Investment Thesis – 2023

TROPICAL REGIONS WITH HIGH RISK OF DEFORESTATION

a. Production of important commodities in tropical forest geographies – palm oil, soy, cattle, rubber for example – is often extractive and leads to deforestation. Tropical deforestation is responsible for 20-25% of global emissions, and results in major biodiversity losses.

b. &Green seeks investment opportunities in tropical forest geographies and sectors where deforestation is a problem, to change business models from extractive to regenerative. It selects those jurisdictions where the problem is acute and that have the regulatory framework to complement &Green investment through its unique “Jurisdictional Eligibility Criteria” process.

c. Selected jurisdictions will have reduction targets for deforestation, and strategies and systems in place to credibly and transparently track deforestation trends. Indonesia for example has over the last years reduced deforestation through regulation and market pressure on producers.

COMMODITY SUPPLY CHAINS

a. Ecosystem change is driven by a complex combination of different factors, environmental, regulatory, economic and/or social, depending on the commodity.

b. &Green analyses drivers of deforestation and within the identified commodity value chains the factors that lead to deforestation, defining generic pathways where commercial financing can help in the transition of the sector towards sustainability.

c. In Colombia for example, economic development needs and increasing consumption of beef create incentives for increasing cattle ranching. &Green identifies where such expansion is best aligned with national development and forest protection plans and what business models allow for sustainable expansion.

PRIVATE SECTOR ACTORS

a. Deforestation happens at the beginning of supply chains, often through actors not directly accessible for international lenders (or even local banks).

b. &Green identifies the actors that provide access to actual landowners – these can be the local banks financing agribusinesses, traders or larger landowners with a lighthouse role or aggregating commodity volumes in a combination of their own production and third party suppliers.

c. FS, the Brazilian grain trader in Mato Grosso is an example of how No Deforestation commitments can be implemented in the upstream supply chain by &Green investing in a local trader.

INNOVATORS

a. Not all private sector actors are willing to change, or accessible and suitable for international lenders.

b. &Green identified suitable actors on the ground on the basis of reputation, bankability, financial solidity, willingness to change and willingness to share risk. In principle these can be local landowners such as plantation companies or commercial farms, supply chain actors like grain traders or local banks financing agribusinesses.

c. In Brazil, &Green is financing a large farming business (Roncador) that has a very strong track record on innovation, that is financially very solid and where the owner has a strong intrinsic motivation to farm sustainably.

BLUEPRINTS FOR OTHERS TO FOLLOW

a. The sustainability transition of tropical commodity production requires scale to be impactful.

b. &Green designs, in collaboration with its clients, blueprints with innovators that set the examples that can be replicated and scaled. This transformational change impact is at the heart of any &Green investment rationale, together with the financial opportunity.

c. In Brazil, &Green is investing in the traceability of Marfrig’s upstream cattle supply chain, which will cover [1/3] of the beef production of Mato Grosso – the tools and procedures developed with &Green funding can be replicated by other companies, and will be used by Marfrig in other jurisdictions.

&GREEN TRANSACTIONS

a. Transactions in emerging markets agriculture carry specific risks and the impact envisaged must be ensured through careful implementation of transition plans on the basis of operational excellence and on a financially sustainable basis.

b. &Green designs loan covenants that ensure loan performance during the tenor of the loan as well as delivery of the impact required to stimulate the transition, as well as corrective action plans that will mitigate downside risks both for environmental, social and governance risks as well as financial risks.

c. &Green enters into a “Landscape Protection Plan” with each company it invests in that defines milestones and targets for the impacts that it has identified will drive the company’s transition to sustainability, and it prescribes and Environmental and Social Action Plan in line with best practice standards. The delivery of impact is monitored on the ground, independently, and through satellite monitoring.

SECTOR IMPACT IN THE COUNTRY

&Green’s investments are with local or regional market leaders, and at a scale that provides meaningful blueprints, in commercially sustainable models, with outsized impacts on important sustainability topics, such as climate benefits and protection of forests. Through its high level of transparency, &Green also allows for sectoral learning. &Green also tracks the performance of its investees relative to the sector they operate in, allowing to showcase sector outperformance over time.

SCALABLE IMPACT, BLUEPRINT PROOF OF CONCEPT

Successfully demonstrating impact and business performance of &Green investees will lead to replication and therefore scalable impact. &Green designs its projects so they can provide these blueprints for others to scale – both with the support of &Green as well as, ultimately, through mainstream financial markets as the blueprints are derisked and attract more and more capital.

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