IFACC 2023 Market Report

Closing date: December 2023 Disbursed amount: US$ 2.4 MM Partners: Vert Capital, Natura, FUNBIO Overview: The Living Amazon Mechanism consists of two mutually reinforcing instruments: the issuance of a CRA and the set-up of a Technical Assistance facility called Enabling Conditions Facility (ECF). The CRA is structured, issued, and managed by Vert and backed by the Agribusiness loans originated by local credit cooperatives and associations to finance working capital and input purchases of smallholder farmers and extractivists in the supply chain of Natura in the Amazon. The objective of the project is to strengthen Amazon’s socio-biodiversity organizations, businesses, and supply chains, promoting a development model in the Amazon that combines upfront finance and conservation with income generation for local communities and which will serve as a demonstration model to continue attracting more off-takers and market investments by other investors and donors. Structure and terms: The CRA acquires the loan portfolio of the cooperatives and securitizes it in the local capital markets. The loans will finance sociobioeconomy activities in the Amazon to deliver the intended supply of products. The underlying assets (the Agribusiness loans) are formalized as Financial CPRs (Rural Producer Banknotes), have financial settlement, and are issued electronically by the cooperatives, which in this case, are Natura’s suppliers. These suppliers are initially composed of 10 agro-extractivist associations or cooperatives in the Amazon, formally constituted. Expected impact: “Mecanismo Amazônia Viva” plans to increase the production and revenue volume of more than 40 agro-extractivist cooperatives and associations and benefit more than 10 thousand families in the region, fostering territorial development in around 16 territories while contributing to the conservation of over 3 million hectares of native forests. To do so, it provides the agro-extractivist cooperatives and associations with working capital and investments to lead a more efficient operation, in addition to promoting through its Enabling Conditions Facility (ECF) managed by FUNBIO socio-environmental programs that help solve structuring problems in territories and strengthen the protagonism of young people and women, for example. Scale opportunities: Initial investment can be expanded in future issuing considering the potential of other communities and non-timber forest products. The product was also selected by the first BNDES blended finance call for proposals.10. LIVING AMAZON MECHANISM (“MECANISMO AMAZÔNIA VIVA”) © Yurika Hidaka amazon ifacc 2023 USD 2.4 MM 33 IFACC 2023 MARKET REPORT