The World Bank will be issuing a new bond to raise $200 million to support reforestation in Brazil’s Amazon rainforest. HSBC Bank will be structuring this transaction. Through this bond, the World Bank will provide financing to the reforestation initiatives of Brazilian startup Mombak.
Mombak buys degraded land from farmers and replants them with native species of the Amazon. This model generates carbon removal credits to be sold in the carbon market.
“This transaction is a continuation of this market we’re trying to develop,” World Bank vice-president Jorge Familiar told news agency Reuters, referring to the so-called “outcome bond” model the bank launched earlier this decade. These bonds will allow investors to support specific sustainable projects and their outcomes.
Mombak co-founder Peter Fernandez said, “You need a lot of money to do reforestation; and because it’s so new, the cost of capital is quite high,” adding the transaction might help unlock debt markets for others in the industry.
