Responsible Commodities Facility
Status: Proposed investmentWhy disclosure?
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In case of questions
We welcome feedback on this proposed investment opportunity for FMO. The ending of the proposed investment phase is indicated on the right side of this page. In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
The Responsible Commodities Facility (RCF) promotes the production of deforestation- and conversion-free (DCF) soy in Brazil’s Cerrado biome by providing lower-interest credit lines as a financial incentive to farmers who commit to zero deforestation (legal and illegal) and conversion of native vegetation. This financial incentive is provided through short-term crop financing for a one-year working capital loan, so farmers can buy input during the pre-harvesting season and repay the debt at the end of the season. Provided farmers continue to comply with the environmental conditions of the loan throughout the year, the loans are renewed, thereby maintaining the incentive.
What is our funding objective?
The significance of FMO’s participation in the RCF is highlighted by the funding from both the Dutch Fund for Climate and Development (DFCD) and Mobilising Finance for Forests (MFF). These funds are crucial for the further success and scalability of the program. Specifically, the DFCD and MFF funds will be allocated as follows: USD 10 mln will be funded by DFCD in the Mezzanine Tranche, and USD 10 mln will be funded by MFF in the Junior/First Loss Tranche. This catalytic role helps RCF by giving even more credibility and much-needed risk capital to further scale the program and attract additional investors.
Why do we want to fund this investment?
This investment will be fully aligned with FMO’s Brazilian Strategy of enabling mechanisms and programs that support sustainable intensification to reduce deforestation caused by agriculture. RCF is one of the few initiatives in Brazil that successfully combines financing incentives with no-deforestation commitments in a region that is facing rapid deforestation and conversion – therefore this transaction is expected to be labelled 100% Green.
What is the Environmental and Social categorization rationale?
Because of the regional scope (Cerrado region in Brazil) and the objective of investing in existing activities, the Fund’s environmental and social (E&S) risk categorization is ‘Private Equity risk category B’. It should be noted, however, that category B investee companies will not be pursued by the facility and that the size of the investments is relatively small. E&S risks that may be encountered at the investee companies are expected to be linked to IFC PS 1 to 4 (Risk management, Labor, Resource efficiency and pollution prevention, and Community) and PS 6 (Biodiversity). The objective of the investments of RCF is to reduce the risks associated with deforestation without increasing any other E&S risks. Key NGOs, that have been involved for decades in developing solutions for the environmental protection of the Cerrado region, consider the solution offered as the best existing scheme to halt soy-led deforestation in this region in Brazil. The program manager has developed a due diligence process to assess environmental and social risks in the potential investees and has systems to certify the validity of the results.
More investments
| Date | Total FMO financing |
|---|---|
| 4/7/2025 | USD 10.00 MLN |
- Website customer/investment
- https://sim.finance/responsible-commodities-facility/
- Region
- Latin America & The Caribbean
- Country
- Brazil
- Sector
- Agribusiness, Food & Water
- Publication date
- 4/7/2025
- Deadline for feedback
- 5/7/2025
- Total FMO financing
- USD 10.00 MLN
- Funding
- LUF
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B
- Translation
- https://www.fmo.nl/-responsible-commodities-facility