Scaling nature finance now The opportunity for investors in Brazil and beyond

The opportunity The imperative Nature-based Solutions are investable today, and the pipeline of investable projects is growing. Capital for Climate has mapped over USD$21bn of investable projects to date,11 and investors on the platform are already making strong returns in NbS within agriculture and forestry.12 In parallel, Agroforestry systems have been shown to generate between USD$300 and USD$1,500 per hectare annually, significantly outperforming extensive cattle ranching, which yields USD$50 to USD$100/ha/year.13 While the NbS market has been spearheaded by specialist investors, as returns potential grows major international financial institutions such as HSBC, NATIXIS, Schroders and Lombard Odier are moving into the market.14 NbS also provide a strong tool for diversifying portfolios, given low correlation with broader market trends15. Generate strong risk-adjusted returns for investors: USD$21bn of investable projects on Capital for Climates NbS platform to date22023 was the hottest year on record, and evidence to date suggests a very high probability that 2024 will be hotter still.24 Another year of deadly floods, wildfires and unbearable heat waves has made the growing cost of climate change plain to see. Biodiversity loss is deepening the crisis and, without action, could amplify climate-related economic risks costing businesses, economies and supply chains by USD$5tn by 2050 .25 Deepening climate crisis: USD$5tn amplification in climate-related risks1 UNEP estimates every dollar invested in nature-related sustainable development goals can generate USD$20 of economic returns.16 For farmers, BCG suggests switching to regenerative agricultural practices can generate a 15-25% 10-year return on investment, after a 3-5 year transition period.17 Designed well, NbS empower local communities and Indigenous Peoples, who are critical to success (see section 2).18 Accelerate sustainable development for countries and people: 15-25 % ROI over 10 years31/5 of the world’s countries are at risk of their ecosystems collapsing.26 64% of rainforests have already been destroyed or degraded in the industrial era.27 Wildlife populations – mammals, birds and fish – have declined by almost 70% since 1970.28 These trends severely threaten food provision, water security and regulation of air quality that are vital to maintaining healthy communities and stable economies.Collapsing ecosystems: 70 % decline in wildlife populations since 19702Our land and oceans are invaluable carbon sinks – currently absorbing half of man-made carbon emissions. By investing in nature, this capacity can be enhanced, leading to a virtuous cycle. Forests and land alone can deliver up to 30% of the world’s climate mitigation potential until 2050.19 Investing in nature is also a cost-effective way to enhance physical and economic resilience to climate change – with mangroves proven to be an excellent flood defense,20 or forests in Brazil demonstrably improving water and food security for local communities.21Mitigate climate change, safeguard nature and build resilience: 30 % of mitigation potential1 Food systems are one of the largest contributors to the climate and nature crises, responsible for a third of global GHG emissions,29 70% of freshwater use30 and 80% of biodiversity loss.31 At the same time, hundreds of millions of people are hungry and billions of people suffer from malnutrition, unable to access nutritious, affordable, diverse and sustainably-produced food.32 Climate change and biodiversity loss are compounding the challenge: major crop yields are predicted to fall by 3-7% for every 1°C degree increase in temperature33 The World Bank finds more than 75% of crops rely on pollinators, many of which are disappearing.Failing food systems: 1/3 of global GHG emissions3 Food demand is expected to grow by 50% by 2050.22 Our supply of food is highly dependent on a stable climate and natural world. The World Bank estimates that transitioning the agrifood system offers a huge, untapped, opportunity: halving emissions by 2030 would require around 50% of the amount (USD$260bn) spent annually on environmentally harmful subsidies and yet deliver more than USD$4tn in benefits, including improvements in human health, as well as enhancing food and nutrition security.23 Enhance food security: USD$4tn in wider benefits4 12 Scaling nature finance now 13Foreword References 02 The Brazilian market – accelerating now03 Unlocking the next phase of growth in Brazil and beyond Executive summary01 The opportunity and the imperative