Brazil: a major market poised for nature investment boomBrazil will also play a crucial role in meeting rising global food demand. A 35% growth in demand for Brazilian beef is anticipated in the next two decades, underlining the imperative and the opportunity to transition to regenerative agricultural practices. The country currently has over 100 million hectares of degraded pastures available to restore for agricultural and livestock expansion – sufficient to meet the anticipated increase in production until 2040 without cutting a single tree.39 There are also significant opportunities to implement agroforestry systems to restore native vegetation: 9 million hectares in the Amazon biome and 4 million in the Cerrado.40 2. Maturing financial markets Brazil has an increasingly mature and sophisticated financial market. This solid foundation positions the country well to attract and manage large-scale NbS investments. – Brazil offers various structured investment vehicles that provide routes for international capital investment in NbS. Examples include: Fundo de Investimento em Participação (FIP), Fundo de Investimento em Direitos Creditórios (FIDC), and Investment Funds in Agro-Industrial Production Chains (FIAGRO), which build on 25 years of development of alternative assets and more than 10 years of sustainability focused products. – New innovative financial mechanisms are also being developed to foster finance flows to NbS, such as: Payment for Ecosystem Services, farm loan products, nature bonds, grants for technical and financial assistance and other schemes, such as offtake agreements, barter schemes, alternative guarantees and finance for certification efforts (see section 2).41 – The derivatives market in Brazil has daily trading volumes around USD$7bn, with its liquidity and depth helping manage risks associated with large-scale investments.42 3. Increasingly supportive government policy Brazilian government policies are beginning to drive investment to protect, restore and sustainably manage nature, with the aim of transitioning the food system and developing a thriving ‘bioeconomy’ in the country and beyond.43 Emerging and developing economies account for an estimated 90% of the investment opportunity in protecting and restoring nature from 2020-2030, but they receive only around 20% of the financing today.34 And the vast majority of that financing is domestic. The ‘bioeconomy’ is commonly used to describe the process of converting renewable biological resources into different outputs. As such, the term is used to reflect and better understand the two-way interaction between nature and society – indicating both society’s dependence on nature, and the impacts of human activities on biodiversity.46 For example, in Brazil, the ‘New Economy for the Brazilian Amazon’ report states that the bioeconomy in the Amazon should evolve in harmony with the forest and the rivers, ensuring it adjusts to the biome’s biocapacity. Notably, the bioeconomy is increasingly coupled with agrifood system transformation.47 What is the ‘bioeconomy’? The bioeconomy should therefore be understood as an emerging and prominent field, offering various transformation pathways for countries depending on the socio-economic and ecological context. While the pathways may differ, the bioeconomy can be framed around three thematic areas48: 1. Research, development and innovation (biotechnology) 2. Sustainable use of biodiversity (bioresources) 3. Bioeconomy as an enabler of sustainable development (bioecology) Brazil is promoting the bioeconomy topic at the G20 to build a common understanding and definition of high-level principles on the issue, and has defined three work streams which correspond to the areas above.49This presents a huge, as yet untapped, opportunity in emerging and developing economies to unlock capital and attract Foreign Direct Investment for projects that can offer commercial returns, reduce emissions and increase biodiversity while empowering local communities and Indigenous Peoples. As the largest potential market for NbS investment on the planet, Brazil can act as an emerging model for countries in the region and the world to follow. WEF estimates that the Cerrado region alone could provide up to USD$72bn a year for Brazil’s economy, by boosting sustainable production and creating value from natural habitats.35 90 % 20 % of nature financing today is flowing to emerging and developing economiesof the nature investment opportunity is in emerging and developing economies Three key factors are making NbS in Brazil increasingly attractive to domestic and international investors. 1. Large and diverse investment potential Brazil has the greatest potential in the world to abate or sequester carbon using natural climate solutions. McKinsey estimates a total abatement potential of 1.2-1.9 GtCO 2e/year, through measures to avoid deforestation, restore natural ecosystems and transition to regenerative agricultural practices.36 To put that into context: it’s significantly more than the total emissions of major economies such as Japan (1.06 GtCO 2)37, and represents twice the annual emissions produced by the aviation sector globally (c. 800 MtCO 2).38Source: Independent High Level Expert Group on Climate Finance, A climate finance framework: decisive action to deliver on the Paris Agreement, November 2023.Through the Ecological Transformation Plan and the Pasture Recovery Program, both launched in 2023, Ministries are aligning the Government agenda around public policies, private investments and structural partnerships which aim to: – Recover 40 million ha of degraded pasturelands by 2035 – Achieve zero deforestation in Amazon by 2030 (PPCDAM) – Incentivize livestock farming and sustainable grain production with reduced pressure on critical deforestation areas in Cerrado by 2027 (PPCERRADO) – Restore 12 million ha of native vegetation by 2030 Meanwhile, earlier this year, the Brazilian Development Bank (BNDES) and GFANZ established the Brazil Climate & Ecological Transformation Investment Platform, a first-of-its-kind bespoke country transition platform to advance Brazil’s ambitious green growth agenda as set out in the Ecological Transformation Plan (ETP). Under the oversight of the Brazilian Government, the Platform will create a cross-sector capital mobilization platform that will foster public-private collaboration to achieve the right blend of public and private finance to support the Government’s priority projects in line with their climate transition plans, which include Nature-based Solutions. The Brazilian government is also increasingly working beyond the country to build momentum for investments into nature. Brazil has placed the bioeconomy on the G20 agenda as part of its Presidency, with the aim of promoting a common understanding on the relationship between nature, society, the economy, and biodiversity.44 Brazil has also launched the Ecological Transition Pact in August led by its three State Powers promoting the importance of investments in nature. At the same time, The Tropical Forest Forever Facility (TFFF) and The Tropical Forests Mechanism (TFM) are being championed by the Brazilian government, with the aim of rewarding tropical forest countries for protecting their natural capital with explicit payments for conservation and restoration.45 These targeted government policies aim to help spur and unlock further private sector investment from domestic and international investors. 14 Scaling nature finance now 15Foreword References 02 The Brazilian market – accelerating now03 Unlocking the next phase of growth in Brazil and beyond Executive summary01 The opportunity and the imperative

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