How investors are stress-testing catalytic models to make nature-positive production a commercial norm
Deforestation is not a distant environmental concern; it is an immediate business risk. It disrupts supply chains, causes yield shocks, and can reduce market access in the face of tightening regulations. Yet despite clear signals from policymakers and markets, capital is still failing to move at the speed and scale required to halt deforestation within global commodity supply chains.
Deforestation is not a CSR issue — it’s a material business risk
Mobilising Finance for Forests (MFF), a $300 million blended investment facility funded by the UK and Dutch governments and managed by FMO, is working to change that. Through its Learning, Convening & Influencing Platform (LCIP), MFF released a white paper – Investing in Deforestation-Free Supply Chains is a Strategic Imperative at the London Climate Action Week. The paper argues that building deforestation-free commodity supply chains is both a climate necessity and a commercial safeguard. Its central thesis is that closing the investment gap requires rewiring finance to deliver stronger farmer incentives, better risk mitigation, and greater alignment across supply-chain actors to enable forest-positive production.
Building on the paper’s findings, MFF convened two working sessions, first in London, then in Berlin. The London session, held during Climate Action Week, was a high-level technical exchange with around 30 participants. The Berlin follow-up, held ahead of the GIIN Impact Forum, took the discussion deeper. About 25 participants from DFIs, commercial funds, asset managers and government agencies came together to stress-test the conditions and design features of catalytic instruments needed to scale commercial investment in deforestation-free supply chains. Several proven models are already delivering results from the MFF portfolio. The Responsible Commodities Facility (RCF), for instance, channels green-bond capital into concessional loans for deforestation-free soy production in Brazil—over 180,000 tons produced in 2023–24 while conserving an estimated 43,000 hectares of native vegetation. Initially backed by UK supermarkets Tesco, Sainsbury’s and Waitrose, it is now preparing its 2025–26 cycle with commercial investors. The &Green Fund offers another example of scale in action. The Fund finances large agri corporates in major commodity supply chains to tackle deforestation in a way that is commercially viable and replicable. The Fund has expanded to $400 million under management, backed by public and private investors.
Participants, in three working groups, examined first-loss capital, guarantees and off-take agreements and how each could be refined to mobilize commercial investment more effectively.
The Berlin discussions underscored that while the most common de-risking tools are in place, they are not yet delivering the scale or impact needed to drive finance towards deforestation-free models.
Here are three priority actions that can make these instruments faster to execute, more inclusive, and better aligned with real investment needs.
First loss capital often comes with significant barriers to entry: funds often need a track record to access first-loss support but also can’t build one without it.
Action: Catalytic finance providers can play a critical role by using first-loss and other forms of concessional capital to incubate early or pilot projects, helping them become investment-ready and absorb commercial funding later. Commercial investment could be better mobilized if first loss facilities were more predictable, with transparent terms on coverage, duration and exit within and across sectors.
Guarantees have the potential to be a highly effective tool for de-risking private investment, but their use is often constrained by complex processes and reliance on public facilities.
Action: The next step for guarantees providers is to develop products tailored to smaller investors and commodity traders working directly with smallholders to broaden access. Corporate-backed guarantee pools could complement public mechanisms, mobilise additional capital and align corporate incentives with supply-chain resilience.
Long-term contracts are often misaligned with how farmers and traders operate. For farmers, flexibility often matters more than long term fixed commitments. Traders remain essential partners, providing market access, technical assistance and on-farm monitoring alongside finance.
Action: Corporates can shift towards incentive-based agreements that pay producers for verified sustainability outcomes. True commitment lies not in contract duration but in delivery — ensuring sustainable practices are the most profitable choice each season.
Flexibility at the ground level and standardisation at the top — that’s how we scale
The emerging consensus from these discussions is that the building blocks of a forest-positive financial architecture already exist. The question is whether investors can move quickly enough to capture the opportunity before the pace of regulation, markets, and ecosystems change overtakes them.
This was a conversation among investors, funders and practitioners tackling the same challenge from different angles.
Watch this short video below to hear what the participants took away from the Berlin session: new insights, partnerships and how they plan to turn ideas into action.
The MFF Program is delivered by FMO and funded by the government of the United Kingdom and the government of the Netherlands.