news - UK and Dutch Development Bank FMO partner to Mobilise Finance for Forests

To mark the upcoming International Day of Forests, the UK government is launching a new £150 million ‘Mobilising Finance for Forests’ programme which is aimed at unlocking private sector investment in projects that protect and restore tropical forests across Africa, Asia and Latin America. This new International Climate Finance (ICF) initiative will be managed by FMO, the Dutch entrepreneurial development bank.

According to the Intergovernmental Panel on Climate Change (IPCC), one fifth of global greenhouse gas emissions are the result of deforestation, agriculture and other unsustainable land uses, with valuable natural resources being cleared away at a rapid pace to make way for grazing animals and to grow crops. Investing in sustainable land use could provide up to one third of global greenhouse gas mitigation required internationally by 2030 and is essential to reach the Paris Agreement ambitions.

The Mobilising Finance for Forests (MFF) programme will use a blended finance investment approach to combat deforestation and other environmentally unsustainable land use practices that are contributing to global climate change. Through MFF, FMO will allocate up to £150 million across three to five investment funds and direct clients operating in selected tropical forest regions in Africa, Asia and Latin America. A Technical Assistance Facility will support the programme’s fund managers and direct investees post-investment, to scale proven, bankable projects. Through adaptive management and learning this facility will also gather ‘blueprints’ of successful sustainable land-use and forestry investment models, to be disseminated throughout the landscape and the wider investment community to promote catalytic change. 

The programme’s investments will, over time, contribute to a reduction in deforestation rates by stimulating the growth of private sector investment in markets that create value from standing forests or incorporate forest protection into agricultural production. 

Scaling up forestry investments for carbon negative emissions

FMO already has a strong track record of investing in a range of forestry and sustainable land use projects and businesses in developing countries and is looking to build a portfolio of carbon negative investments in forestry and sustainable land use projects. We will leverage our knowledge, network and own funding to deliver MFF’s objectives as well as help FMO align its portfolio with the 1.5 degree pathway of the Paris Agreement.

Linda Broekhuizen, CEO a.i. at FMO: “I am proud that FMO is entrusted with the management of another International Climate finance Initiative. It is exciting for us to partner with the UK government to accelerate the development of the Forestry and Sustainable Land Use sectors in developing countries. The Mobilising Finance for Forests programme will help safeguard our planet’s precious biodiversity whilst creating green jobs and supporting global efforts to build back greener.”

UK Energy Minister and International Champion on Adaptation and Resilience for the COP26 Presidency, Minister Anne-Marie Trevelyan, said: “The impact of deforestation is devastating – on those vulnerable rainforest communities, and on global efforts to combat climate change.  And the health of the earth’s tropical forests is critical to the health of our planet – we need to do all we can to protect and preserve this vital ecosystem. 

“Today’s new fund will ramp up investment in projects on the frontline of this effort, while also giving financial institutions the confidence they need to invest, which could attract and secure as much as £850million from the private sector.”