 240 million in public and USD 250[1] million in private finance was mobilised. MFF’s concessional instruments, including debt, equity, Development Contributions (DCs) and Technical Assistance (TA), were seen as highly effective, though the progress of deployment has been slower than expected. In addition, strong Environmental, Social and Governance (ESG) and Gender and Social Inclusion (GESI) frameworks are embedded across the portfolio.
FMO is well-positioned to address challenges in the sector. Challenges for forestry investments in targeted regions include structural risks like challenges with respect to institutional capacity , infrastructure and low market demand, in addition to longer-term investment horizons. Despite the challenges, the market outlook is promising, with rising demand for sustainable forest products, deforestation free commodities and high-quality carbon offsets. MFF’s additionality was also rated high, given the need for long tenors and scarcity of private capital in the FSLU sector, which is characterised by high risks and low returns.
This evaluation provides valuable lessons for both FMO and the wider climate investment community. It confirms the importance of concessional funding in supporting high-risk and early-stage projects, while also highlighting the need to align investment types with appropriate investors, as different sub-sectors within FSLU may attract different types of capital. Moreover, strengthening ESG and GESI practices and ensuring technical assistance is responsive to diverse project needs are also indispensable.
We are grateful for the effort made by the evaluators and for the continued collaboration with our donor partners. The evaluation confirms that we are on the right track, while also offering guidance to improve delivery in the coming years. We will take these points forward and remain committed to mobilizing greater finance for Forestry and Sustainable Land Use.
[1] As acknowledged in the report, 2024 figures were preliminary and subject to change. In fact, final 2024 figures reflect private finance mobilization of USD 304 mln.
