Investing meaningfully to protect the Amazon rainforest

With the Amazon rainforest absorbing two billion tons of carbon per year, and current rates of deforestation such that over a quarter of the biome will be lost by 2030, urgent action is needed to stop deforestation. Work by the voluntary sector alone will not be enough; business must be involved, too. Recent years have seen promising work in the sustainable investment space, but greenwashing remains all too common.

With a background in financial services, Pajani set out to demonstrate that investing sustainably doesn’t have to mean sacrificing profits. Along with Aldo Soto, a biologist with 15 years’ experience supporting indigenous communities in the Amazon to protect their lands from illegal deforestation, they set up Amazonia Impact Ventures (AIV), which selects enterprises that can use capital investment to increase financial returns, protect the forests, benefit their community and deliver a return to investors. The company directly addresses 6 of the UN’s Sustainable Development Goals and intend to address more as they scale up.

Using sustainable finance to support indigenous communities 

Pajani highlights that indigenous communities often struggle to access traditional bank finance, in part due to prohibitively high interest rates and a lack of collateral. AIV supports these communities by making sustainability linked loans available for pre-harvest, capex and marketing for responsibly-grown commodities. These loans provide results-based incentives to meet environmental and social targets such as improving land use, reducing deforestation, and improving farmers’ incomes.

Alongside this trade finance, AIV provides technical assistance to improve productivity and works closely with indigenous communities to provide the finance needed to expand agroforestry and reforestation on their land via grant funding normally provided by foundations. Technical assistance is also given for finance and legal representation to protect their land from deforestation and illegal logging where needed.

Consumers and companies are increasingly interested in where their produce comes from and whether it has been ethically and sustainably sourced. AIV works to link them with indigenous producers adopting sustainable, transparent practices, thus reducing the number of linkages in the supply chain and improving the share of profit retained by producers. AIV lends to farmers’ cooperatives to enable them to boost the collective power of the farmers to source buyers, negotiate better prices and adopt more efficient production and processing practices.

Demonstrating impact 

All of AIV’s investments are selected on the basis of their contribution towards protecting the Amazon rainforest and improving the wellbeing of indigenous communities living in the Amazon. Having invested over $1 million of internal capital in its first year of operation, influencing economic activity in around 100,000 hectares of rainforest, AIV hopes to raise another $25 million to scale up its activities and attract like-minded investors to protect much larger areas of the forest.

AIV was selected by the World Economic Forum as a winner of the Tropical Forest Commodities Challenge as a top innovator helping to reduce deforestation, and received the award from Lord Zac Goldsmith at COP26. The award is supported by the Tropical Forest Alliance, the UN Climate Change Conference UK 2021, and the Forest, Agriculture and Commodity Trade (FACT) Dialogue.