Vale fund leverages funding to boost forest initiatives
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In Brazil, the Vale Fund reports that for every R$ 1 it invested, it mobilized an additional R$ 5.9 from banks, funds, international organizations, and public investors.
The fund, created in 2009, is shifting its focus from direct funding to acting as a catalyst for larger investments in nature and climate agendas. Over the past 16 years, Vale Fund has invested R$ 576 million in 169 projects encompassing 887 deals.
The fund uses blended finance techniques, like assuming initial losses or guaranteeing returns, to reduce risk and attract private investment into projects focused on nature-based solutions. This approach addresses a common challenge for these projects, which often lack the established financial track record banks require. Vale’s VP of Sustainability, Grazielle Parenti, notes that this leverage isn’t automatic and depends on financial mechanisms, business maturity, and economic conditions. Vale emphasizes that its support extends beyond financial contributions, including research and governance.
The company sees protecting and restoring forests as critical to its operations in the Amazon, where 60% of its production originates, and as a way to address reputational damage from past dam disasters. As of this report, Vale has achieved approximately 45% of its goal to protect and restore 500,000 hectares of forest by 2030, investing R$ 292 million directly into related businesses and another R$ 38 million in non-financial support.
The company anticipates a significant funding gap in the bioeconomy, estimated at US$ 15.7 billion over the next decade, requiring a combination of public, philanthropic, and private capital.
