1 00:00:17,130 --> 00:00:20,570 Hi, I'm Helen Avery with the Green Finance Institute, and 2 00:00:20,570 --> 00:00:22,450 you're listening to Financing Nature. 3 00:00:22,810 --> 00:00:26,410 In this first episode of our new season, I'll be joined by Pedro 4 00:00:26,410 --> 00:00:29,290 Miracosta, Founder of Sustainable Investment 5 00:00:29,290 --> 00:00:33,330 Management, SIM and BV Rio to talk about the Responsible 6 00:00:33,330 --> 00:00:39,720 Commodities facility. The expansion of soy was the 7 00:00:39,720 --> 00:00:42,640 biggest driver for the first issue in Brazil, particularly in 8 00:00:42,640 --> 00:00:44,960 the Cihado, and something needed to be done. 9 00:00:45,200 --> 00:00:48,920 Investors can subscribe to the bonds in Vienna, bring the money 10 00:00:48,920 --> 00:00:53,320 to Brazil in less than 48 hours later is already in the hands of 11 00:00:53,320 --> 00:00:56,160 this producers. So producers take our loans, 12 00:00:56,160 --> 00:01:00,720 plant soy, they harvest, they repay us, we pay the investors, 13 00:01:00,720 --> 00:01:04,360 and then we reinvest the the the capital for yet another year. 14 00:01:04,680 --> 00:01:08,240 And this cycle can be repeated for as long as it takes. 15 00:01:14,820 --> 00:01:19,100 Hello and a very warm welcome and thank you for joining us. 16 00:01:19,100 --> 00:01:23,980 It's been a while, but we are back with a full series as part 17 00:01:23,980 --> 00:01:28,540 of our Revenues for Nature initiative with UNEP FI and UNDP 18 00:01:28,540 --> 00:01:30,760 Biofin. If you don't know about this 19 00:01:30,760 --> 00:01:34,280 project, we are working globally to identify models and 20 00:01:34,280 --> 00:01:37,800 mechanisms that are mobilising private sector investment into 21 00:01:37,800 --> 00:01:41,120 nature restoration and nature based solutions to support 22 00:01:41,120 --> 00:01:44,440 target 19 of the Global Biodiversity Framework. 23 00:01:44,760 --> 00:01:48,040 And where possible, we're supporting those models to be 24 00:01:48,040 --> 00:01:51,880 replicated and scaled and building a community of 25 00:01:51,880 --> 00:01:54,920 businesses, project developers, policy makers, and financial 26 00:01:54,920 --> 00:01:58,640 institutions to share learnings and also just work together. 27 00:01:59,160 --> 00:02:02,520 I'll give more details about how you can plug into all of that at 28 00:02:02,520 --> 00:02:04,840 the end. But the purpose of this series 29 00:02:04,840 --> 00:02:09,560 is really to get into the detail of these models and learn about 30 00:02:09,560 --> 00:02:13,120 what's working and how we can take those learnings and apply 31 00:02:13,120 --> 00:02:16,760 them to different regions or different sectors so that we can 32 00:02:16,760 --> 00:02:21,280 move faster towards these targets of mobilising up to sort 33 00:02:21,280 --> 00:02:26,160 of 200 billion a year. So we have about 10 guests lined 34 00:02:26,160 --> 00:02:30,000 up for you in this series, but I wanted to talk to you now about 35 00:02:30,000 --> 00:02:34,280 today's guest, Pedro Miracosta. Pedro, if you don't know him, is 36 00:02:34,280 --> 00:02:37,520 the founder and the CEO of impact investment firm 37 00:02:37,640 --> 00:02:40,480 Sustainable Investment Management, also known as SIM. 38 00:02:40,800 --> 00:02:45,680 And he's also founder of NGO BV Rio that runs the responsible 39 00:02:45,680 --> 00:02:48,880 commodities facility. It's a facility that was set up 40 00:02:48,880 --> 00:02:52,680 a few years ago and it's connecting investment, including 41 00:02:52,680 --> 00:02:57,320 from UK retailers with soy farmers in the Cerrado to 42 00:02:57,320 --> 00:03:00,280 prevent deforestation. And we'll be getting into the 43 00:03:00,280 --> 00:03:04,360 details of that facility. It's super interesting and also 44 00:03:04,360 --> 00:03:07,680 talking about how it could be scaled or replicated. 45 00:03:08,120 --> 00:03:11,560 So without further ado, let's invite Pedro on. 46 00:03:17,640 --> 00:03:20,200 Pedro, thank you so much for joining us today. 47 00:03:20,200 --> 00:03:22,280 It's such a pleasure to see you again. 48 00:03:22,560 --> 00:03:27,120 And I'm really excited to get into the details of the 49 00:03:27,120 --> 00:03:28,920 Responsible Commodities facility. 50 00:03:29,600 --> 00:03:32,920 But before we do that, I think you have such an interesting 51 00:03:32,920 --> 00:03:36,280 background with 25 years of experience in developing 52 00:03:36,400 --> 00:03:40,000 environmental finance models. So would you do us the honour of 53 00:03:40,000 --> 00:03:42,040 just sharing some of that background with us? 54 00:03:42,840 --> 00:03:44,520 Thanks Helen. Pleasure to be here. 55 00:03:45,000 --> 00:03:47,720 Yeah, it's been a long, long journey really. 56 00:03:48,320 --> 00:03:52,520 And somewhat accidental. I got into this whole sector of 57 00:03:52,520 --> 00:03:57,080 environmental finance back in 1991 when I moved to Malaysia 58 00:03:57,080 --> 00:04:01,280 and ended up running what was the the first carbon funded 59 00:04:01,280 --> 00:04:03,920 project in the world. It was a rainforest 60 00:04:03,920 --> 00:04:07,200 rehabilitation project in the middle of the of Saba in 61 00:04:07,200 --> 00:04:11,440 Malaysia, where I spent five years kind of planting trees for 62 00:04:11,680 --> 00:04:15,640 to offset the emissions of a new power plant in the Netherlands 63 00:04:16,040 --> 00:04:20,519 back in the early 90s. I love the idea and you know of 64 00:04:20,519 --> 00:04:23,920 having this payment for an environmental service, a 65 00:04:23,920 --> 00:04:27,680 commercial relationship between those in the global South and 66 00:04:27,680 --> 00:04:30,160 those that needed to offset their emissions in the north. 67 00:04:30,640 --> 00:04:34,800 And that that led me to create a company to replicate what we did 68 00:04:34,800 --> 00:04:38,400 in Malaysia. So we, I started doing a bit of 69 00:04:38,400 --> 00:04:42,000 consultancy, ended up creating a company called Echo Securities, 70 00:04:42,000 --> 00:04:45,760 which did projects all over the world during the Kyoto Protocol 71 00:04:45,760 --> 00:04:49,160 phase. So we had something like 700 72 00:04:49,160 --> 00:04:54,080 projects in more than 50 countries until we open the 73 00:04:54,080 --> 00:04:57,760 capital in in the Learning Stock Exchange in 2005. 74 00:04:58,240 --> 00:05:03,240 But at some stage during the financial crisis of 2008, the 75 00:05:03,240 --> 00:05:05,760 stocks of environmental companies went down the drain. 76 00:05:05,760 --> 00:05:10,240 And I tried to buy the company back and ended up selling it to 77 00:05:10,240 --> 00:05:12,840 an American bank and then moved on. 78 00:05:12,840 --> 00:05:17,080 I mean, and moved back to Brazil after 25 years, created an NGO, 79 00:05:17,080 --> 00:05:21,600 they're called BV Rio, that specialised in creating new 80 00:05:21,600 --> 00:05:25,320 financial mechanisms to tackle environmental challenges. 81 00:05:25,880 --> 00:05:29,720 We looked at the circle economy, created the first system of 82 00:05:29,720 --> 00:05:33,560 plastic credits in the world. Now there's more than 60 around 83 00:05:33,560 --> 00:05:35,400 the, you know, in different countries. 84 00:05:35,880 --> 00:05:42,600 And at some stage we decided to design something to address the 85 00:05:42,600 --> 00:05:45,560 main drive of the first station in Brazil, which is the 86 00:05:45,560 --> 00:05:50,560 expansion of the soy sector. And that resulted in a new spin 87 00:05:50,560 --> 00:05:52,920 off company which is called Sustainable Investment 88 00:05:52,920 --> 00:05:57,880 Management, which is an impact investor that the first thing 89 00:05:57,880 --> 00:06:01,400 that we did was to create a fund focused on the soy sector, which 90 00:06:01,400 --> 00:06:03,840 is called the Responsible commodities facility. 91 00:06:04,080 --> 00:06:07,080 So you touched on the problem that obviously RCF is trying to 92 00:06:07,080 --> 00:06:11,160 solve and that is around deforestation in the Cerrado due 93 00:06:11,160 --> 00:06:14,200 to soil production. But specifically, could you just 94 00:06:14,200 --> 00:06:17,600 explain this sort of exactly what the facility does with 95 00:06:17,600 --> 00:06:22,400 regards to that problem? Yeah, back in 2017, when the 96 00:06:22,400 --> 00:06:27,160 whole kind of civil society in Brazil and and consumer goods 97 00:06:27,160 --> 00:06:32,320 companies that have exposure that that consume soy, they 98 00:06:32,320 --> 00:06:35,840 realised that the expansion of soy was the biggest driver for 99 00:06:35,840 --> 00:06:39,320 the first station in Brazil, particularly in the Sihado, and 100 00:06:39,320 --> 00:06:40,840 that something needed to be done. 101 00:06:41,320 --> 00:06:44,160 That resulted in something called the Sihado Manifesto, 102 00:06:44,160 --> 00:06:48,080 which was a plea for producers not to expand in native 103 00:06:48,080 --> 00:06:52,400 vegetation and also for buyers and traders not to buy from 104 00:06:52,400 --> 00:06:55,720 producers that were opening more Sahara the grassland. 105 00:06:56,200 --> 00:07:00,200 So okay, but how do you make it work? 106 00:07:00,400 --> 00:07:06,320 Agreement stock is cheap, so in order to make farmers to comply 107 00:07:06,320 --> 00:07:09,400 with that, we thought that we needed to find a way of giving 108 00:07:09,400 --> 00:07:14,320 them some sort of incentive. Farmers in Brazil, they can open 109 00:07:14,320 --> 00:07:18,680 up to 80% of their of their land, it's legally authorised 110 00:07:18,680 --> 00:07:22,840 to, to clear 8080% for agriculture and they have by law 111 00:07:23,280 --> 00:07:28,440 to protect at anything between 20 and 35% in this ad. 112 00:07:29,120 --> 00:07:33,640 So in order for them not to do that, to forego with this legal 113 00:07:33,640 --> 00:07:36,040 right to the forest, they need an incentive. 114 00:07:36,560 --> 00:07:41,160 And we thought that perhaps the best incentive would be credit 115 00:07:41,160 --> 00:07:45,440 lines with low interest rates. Why low interest rates? 116 00:07:45,440 --> 00:07:49,280 Because interest rates in Brazil are very high at the moment. 117 00:07:49,280 --> 00:07:53,600 The base rate is 1425%, which is a lot every year. 118 00:07:54,000 --> 00:07:57,080 And if you could provide loans for them, for them to buy the 119 00:07:57,080 --> 00:08:01,040 seeds and fertilisers that they need to plant soil, If you give 120 00:08:01,040 --> 00:08:05,680 them credit lines, which are cheaper, you can, on the other 121 00:08:05,680 --> 00:08:09,600 hand, ask, OK, you can only access these lines if you commit 122 00:08:09,600 --> 00:08:11,720 to zero, the first station, right? 123 00:08:11,800 --> 00:08:15,840 Remember that at that time, the price of carbon, which could 124 00:08:15,840 --> 00:08:19,160 have been another way of financing this, this protection 125 00:08:19,160 --> 00:08:21,880 of the sahadu, but price of carbon was 0. 126 00:08:23,160 --> 00:08:27,120 So OK, so that was the what we wanted to do for the farmers, 127 00:08:27,120 --> 00:08:30,640 you know, provide them financial incentives, but how to fund it? 128 00:08:31,040 --> 00:08:35,320 Carbon prices were zero. We then thought, well, perhaps 129 00:08:35,320 --> 00:08:41,039 if we have a financial structure that can raise capital abroad at 130 00:08:41,039 --> 00:08:44,039 the low cost, that would do the trick. 131 00:08:44,440 --> 00:08:48,280 And that resulted in a structure based on on green bonds, which 132 00:08:48,280 --> 00:08:52,320 are issued in Brazil and registered in the Vienna Stock 133 00:08:52,320 --> 00:08:55,640 Exchange, where this investors can subscribe to the bonds in 134 00:08:55,640 --> 00:08:59,600 Vienna, bring the money to Brazil in less than 48 hours 135 00:08:59,600 --> 00:09:02,800 later is already in the hands of this producers. 136 00:09:03,240 --> 00:09:06,480 So producers take our loans, plant soy that when they are 137 00:09:06,480 --> 00:09:10,760 harvesting, they harvest, they repay us, we pay the investors, 138 00:09:10,760 --> 00:09:14,400 and then we reinvest the the the capital for yet another year. 139 00:09:14,720 --> 00:09:18,240 And this cycle can be repeated for as long as it takes. 140 00:09:18,440 --> 00:09:22,640 So it sounds like there are some key factors that are supporting 141 00:09:22,760 --> 00:09:26,360 the specific mechanism in Brazil, not least being the high 142 00:09:26,360 --> 00:09:29,640 interest rate environment that makes these loans attractive. 143 00:09:29,960 --> 00:09:33,360 But would you mind just clarifying again for us what the 144 00:09:33,360 --> 00:09:36,760 farmers are agreeing to do when they're receiving these loans? 145 00:09:37,240 --> 00:09:40,800 Yeah. In order for us to prevent the 146 00:09:40,880 --> 00:09:45,400 legal deforestation, we need to select farmers that have native 147 00:09:45,400 --> 00:09:48,240 vegetation in excess of legal regulations. 148 00:09:48,680 --> 00:09:53,880 So as I mentioned before, I mean in in the Sahadu, the majority 149 00:09:53,880 --> 00:09:59,480 of the Sahadu farmers can clear up to 80% and 20% is called the 150 00:09:59,480 --> 00:10:01,600 legal reserve, Forest legal reserve. 151 00:10:02,200 --> 00:10:05,280 Certain parts of the Sahadu, this forest legal reserve is 152 00:10:05,280 --> 00:10:10,520 35%, in other parts is 20%. But then we choose farmers, we 153 00:10:10,520 --> 00:10:14,520 select farmers that have an excess of this legal reserve, so 154 00:10:14,520 --> 00:10:21,120 either 40% or 25% and those excess 5% is what they could 155 00:10:21,120 --> 00:10:26,760 legally clear and they forego that that legal rights in order 156 00:10:26,760 --> 00:10:29,680 to access our low interest credit lines. 157 00:10:30,520 --> 00:10:34,080 Thank you for clearing that up. And just to sort of start with 158 00:10:34,400 --> 00:10:37,680 the end, if you will, can you just sort of share with us who 159 00:10:37,680 --> 00:10:41,960 how many hectares have already been conserved through RCF? 160 00:10:42,760 --> 00:10:47,040 This year, Ellen, we are we. In a month's time we will be 161 00:10:47,040 --> 00:10:50,600 closing the funding round for the next crop cycle. 162 00:10:50,960 --> 00:10:54,840 In this next crop cycle, we have some new investors and we will 163 00:10:54,840 --> 00:11:00,240 be closing at $100 million for us to lend to the farmers with 164 00:11:00,240 --> 00:11:05,800 $100 million under management. We will be financing about 50 165 00:11:05,800 --> 00:11:11,720 farming groups with about 250 farms and protecting in the 166 00:11:11,720 --> 00:11:17,280 process about 100,000 hectares of native vegetation, of which 167 00:11:17,760 --> 00:11:22,600 anything between 15 and 20,000 hectares will be this excess 168 00:11:22,600 --> 00:11:24,720 legal reserve that are referred to before. 169 00:11:25,160 --> 00:11:28,240 Because we're protecting this native vegetation, we're also 170 00:11:28,240 --> 00:11:32,480 protecting carbon stocks. So this 100,000 hectares of 171 00:11:32,480 --> 00:11:35,360 native vegetation store in average. 172 00:11:35,360 --> 00:11:38,880 Again, we we only know the numbers after we actually select 173 00:11:38,880 --> 00:11:43,720 the final portfolio, but about 35 megatons of CO2 stocks. 174 00:11:43,960 --> 00:11:49,760 We will also be producing about 300 and 5400 thousand tonnes of 175 00:11:49,760 --> 00:11:58,320 0 deforestation and conversion free soy, which is about 10 176 00:11:58,320 --> 00:12:04,600 percent, 15% of the whole UK footprint soy footprint well 177 00:12:04,800 --> 00:12:06,480 assumption. Well, OK. 178 00:12:06,880 --> 00:12:10,960 So really impactful coming back to the structure of the 179 00:12:10,960 --> 00:12:13,960 facility, if we could start to get down into that in a bit more 180 00:12:13,960 --> 00:12:15,880 detail. So you said investors are 181 00:12:15,880 --> 00:12:20,360 purchasing green bonds listed on the Vienna Stock Exchange and 182 00:12:20,360 --> 00:12:22,440 that money then comes into Brazil. 183 00:12:22,440 --> 00:12:26,120 Can you sort of talk us through that piece of the facility? 184 00:12:26,120 --> 00:12:29,680 So who are the investors? Are these sort of typical green 185 00:12:29,680 --> 00:12:31,480 bonds? Because I know we've also got 186 00:12:32,480 --> 00:12:34,560 Cras that we can go into. If you could sort of talk us 187 00:12:34,560 --> 00:12:37,880 through that structure. So the way that he works is 188 00:12:37,920 --> 00:12:42,840 first of all we have to identify a portfolio of farmers that want 189 00:12:42,840 --> 00:12:47,240 to participate in the scheme. So we we select them, we screen 190 00:12:47,240 --> 00:12:50,360 them for the environmental compliance, but also for the 191 00:12:50,360 --> 00:12:54,400 credit risk. And then we negotiate with them 192 00:12:54,400 --> 00:12:58,160 the the loans and enter into a series of loan agreements. 193 00:12:58,360 --> 00:13:02,920 Next year is going to involve anything between 40 and 60 194 00:13:03,040 --> 00:13:06,200 loans. So we get this pool of loans, we 195 00:13:06,200 --> 00:13:08,560 register them in the Brazilian Stock Exchange. 196 00:13:08,920 --> 00:13:11,600 And with that we can issue this green bonds. 197 00:13:11,960 --> 00:13:15,520 The type of green bond that we use is is called cry. 198 00:13:15,840 --> 00:13:20,000 Cry is an instrument widely used to finance the Agri business in 199 00:13:20,000 --> 00:13:24,200 Brazil and stands for certificates of receivables from 200 00:13:24,200 --> 00:13:28,600 the Agri business. We engage a company, we work in 201 00:13:28,600 --> 00:13:31,520 partnership with a with a securitization company called 202 00:13:31,520 --> 00:13:33,960 Opia. And OPIA is the one who who 203 00:13:33,960 --> 00:13:37,480 actually gets all these loans as guarantees and issue this 204 00:13:37,480 --> 00:13:42,200 instrument and register that in the Vienna Stock Exchange so 205 00:13:42,200 --> 00:13:46,800 that it's easier for investors outside of Brazil to subscribe 206 00:13:46,800 --> 00:13:49,760 to these bonds. There they, they go to the Young 207 00:13:49,760 --> 00:13:53,080 Stock Exchange, they, they acquire the bonds, the money 208 00:13:53,080 --> 00:13:57,800 goes into a paying agent bank account and transfer to Brazil 209 00:13:57,960 --> 00:14:04,080 where we then distribute for all these farmers that sign in for 210 00:14:04,080 --> 00:14:07,040 the loans. I forgot to mention, but we were 211 00:14:07,040 --> 00:14:12,320 very lucky in a way that just before we we started this fund, 212 00:14:12,320 --> 00:14:16,440 the Brazilian legislation changed and enabled us to issue 213 00:14:16,440 --> 00:14:19,400 this Cras, the Cras in foreign currency. 214 00:14:20,000 --> 00:14:23,680 And in this case we we issue this Cras in U.S. dollar. 215 00:14:24,160 --> 00:14:27,040 Why dollar, you know, especially given that the majority of our 216 00:14:27,240 --> 00:14:32,240 investors are actually European, but basically because the whole 217 00:14:32,800 --> 00:14:38,320 soy economy is very dollarized, the the final price of of of soy 218 00:14:38,320 --> 00:14:42,640 is, is kind of pegged to the Chicago Mercantile Exchange in 219 00:14:42,640 --> 00:14:44,920 dollar. And the inputs that they use the 220 00:14:44,920 --> 00:14:48,560 fertilisers and so on are also very much dependent on dollar. 221 00:14:49,040 --> 00:14:53,480 So, yeah, as in as I mentioned then they use that to plant and 222 00:14:53,480 --> 00:14:55,960 repairs. At the end of the crop cycle, 223 00:14:56,440 --> 00:14:59,920 they enter into an offtake agreement with with traders 224 00:14:59,920 --> 00:15:01,520 because we don't want bags of soy. 225 00:15:01,960 --> 00:15:05,760 And the the traders in turn pay us with the, you know, the pay 226 00:15:05,760 --> 00:15:09,200 us directly for the loan and the remainder goes back to the farm. 227 00:15:09,960 --> 00:15:14,360 In terms of investors, I mean this whole fund to a certain 228 00:15:14,360 --> 00:15:20,000 extent we designed this fund to assist consumer goods companies 229 00:15:20,000 --> 00:15:24,960 in Europe, predominantly in Europe to, to do something for, 230 00:15:25,080 --> 00:15:29,600 you know, to reduce the the impact of the soy purchases 231 00:15:29,600 --> 00:15:33,560 along the supply chains. And the ones who really got 232 00:15:33,560 --> 00:15:38,680 involved from the outset was the UK based supermarkets, Tesco, 233 00:15:38,680 --> 00:15:43,240 Sainsbury's and Waitrose invested right at the beginning 234 00:15:43,240 --> 00:15:45,480 of the fund. They put an anchor investor of 235 00:15:45,720 --> 00:15:50,120 investment of $11 million. In the subsequent year. 236 00:15:50,120 --> 00:15:53,600 We then kind of attracted more capital. 237 00:15:53,600 --> 00:15:56,240 We leveraged their initial investment with different 238 00:15:56,240 --> 00:16:00,080 sources of capital. In a mezzanine tranche, we 239 00:16:00,080 --> 00:16:04,560 brought the Dutch impact investment group called Agri 3 240 00:16:05,280 --> 00:16:10,800 and in the senior tranche Rabobank and Santander. 241 00:16:11,640 --> 00:16:16,240 And this year we are now finalising the negotiations to 242 00:16:16,240 --> 00:16:20,160 bring some new investors. It's a more robust structure as 243 00:16:20,160 --> 00:16:24,120 well. We're bringing credit insurance 244 00:16:24,400 --> 00:16:29,600 so that the senior tranche is going to have a credit rating of 245 00:16:29,600 --> 00:16:33,760 AAA, AAA, Brazilian scale, which is, you know, the maximum that 246 00:16:33,760 --> 00:16:37,040 we can get. And our objective was really to 247 00:16:37,040 --> 00:16:41,000 prove that you could have this type of green bond, you know, 248 00:16:41,000 --> 00:16:44,360 dark green bond. Independently certified by the 249 00:16:44,360 --> 00:16:48,600 way, with second party opinion by ERM, but a dark green bond, 250 00:16:48,600 --> 00:16:54,640 which is investment grade trip away rated with top class group 251 00:16:54,640 --> 00:16:57,800 of investors. So this is where we're going to 252 00:16:57,800 --> 00:17:00,080 get this year. And that's what's the objective 253 00:17:00,080 --> 00:17:03,840 to show that you don't, you know, you can have environmental 254 00:17:03,840 --> 00:17:07,560 impact with very sophisticated and robust financial structures. 255 00:17:08,160 --> 00:17:10,079 That's great. If you're able to share sort of 256 00:17:10,079 --> 00:17:13,000 what are the different terms then for that junior tranche, 257 00:17:13,000 --> 00:17:15,960 the mezzanine tranche and the senior tranche? 258 00:17:15,960 --> 00:17:21,520 Because I'm intrigued as to that UK retailer role in the junior 259 00:17:21,520 --> 00:17:25,880 tranche and sort of what was their inspiration for for taking 260 00:17:25,880 --> 00:17:28,640 that chunk? In, in terms of the the 261 00:17:28,640 --> 00:17:34,280 structure, I mean for you to be able to raise a senior tranche 262 00:17:34,280 --> 00:17:38,000 at a good price, you have to have a risk adjusted return. 263 00:17:38,280 --> 00:17:44,160 And because of that you have to have a strong subordination in 264 00:17:44,160 --> 00:17:47,320 terms of a junior tranche which was subscribed by the UK 265 00:17:47,320 --> 00:17:51,880 supermarkets and the mezzanine tranche which is what was Agri 3 266 00:17:51,880 --> 00:17:55,880 and hopefully FMO as well. So each tranche is priced in a 267 00:17:55,880 --> 00:18:01,160 way that reflects the risk. So the lower, the more junior 268 00:18:01,160 --> 00:18:06,080 tranches get the higher coupon, you know, interest payments then 269 00:18:06,080 --> 00:18:10,280 the senior tranche every year it's readjusted of course, 270 00:18:10,280 --> 00:18:14,200 because it in the end of the day we have to have capital that is 271 00:18:14,200 --> 00:18:18,960 cheap enough for this farmers to agree to commit to 0 272 00:18:18,960 --> 00:18:22,240 deforestation. So every year we recalibrate 273 00:18:22,240 --> 00:18:25,440 the, the interest rates that we pay for the, for the different 274 00:18:25,440 --> 00:18:29,120 tranches of the fund. But that's, that's the way it 275 00:18:29,120 --> 00:18:32,400 works. And having credit insurance now 276 00:18:32,440 --> 00:18:37,920 and and a AAA rating, it also helps us to reduce the cost of 277 00:18:37,920 --> 00:18:43,040 capital. And coming back to the retailers 278 00:18:43,040 --> 00:18:48,920 again, for them this investment is aligned with sort of 279 00:18:48,920 --> 00:18:52,200 reporting requirements. Do do they have any claims 280 00:18:52,200 --> 00:18:54,440 against it? Like I'm interested in what 281 00:18:54,440 --> 00:18:56,960 they're in the driver for them is? 282 00:18:57,320 --> 00:19:01,560 Yeah, the UK retailer's main motivation at the time was, was 283 00:19:01,560 --> 00:19:04,280 really to, you know, take a leadership position in terms of 284 00:19:04,280 --> 00:19:07,760 saying, hey, there's a long supply chain between US and the 285 00:19:07,760 --> 00:19:12,120 soy producers there. But you know, the UK based 286 00:19:12,120 --> 00:19:14,920 supermarket doesn't buy physical soy. 287 00:19:14,920 --> 00:19:17,680 I mean they, it goes through a whole supply chain. 288 00:19:18,360 --> 00:19:20,760 It's, it's not that they are financing something that they 289 00:19:20,760 --> 00:19:24,680 are directly buying, but they wanted to send the signal that 290 00:19:24,680 --> 00:19:29,480 they are doing something about the, the sector that supplies a 291 00:19:29,480 --> 00:19:31,360 lot of the products that they sell. 292 00:19:31,640 --> 00:19:34,280 So was was not a compliance move. 293 00:19:34,640 --> 00:19:37,640 It was not for carbon credits because we, we never actually 294 00:19:37,640 --> 00:19:40,720 extracted or tried to extract carbon credits out of this 295 00:19:40,720 --> 00:19:46,320 operation, but was basically to, to be able to reports to their 296 00:19:46,480 --> 00:19:50,560 consumers, to their clients, to their investors that they were 297 00:19:50,760 --> 00:19:55,240 taking a proactive approach to, to contributing to making their, 298 00:19:55,280 --> 00:19:58,960 their supply chain more green. In parallel to that, more 299 00:19:58,960 --> 00:20:04,560 recently then the EU passed this EU deforestation regulation, the 300 00:20:04,560 --> 00:20:09,320 EUDR. Which will be forbidden the 301 00:20:09,320 --> 00:20:13,720 entry into the EU of of agricultural commodities 302 00:20:13,880 --> 00:20:17,560 associated with deforestation. We're not in the EU anymore, but 303 00:20:17,560 --> 00:20:21,360 much sooner or later the UK may follow suit somehow. 304 00:20:21,840 --> 00:20:27,160 And so that creates an extra motivation now for other, for 305 00:20:27,160 --> 00:20:30,360 them and other companies to continue to be involved with the 306 00:20:30,360 --> 00:20:35,040 RCF because apart from all the, the, the cuters that they may 307 00:20:35,040 --> 00:20:39,920 get from investing in US, they will may end up have been able 308 00:20:39,920 --> 00:20:42,400 to use that as a compliance instrument as well. 309 00:20:43,160 --> 00:20:48,560 Another contribution that the RCF does to those investors is 310 00:20:48,560 --> 00:20:51,920 that we are, we are greatly reducing the footprint, the 311 00:20:51,920 --> 00:20:56,360 carbon footprint, the greenhouse gas footprint of their supply 312 00:20:56,360 --> 00:21:01,120 chains and consequently that may be captured at some stage in 313 00:21:01,120 --> 00:21:04,120 terms of the reduction of their Scope 3 emissions. 314 00:21:04,440 --> 00:21:09,760 So all of that is in motion now. In order to be able to claim 315 00:21:09,760 --> 00:21:13,440 Scope 3 reductions, to claim compliance with the EUDI, you 316 00:21:13,440 --> 00:21:17,040 have to be able to trace the soil from our producers in the 317 00:21:17,040 --> 00:21:21,000 middle of Brazil all the way to their supply chains that reach 318 00:21:21,800 --> 00:21:24,960 UK or Europe. And that requires a whole work 319 00:21:24,960 --> 00:21:29,040 on traceability, which we are doing at the moment. 320 00:21:29,040 --> 00:21:32,800 And hopefully by the end of the year or the next harvest, we 321 00:21:32,800 --> 00:21:36,600 should be able to have the first shipments which are fully traced 322 00:21:36,960 --> 00:21:40,800 from stores to Europe and OPIA at the pilot stage yet. 323 00:21:40,800 --> 00:21:42,920 But it will be a good start way forward. 324 00:21:43,400 --> 00:21:46,480 Yeah, that's really interesting. And so I've got 2 questions from 325 00:21:46,480 --> 00:21:48,680 that. Then the first is so that court 326 00:21:48,680 --> 00:21:52,000 sort of explains the reasoning not to sell carbon credits 327 00:21:52,000 --> 00:21:55,440 because it effectively could be used as sort of insetting and 328 00:21:55,520 --> 00:21:57,960 for scope three, if I understood that correctly. 329 00:21:58,840 --> 00:22:00,960 Yeah. As I mentioned, we are not 330 00:22:01,200 --> 00:22:04,840 creating carbon credits associated with the reduction of 331 00:22:04,840 --> 00:22:09,640 emissions for various reasons. One is that these are short 332 00:22:10,200 --> 00:22:12,520 funds. I mean this fund has a four year 333 00:22:12,520 --> 00:22:16,600 duration, but the methodologies associated with creating these 334 00:22:16,600 --> 00:22:20,760 types of carbon credit they create, they require much longer 335 00:22:22,000 --> 00:22:26,400 commitments which would be difficult to secure from this 336 00:22:26,400 --> 00:22:30,880 farmers at this point in time. So our take is that, OK, you 337 00:22:30,880 --> 00:22:33,600 keep protecting as long as I keep on paying. 338 00:22:34,240 --> 00:22:38,800 But instead of carbon credits, what we we can do and we'll be 339 00:22:39,240 --> 00:22:45,960 doing is capturing this greenhouse gas benefit exactly 340 00:22:46,160 --> 00:22:50,280 as an inset in or reduction of Scope 3 emissions of those 341 00:22:50,280 --> 00:22:52,920 involved. And that can be done without 342 00:22:52,920 --> 00:22:55,720 having to go through the whole process of carbon credit 343 00:22:55,720 --> 00:23:00,320 creation. Of interest is TNFD reporting a 344 00:23:00,320 --> 00:23:02,480 driver for these retailers as well. 345 00:23:02,880 --> 00:23:07,040 Well, yeah, there's, there's all sorts of new reports in an 346 00:23:07,040 --> 00:23:11,480 environmental commitments and programmes and you know, there's 347 00:23:11,560 --> 00:23:15,920 no reason why investment in the RCF couldn't be used for any and 348 00:23:15,920 --> 00:23:19,480 all of them. I mean, we have a dark green 349 00:23:19,880 --> 00:23:24,320 fund in which every single dollar invested in this fund 350 00:23:24,320 --> 00:23:28,240 goes directly to activities that that have a positive 351 00:23:28,240 --> 00:23:30,960 environmental impact, for instance. 352 00:23:31,360 --> 00:23:33,640 Yeah. You know, the, the, the fund 353 00:23:33,760 --> 00:23:39,000 should be able to qualify as an Article 9 under the, the, the 354 00:23:39,160 --> 00:23:41,480 European Regulation exactly because of that. 355 00:23:41,760 --> 00:23:46,320 There's not a single aspect of the fund that is not devoted 356 00:23:46,320 --> 00:23:49,880 directly directed to positive environmental impact. 357 00:23:51,360 --> 00:23:55,800 You know, every farm is plotted in our GIS mapping system. 358 00:23:55,800 --> 00:23:58,920 Every farm is monitoring the independently. 359 00:23:59,840 --> 00:24:01,840 Well, yes, that's, you know, it's a perfect segue. 360 00:24:01,840 --> 00:24:04,920 Let's talk about how you're measuring environmental impacts 361 00:24:04,920 --> 00:24:07,440 and that monitoring and verification process. 362 00:24:08,000 --> 00:24:10,960 Yeah. I mean, if you have a green 363 00:24:11,280 --> 00:24:14,560 fund, if you have any environmental claim, you really 364 00:24:14,560 --> 00:24:19,240 need to monitor that to, to, to a standard, to a level that is 365 00:24:19,240 --> 00:24:22,160 credible. And the more that you can kind 366 00:24:22,160 --> 00:24:25,440 of demonstrate in a, in a transparent way that what you're 367 00:24:25,440 --> 00:24:28,400 doing is what you promised to do, the better. 368 00:24:28,400 --> 00:24:31,440 If you don't do that, sooner or later you will be the subject of 369 00:24:31,440 --> 00:24:33,440 criticism or suspicion and so on. 370 00:24:33,960 --> 00:24:39,080 So in our case, from the outset, we with, we took a lot of care 371 00:24:39,080 --> 00:24:43,960 and precaution to have it right. So to start with, you know, the, 372 00:24:43,960 --> 00:24:48,600 all the environmental criteria necessary for farmers to enter 373 00:24:48,600 --> 00:24:51,760 into the programme to participate in the RCF were 374 00:24:51,760 --> 00:24:55,080 discussed with a group of organisations which include 375 00:24:55,080 --> 00:25:04,240 TNCWWFCI, UNAP Finance Profars, EPAM which is a Brazilian NGO 376 00:25:04,240 --> 00:25:07,600 and Bivirio, which is the NGO that we run in Brazil. 377 00:25:08,240 --> 00:25:11,920 These organisations in turn, I mean, we discussed a lot, OK, 378 00:25:11,920 --> 00:25:14,280 should we have this criterion or not? 379 00:25:14,280 --> 00:25:16,960 I mean what level of intensity, how do we monitor? 380 00:25:17,160 --> 00:25:21,280 So all of that was agreed with them and now form part of our 381 00:25:21,280 --> 00:25:24,040 environmental eligibility criteria. 382 00:25:24,680 --> 00:25:30,280 Then in addition to that, UNAP Finance also put together an ENS 383 00:25:30,280 --> 00:25:34,200 framework, environmental social framework for our operations, 384 00:25:34,200 --> 00:25:37,280 which go a bit beyond this criteria that we have. 385 00:25:37,960 --> 00:25:41,000 Then all these organisations then joined us in an 386 00:25:41,000 --> 00:25:46,960 environmental Advisory Board. So if there's any required 387 00:25:46,960 --> 00:25:50,320 modification of the criteria or, or questions on the 388 00:25:50,320 --> 00:25:53,600 interpretation, how do we implement these criterions? 389 00:25:53,920 --> 00:25:58,560 We always discuss with them and we, we always report on a yearly 390 00:25:58,560 --> 00:26:03,520 basis to the environmental board what the impacts were, you know, 391 00:26:03,520 --> 00:26:06,720 so they have a look, they may have questions, clarifications 392 00:26:07,200 --> 00:26:10,440 and after they give their feedback, we then report to 393 00:26:10,440 --> 00:26:14,480 investors. OK, how do we then measure all 394 00:26:14,480 --> 00:26:17,480 of that? I mean we, these criteria are 395 00:26:17,480 --> 00:26:23,160 used to screen this producers right at the beginning when they 396 00:26:23,200 --> 00:26:27,200 asked to join the programme. We check a variety of databases 397 00:26:27,200 --> 00:26:30,440 of compliance with environmental laws, with labour laws. 398 00:26:30,840 --> 00:26:34,960 We also check all their farms for compliance with the main 399 00:26:34,960 --> 00:26:39,280 requirements. The main requirement of the fund 400 00:26:39,280 --> 00:26:43,640 is 0 deforestation since the cutoff date which is January 401 00:26:43,640 --> 00:26:46,960 2020. So we get the shape files of the 402 00:26:46,960 --> 00:26:50,800 files we check with against satellite imagery that going 403 00:26:50,800 --> 00:26:57,040 back to 2008 and then determine whether or not they have all the 404 00:26:57,120 --> 00:27:00,720 requisites to participate. So once they join in, we 405 00:27:00,720 --> 00:27:04,360 continue to monitor them throughout the crop cycle and 406 00:27:04,360 --> 00:27:08,960 after they they they harvest and repay the loan, we then check 407 00:27:09,280 --> 00:27:13,320 whether or not there was any deviation of this criteria, 408 00:27:13,320 --> 00:27:17,120 especially deforestation. If there is any deforestation, 409 00:27:17,120 --> 00:27:20,720 the, the farmer is expelled from the, from, from the programme 410 00:27:20,720 --> 00:27:25,600 and have to pay a fine of 15% on top of the repayment of the 411 00:27:25,600 --> 00:27:29,240 loan. To date we've financed more than 412 00:27:29,400 --> 00:27:35,400 200 farms and, you know, more than 100,000 hectares of forest. 413 00:27:35,640 --> 00:27:39,840 And there was one case of the forestation of 23 hectares. 414 00:27:41,640 --> 00:27:43,960 Unfortunately there was the, the death. 415 00:27:43,960 --> 00:27:46,760 But in the, you know, in the grand scheme of things, we 416 00:27:47,200 --> 00:27:51,760 actually managed to protect a lot of of native vegetation 417 00:27:52,160 --> 00:27:54,520 during this very turbulent times in Brazil. 418 00:27:55,120 --> 00:27:57,960 Yeah. So following up on that question 419 00:27:57,960 --> 00:28:01,320 of MRV, have you seen, do you see costs coming down? 420 00:28:01,320 --> 00:28:03,360 I mean, how much of an impact does that have on when you're 421 00:28:03,360 --> 00:28:06,960 trying to create an instrument that has a return that attracts 422 00:28:06,960 --> 00:28:11,640 large investors? Yeah, the MRV costs for the RCF 423 00:28:11,640 --> 00:28:16,520 are not that high because we're looking at clearance of native 424 00:28:16,520 --> 00:28:20,720 vegetation, deforestation, which is something that is very easily 425 00:28:20,720 --> 00:28:26,080 observed with satellite imagery. So we can do the majority of IMF 426 00:28:26,160 --> 00:28:30,400 without actually having to visit each of these farms, which will 427 00:28:30,400 --> 00:28:33,600 take, you know, weeks because the distances in, in the 428 00:28:33,600 --> 00:28:36,800 interior of Brazil, you know, they're, they're huge and the, 429 00:28:36,880 --> 00:28:38,480 and the roads are not that great. 430 00:28:39,160 --> 00:28:43,240 So the majority of what we do is based on remote sense and and 431 00:28:43,240 --> 00:28:47,880 publicly available databases of compliance or infringement of 432 00:28:47,880 --> 00:28:51,360 environmental legislation which are compiled by either the 433 00:28:51,360 --> 00:28:54,800 state, municipal or federal level and Brazilian government. 434 00:28:55,120 --> 00:29:00,600 So that is the bulk of what we do as and when we find question 435 00:29:00,600 --> 00:29:02,560 marks. So I don't know if this area was 436 00:29:02,560 --> 00:29:06,440 cleared or not and so on. Then we have to deploy people to 437 00:29:06,440 --> 00:29:08,960 the ground. So the course nowadays with the 438 00:29:08,960 --> 00:29:12,680 amount of technology that is out there is not prohibitive. 439 00:29:12,680 --> 00:29:15,200 It's something kind of quite affordable. 440 00:29:17,000 --> 00:29:21,280 So sort of moving on to, you know, 100,000 hectares, 441 00:29:21,720 --> 00:29:25,720 incredible in a short time and also, you know, worth saying 442 00:29:26,080 --> 00:29:31,080 that the facility was scaled to $47 million in 2023 and you said 443 00:29:31,080 --> 00:29:33,920 100 billion this year. So obviously the numbers are 444 00:29:33,920 --> 00:29:38,440 going up in terms of numbers of hectares and investment coming 445 00:29:38,440 --> 00:29:40,800 in. How do you see that scaling 446 00:29:40,800 --> 00:29:42,360 process? What are the challenges to 447 00:29:42,360 --> 00:29:45,640 scaling it further that you see and and how are you overcoming 448 00:29:45,640 --> 00:29:47,200 some of those barriers if there are some? 449 00:29:47,920 --> 00:29:51,640 Yeah, I mean, the credit market for soy. 450 00:29:52,080 --> 00:29:55,440 Soy is an annual crop. So every year the farmers have 451 00:29:55,440 --> 00:29:59,320 to go to the bank to to borrow the money to to plant. 452 00:29:59,320 --> 00:30:02,080 And usually they want credit to pay only when they harvest. 453 00:30:02,560 --> 00:30:06,160 This market for soy alone in Brazil is about 30 to $40 454 00:30:06,160 --> 00:30:09,920 billion year on year, right? We are still right at the 455 00:30:09,920 --> 00:30:13,640 beginning of that process. And then next year if everything 456 00:30:13,640 --> 00:30:17,680 goes well, we will be jumping from 100 to about $500 million 457 00:30:17,680 --> 00:30:18,120 on the map. Wow. 458 00:30:19,000 --> 00:30:22,600 Why is that? Because if we are negotiating 459 00:30:22,600 --> 00:30:27,320 now alone with the UN Green Climate Fund that if approved 460 00:30:27,560 --> 00:30:33,320 will be in a journal tranche and enable us to to leverage capital 461 00:30:33,320 --> 00:30:36,560 from that capital markets which are you know, provided that they 462 00:30:36,560 --> 00:30:40,280 have all the elements that we are putting in place, credit 463 00:30:40,280 --> 00:30:44,320 insurance, credit rates and etcetera, it's not that 464 00:30:44,320 --> 00:30:48,240 difficult to raise. The big challenge all the time 465 00:30:48,240 --> 00:30:52,520 is to raise subordinated capital, the the first loss 466 00:30:52,520 --> 00:30:56,800 capital that reduces the risk for stock markets to invest in 467 00:30:56,800 --> 00:30:59,560 this, you know lower risk green bonds. 468 00:31:00,160 --> 00:31:02,600 So that remains always a challenge. 469 00:31:03,000 --> 00:31:06,760 As I said, if we can get like a multilateral or or an 470 00:31:06,760 --> 00:31:11,600 international fund like the GCF invest in, in the subordination, 471 00:31:11,880 --> 00:31:13,800 we have the potential to grow a lot. 472 00:31:14,480 --> 00:31:18,000 Alternatively, we would love to have more of the consumer goods 473 00:31:18,000 --> 00:31:21,200 companies that needs to do something about the supply 474 00:31:21,200 --> 00:31:26,000 chains to join Tesco, Sainsbury and Waitrose and demonstrate 475 00:31:26,000 --> 00:31:28,480 their leadership through involvement with initiatives 476 00:31:28,480 --> 00:31:30,880 like ours. Yeah, I mean to ask a bit of a 477 00:31:31,840 --> 00:31:34,560 Mike's had a daft question, but why? 478 00:31:35,120 --> 00:31:39,480 Why UK retailers do you think versus other very large 479 00:31:39,480 --> 00:31:44,480 retailers? Since 2017, when the Sehado 480 00:31:44,480 --> 00:31:49,040 Manifesto was being proposed and launched, Tesco was taken a 481 00:31:49,040 --> 00:31:52,480 leadership in the working groups that were discussing among all 482 00:31:52,480 --> 00:31:56,080 the industry what could be proposed and put forward. 483 00:31:56,840 --> 00:32:00,440 And perhaps because Tesco is in the UK, kind of, you know, it 484 00:32:00,440 --> 00:32:03,560 was easier to engage some of their peers. 485 00:32:03,840 --> 00:32:04,880 Yeah. That makes sense. 486 00:32:04,960 --> 00:32:08,800 So essentially what we would, what would be helpful as if we 487 00:32:08,800 --> 00:32:11,840 think about scaling in addition to that subordinated tranche 488 00:32:11,840 --> 00:32:18,280 that we you you need is this sort of anchor investor in each 489 00:32:18,360 --> 00:32:20,360 country really would be fantastic. 490 00:32:20,400 --> 00:32:25,200 Yeah, but for you know that's the challenge Helen for all 491 00:32:25,840 --> 00:32:30,200 impact funds is always the subordinated, the first loss 492 00:32:30,280 --> 00:32:33,400 trenches. What we are trying to do now, I 493 00:32:33,400 --> 00:32:37,320 mean what's next for the RCF? At the moment the RCF is focused 494 00:32:37,320 --> 00:32:43,640 only in providing credit lines against zero to first station 495 00:32:43,640 --> 00:32:46,640 commitments. But at some stage we will have 496 00:32:46,640 --> 00:32:50,480 hundreds of farmers engaged with us and then we can start 497 00:32:50,480 --> 00:32:54,200 layering all the requirements. And for instance, we've been 498 00:32:54,200 --> 00:32:58,640 asked by some consumer goods companies actually to to figure 499 00:32:58,640 --> 00:33:02,560 out some incentives for farmers to adopt regenerative 500 00:33:02,560 --> 00:33:06,320 agricultural practises. So we are now modelling a new 501 00:33:06,320 --> 00:33:11,240 fund that will give an additional incentive scheme for 502 00:33:11,240 --> 00:33:14,560 those of the farmers that already engaged with us to adopt 503 00:33:14,560 --> 00:33:19,560 regenerate practises. Another one that we are also 504 00:33:19,560 --> 00:33:25,400 modelling at the moment is funds to finance the expansion of soy, 505 00:33:25,840 --> 00:33:29,680 but not into native vegetation, but into areas that already 506 00:33:29,680 --> 00:33:32,720 cleared. Brazil has a lot of land that 507 00:33:32,720 --> 00:33:37,280 was cleared for extensive cataration, very low 508 00:33:37,280 --> 00:33:39,720 productivity. It was a means of of people as 509 00:33:39,720 --> 00:33:43,160 securing tenure of land. They cleared the land with a few 510 00:33:43,160 --> 00:33:46,640 cows and now it's mine. But this area should and you 511 00:33:46,760 --> 00:33:50,480 know, could and should be transformed or converted into 512 00:33:50,480 --> 00:33:54,720 more productive uses. And soy is an obvious 1. 513 00:33:55,040 --> 00:33:58,360 Farmers need additional investment to convert these 514 00:33:58,360 --> 00:34:02,920 areas to soy and that is something that we will be 515 00:34:02,920 --> 00:34:05,160 rolling out in next year probably. 516 00:34:05,560 --> 00:34:08,280 And I mean, it sounds like you have a lot on a lot of plans for 517 00:34:08,719 --> 00:34:12,199 RTF in the region that you're that you're working in. 518 00:34:12,400 --> 00:34:17,639 But do you see that RCF could potentially be replicated in a 519 00:34:17,760 --> 00:34:20,920 different region, perhaps with a different supply chain, not soy? 520 00:34:21,199 --> 00:34:22,440 I'm sure you have thought about that. 521 00:34:23,280 --> 00:34:26,080 Sure. I mean we're, we're very happy 522 00:34:26,080 --> 00:34:30,280 with the model that we created that enables us to raise capital 523 00:34:30,280 --> 00:34:35,080 from capital markets abroad directly to farmers to producers 524 00:34:35,080 --> 00:34:39,080 underground. That's perhaps our differential 525 00:34:39,080 --> 00:34:44,679 that we've managed to crack this nut of direct access to 526 00:34:44,679 --> 00:34:48,840 producers and it can be replicated, can be replicated to 527 00:34:48,840 --> 00:34:51,880 other commodities in other locations. 528 00:34:52,239 --> 00:34:57,320 One obvious one would be cotton. In fact cotton is is produced in 529 00:34:57,320 --> 00:34:59,160 the same area in the Brazilian Sahad. 530 00:34:59,160 --> 00:35:03,400 Sometimes the the same farmer produces soy in one crop in the 531 00:35:03,400 --> 00:35:06,480 next 1 cotton. So, you know, replace Tesco 532 00:35:06,480 --> 00:35:12,080 with, you know, Gap or Zara and then you have RCF cotton coming 533 00:35:12,080 --> 00:35:14,400 online. It's another that's, that's the 534 00:35:14,400 --> 00:35:18,360 lowest hanging fruit for us. Apart from that, we've been 535 00:35:18,360 --> 00:35:24,560 asked, you know, to do low methane in, in Asia, sustainable 536 00:35:24,560 --> 00:35:27,440 fisheries in Caribbean, which will be very pleasant to be 537 00:35:27,440 --> 00:35:32,120 involved with all the way to plastic recycling and circular 538 00:35:32,120 --> 00:35:35,280 economies. So all of them have very similar 539 00:35:36,800 --> 00:35:39,400 traits and and the components and so on. 540 00:35:39,400 --> 00:35:42,360 So you have people on the ground that needs funding to perform an 541 00:35:42,360 --> 00:35:44,960 activity that has a positive environmental impact. 542 00:35:45,320 --> 00:35:48,920 They need funding. They can generate revenue, they 543 00:35:48,920 --> 00:35:52,120 can pay back loans. Here's a question really of 544 00:35:53,440 --> 00:35:57,360 hours in the day to be able to put it together. 545 00:35:58,040 --> 00:36:00,720 So actually what you're saying is it's not that Brazil is the 546 00:36:00,720 --> 00:36:03,440 sweet swap because you've got the green bonds that you 547 00:36:03,440 --> 00:36:08,360 mentioned the the Cras, the Cras and the high interest rates that 548 00:36:08,360 --> 00:36:10,560 kind of enable this to work there. 549 00:36:10,560 --> 00:36:13,200 Actually, you could adopt this as you're saying for regions 550 00:36:13,200 --> 00:36:16,360 that don't maybe have those mechanisms and and that high 551 00:36:16,400 --> 00:36:21,240 interest rate level in place. Well, it's not that Brazil is a 552 00:36:21,240 --> 00:36:26,120 sweet spot, but that we spend a lot of time initially trying to, 553 00:36:26,160 --> 00:36:29,360 to identify what are the financial instruments that are 554 00:36:29,360 --> 00:36:31,680 available in Brazil and make the most of that. 555 00:36:32,400 --> 00:36:35,400 And for this reason, for us, you know, the low hanging fruit 556 00:36:35,400 --> 00:36:40,240 would be to do more funds in Brazil, where, you know, we know 557 00:36:40,240 --> 00:36:42,800 the, the, the legal and financial frameworks, the 558 00:36:42,800 --> 00:36:45,560 instruments that can be used like cotton in the Sahara will 559 00:36:45,560 --> 00:36:49,360 be very easy. If we go to the Caribbean for 560 00:36:49,360 --> 00:36:53,800 sustainable fisheries or or India for sustainable rice, then 561 00:36:53,800 --> 00:36:58,880 we will have to do all the the homework of how to, to identify, 562 00:36:58,880 --> 00:37:01,880 create and select the best instruments for for that type of 563 00:37:01,880 --> 00:37:05,320 activity. But that shouldn't prevent us 564 00:37:05,320 --> 00:37:08,360 from trying to do that. You know, it's something that we 565 00:37:08,360 --> 00:37:11,600 would like to expand into in the future. 566 00:37:11,600 --> 00:37:12,440 That's. Great. 567 00:37:13,200 --> 00:37:16,000 Well, thank you so much. Just to wrap up, Pedro, I'm 568 00:37:16,000 --> 00:37:19,480 really keen before we go to hear your broader opinions. 569 00:37:19,480 --> 00:37:22,640 Given your experience over all these years of how are you 570 00:37:22,640 --> 00:37:25,040 feeling at the moment? Do you feel quite optimistic 571 00:37:25,040 --> 00:37:28,600 around sort of our ambitions around the global biodiversity 572 00:37:28,600 --> 00:37:31,320 framework and the targets of mobilising private sector 573 00:37:31,320 --> 00:37:35,120 investment into, you know, nature restoration, nature 574 00:37:35,120 --> 00:37:37,880 positive supply chains sort of as close to nature positive we 575 00:37:37,880 --> 00:37:39,880 can get? How are you feeling, especially 576 00:37:39,880 --> 00:37:42,800 with some of the sort of the geopolitical events that have 577 00:37:42,800 --> 00:37:44,000 been happening in the past few months? 578 00:37:44,360 --> 00:37:48,480 Yeah, No, we, we are living through a very kind of turbulent 579 00:37:48,480 --> 00:37:51,760 time, you know, globally, I mean, it's for a long time we, 580 00:37:52,400 --> 00:37:56,000 we all lived in, in a very relatively peaceful kind of 581 00:37:56,000 --> 00:38:00,880 period of time in which we, we could spend a lot more, more, 582 00:38:00,880 --> 00:38:04,520 more resources and thinking about ways of improving the 583 00:38:04,520 --> 00:38:07,120 environment and preventing environmental degradation. 584 00:38:07,880 --> 00:38:11,840 Now that the things are more difficult in a geopolitical 585 00:38:11,840 --> 00:38:16,000 sense, I think that now it's more important than ever to find 586 00:38:16,000 --> 00:38:19,840 ways of harnessing private capital with financial 587 00:38:19,840 --> 00:38:22,120 instruments that work for both sides. 588 00:38:23,120 --> 00:38:26,280 You know that that works for investors so that you less 589 00:38:26,280 --> 00:38:29,800 depend on on philanthropic capital flows and works for 590 00:38:29,800 --> 00:38:33,680 those on the ground. This is an era in which we have 591 00:38:33,920 --> 00:38:37,480 to make the most of environmental finance so that we 592 00:38:37,480 --> 00:38:41,440 can kind of navigate these difficult times in terms of 593 00:38:41,440 --> 00:38:45,400 mobilising public resources, while at the same time it's very 594 00:38:45,440 --> 00:38:48,760 urgent to deal with the the climate and the biodiversity 595 00:38:49,160 --> 00:38:53,080 challenges that we face. Well, thank you for joining us 596 00:38:53,080 --> 00:38:57,000 today to share all about RCF, which is obviously one of, you 597 00:38:57,000 --> 00:38:59,920 know, there aren't huge numbers of models that are really are 598 00:38:59,920 --> 00:39:03,040 mobilising private sector investment and with the the 599 00:39:03,040 --> 00:39:05,840 finance element to not just sort of payments between companies 600 00:39:06,280 --> 00:39:08,720 and the supply chain of producers. 601 00:39:08,720 --> 00:39:11,680 So thank you so much for coming and joining us and good luck 602 00:39:12,080 --> 00:39:15,440 with the rest of the year and the Rays and look forward to 603 00:39:15,440 --> 00:39:17,720 seeing you, Elko. Fantastic. 604 00:39:17,720 --> 00:39:19,520 Thank you, Helena. It's a pleasure. 605 00:39:27,280 --> 00:39:29,840 Well, that is a wrap for this week. 606 00:39:30,720 --> 00:39:33,160 If you want to learn more about the Responsible commodities 607 00:39:33,160 --> 00:39:36,480 facility, we do have a case study on the Revenues for Nature 608 00:39:36,480 --> 00:39:38,960 site. It's a bit of a mouthful of a 609 00:39:38,960 --> 00:39:41,960 URL if I'm honest. So we're just going to post the 610 00:39:41,960 --> 00:39:45,160 link on LinkedIn. And if you Google Revenues for 611 00:39:45,160 --> 00:39:48,600 Nature, you will get there very easily and find everything we're 612 00:39:48,600 --> 00:39:51,720 doing with our partners at the UN and also links to the case 613 00:39:51,720 --> 00:39:54,960 studies and how to join the community of practise too, if 614 00:39:54,960 --> 00:39:58,480 that is of interest to you. And the next two weeks, in 615 00:39:58,480 --> 00:40:01,520 honour of the UN Oceans Conference and the Blue Economy 616 00:40:01,520 --> 00:40:05,520 Forum, we'll be taking a look at marine models and I'll be joined 617 00:40:05,520 --> 00:40:10,040 by Nicholas Pascal of Blue Alliance and also Elizabeth Beal 618 00:40:10,040 --> 00:40:13,200 at Finance Earth. So don't miss those two. 619 00:40:13,600 --> 00:40:16,920 And if you are going to be headed to the South of France, 620 00:40:16,920 --> 00:40:20,040 do let us know several of the team are going to be there. 621 00:40:20,440 --> 00:40:23,320 In the meantime, just a big thank you for listening. 622 00:40:23,320 --> 00:40:26,960 We always welcome your feedback, so do share it with. 623 00:40:27,040 --> 00:40:30,840 With us at Hive, at GFI dot Green, and especially if there 624 00:40:30,840 --> 00:40:33,680 are models that you think we haven't identified that you 625 00:40:33,680 --> 00:40:37,280 would like us to include in this series, please do reach out. 626 00:40:37,280 --> 00:40:40,040 But until next time, have a good week.