Global Forest Bond

The destruction of native biomes is a main driver in many of humanity´s largest challenges in the 21st challenges, such as biodiversity loss and climate change.

Biome loss is caused by the fact that natural ecosystems are not included in the economy: their services are not paid for, and they generate no revenue, therefore, there is no financial incentive for their protection.

Global Forest Bond is using the financial instruments developed for Brazilian agribusiness, but to grant the sale of yearly "harvests" of ecosystem services. This way, biomes can generate revenue and revert the trend of deforestation in tropical rainforests.

By using state of the art audit platform, we can provide a cheap and scalable solution to assess the environmental state of a forested area and provide that information to buyers across the globe with high level of certainty and confidence.

Two thirds of Brazil´s area is covered by native biomes, ranging from two of the largest tropical rainforests, grasslands, savannas, mangroves, and wetlands. Those areas provide invaluable services to all of humankind, such as carbon capture and storage, biodiversity protection, water cycle regulation and more.

Despite the undeniable value of those biomes, they generate no revenue for the communities around them or the country as a whole. This creates a pressure for the destruction of the biomes and increase in farmland.

In Brazil alone that’s more than 5.6 million km² of land biomes at risk due to lack of financial incentive or integration to the economical system. This also reflects on the people that live around those biomes: more than 20 million Brazilian live in the Amazon region, which has the lowest HDI and income in the country. Providing those people with payment for the environmental services the biomes in which they live offer to the world can at the same time tackle huge environmental challenges, as well as pressing social ones.

Biodiversity and natural biome loss are not exclusive to Brazil. Our solution can be used in many developing countries, mainly in southeast Asia and sub-Saharan Africa.

Our solution for the payment for environmental services has innovations in two fronts: a financial market one and a technological one.

On the financial market side, we innovate in treating the preservation of biomes as an agricultural activity, with "yearly harvests" of environmental services as an output. This allows us to use the same financial instruments that agribusiness companies in Brazil use, but to pay for the preservation of areas of native flora and fauna. With this, we can take advantage of a robust institutional framework that includes contracts, regulations, and transactions trough the São Paulo stocks exchange.

On the technology front, we have partnered with KPMG, a Big-4 auditing firm that operates a nationwide platform for auditing crops. We adapted their platform in order to assess environmental services, with the robust backoffice already in place that makes it possible for us to ensure the buyers of the rights to the environmental services that all the information on the state of the biomes is trustworthy and up to date. We provide metadate to show that pictures and measures were taken inside the audited area and in a set date and time, avoiding fraud and double counting.

The main beneficiaries of a scalable solution for the payment for environmental services can be divided into three groups:

i. Farmers and landowners

ii. Indigenous and traditional communities

iii. Governments

Brazil has strict land-use laws, which means that about half of the preserved biomes in the country are in private lands (i). This includes from the small-scale subsistence farmer to large landowners. For this group, mandatory preservation areas are seen as strict liabilities: they limit production, generate no income and farmers can face charges even if other parties invade their lands to steal wood or burn it.

Having an extra revenue stream linked directly to the conservation efforts would make landowners more inclined to have a larger portion of their lands as conservation areas, as well as making it possible for them to invest in the adequate protection of the biomes in their properties.

This is especially challenging for small farmers, since most environmental services projects depend on large scale and with huge upfront payment for certification. We believe are developing a technology-based solution that will decrease the cost of issuance and democratize the access to the environmental services market in Brazil and the world.

There is no talking conservation without considering indigenous and traditional communities (ii). In Brazil, their reserves hold a significant part of native forests, but most lack access to basic goods and services, such as water, sanitation, education, and healthcare. Having a revenue stream camming from the environmental services they already provide is the best way for this communities to invest in the much-needed infrastructure that will allow them to prosper. This is also truth in many countries around the globe, where native populations are central to conservation efforts and need to be compensated as such to avoid pressure from ill-indented actors.

Our solution can also interest national and local level governments (iii) since public parks and preserves are also major preservation areas. With this revenue from their environmental assets, governments can finance conservation efforts, as well as the formation of new parks.

Data collection is one of the centerpieces of Global Forest Bond´s solution. We have a partnership deal with KPMG and have adapted a platform they used to audit soybean crops for collecting data on environmental quality of biomes in Brazil.

We aim at leveraging KPMG´s proven back-end software with our expertise on environmental services to drastically lower the costs of assessments and improve the quality and security of the information provided to costumers, thus allowing for a low issuance-cost and low transaction-cost instrument to reach truly nationwide scale and global scale environmental services trading platform.

We have past the prototyping phase by testing our solution in conversation with key players in the sectors relevant to our business, including the financial sector (B3 stocks exchange, Bradesco, and Santander), farmers (GTPS - Roundtable for sustainable beef) and industry (Coalizão Brasil Clima, Floresta e Agricultura).

We are working on pilot projects in the meat sector (Grupo Roncador and AgroSB), soybean (Vision Brasil), mining and logistics/transportation. We believe at least three of those pilots to be over by the end of 2021 and can serve as learning experiences to leverage the growth and scale phases of the startup

Our first innovation is on treating the preservation of biomes as an agricultural activity, which results in annual "harvests" of environmental services. This allows us to take advantage of the robust institutional framework of the agribusiness sector in Brazil, bringing to the table legal certainty, good contracts and access publicly traded financial instruments in Brazil, such as rural product notes (CPR) and agribusiness receivables (CRA).

This new approach to the problem of creating revenue from preserved biomes will help integrate the ecosystem services with the activity of the companies that want to offset their impact thought contracts and instruments they already use. Nature is easily integrated as an input that companies tap into for their production, internalizing externalities and having a one-stop shop for environmental needs.

The second innovation is in adopting state-of-the art auditing technology, developed in partnership with KPMG, to assess and communicate the contribution that every individual piece of land provides: carbon capture, carbon storage, water cycle, endangered species and more.

Nowadays, most projects that try to generate revenue from preservation rely on experienced consultants and renowned specialists, making them expensive and only accessible to players with large scale projects.

Our platform will change the main vector of the trust in this environmental services market to the technology that helps the gathering of the information. This will make it so that local technicians and automated tools such as drones can have everything that is necessary to issue a world-class bond at a fraction of the current cost.

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We are measuring the area of biomes issuing forest preservation bonds each year. Since we operate a platform that measures a number of environmental services, we also have metrics such as tonnes of CO²eq captured, tonnes of CO² stocks protected, number of endangered species sighted in protected areas and others.

Those metrics are aligned with SDGs, mainly 15-life on land and 13-climate action, but also affecting 14-life bellow water, 12-responsible consumption and 6-clean water very closely.

3 full time

0 part-time

15 contractors and other

Eduardo Marson was the CEO of Airbus group in Brazil and led helicopter manufacturing subsidiary Helibras. He´s currently on the board of directors of São Paulo state development bank. His experience as C-level executive in high technology and high-complexity businesses is among the largest in Brazil and the world. He also has great experience with corporate governance, which will be important as the startup grows and attracts investors.

Wilson Tomanik worked in the São Paulo Institute for Agricultural Economy and envisioned treating the conservation of biomes as an agricultural activity. He provides the team with deep knowledge of the needs of farmers and agribusiness supply chains.

I (Artur Ferreira) have a background in environmental finances and environmental economics, having consulted for private and public entities on projects in water, sanitation and waste management. I´m also the Autor of "Neither Negationist Nor Apocalypse: environmental economics from a Brazilian perspective", and always try to bring the economic theory behind our product design decisions.

We believe that our founding team has a very complementary skillset and has been able to deliver a very robust startup with an equally robust product, thanks also to our partners in development (KPMG) and environmental consultants (Jataí Capital e Conservação).

There are a number of perspectives that one should take into account when building diverse teams. As said before, the three founders came from diferent industries and with different perspectives. We also have age diversity among the founders (30s, 40s, and 50s).

That said, in such a small team, there are areas where we lack, such as gender diversity, as we are all man. We are working on increasing this by creating a board, which will help us improve our governance and bring in new perspectives. Altought the board is not fully operational yet, we have already decided that 2 of the 3 seats will be held by woman, to further improve diversity of perspectives and help our decisionmaking.

We believe that the scale of challenge we are trying to tackle, to include all native biomes in the economic system, is a huge one, and its solution will depend on joint action of many of the best minds and access to large pools of resources of all kinds: financial, political, technical and much more.

Solve seems like a perfect catalyst for this kinds of change.

Being selected by solve can expose us internationally and help strengthen the trust in our methodology for assessing environmental services, as well as our technological platform. This can also help us attract the capital we need to boost our growth in the next years.

The global network of partners that Solve provides can help us further develop our solutions with science-based inputs and discussions.

We expect that being selected for MIT Solve can open doors to companies that are possible buyers of forest preservation bonds.

We have a large number of farmers from all sizes interested in issuing forest preservation bonds. Our main challenge to scale at this point in time is to make the market see the value in using such instruments to offset their environmental impacts or to attach their brands to the preservation of native biomes.

This needs actions at a public relations level in which we talk to the population at large for them to chose products that carry our forest preservation bonds with them when choosing what to buy, as well as a marketing development level, in which we address needs of companies and show them how buying the rights over environmental services can boost their brands and increase sales.

At the same time, we need to expand from a 3-partner startup to a proper full-fledged company, attracting human capital and adapting our business model accordingly.

We are looking for partnerships with organizations that have experience in scaling environmental solutions to international markets. This can be accelerators, incubators, innovation hubs.

We are also looking for organizations that invest in green techs and can offer smart money to finance our expansion in Brazil and to further markets. This can include names such as Breakthrough Energy Ventures, Sustain VC, Arbor View Capital and many others.

In the technology side, we look for initiatives that can help us scale our forest assessments, which may include satellite and drone imaging, radar and lidar carbon measurement, computational vision applied to the analysis of biomes and nature, among others.