SDG Impact Finance Initiative, with the support of Convergence, awarded Tree Global SA a USD 350,000 grant to design the Africa Reforestation Green Bond. The solution aims to launch a series of green bonds to finance a portfolio of Iarge-scale reforestation and conservation projects in Sub-Saharan Africa.
Reaching net zero requires removing 5-10 Gt CO2 emissions by year by 2050. Forests are the only proven and scalable feasible removal technology. Existing projects are few and small, and often ignore local communities or lack technical know-how. High-quality, large-scale forests require capital that is sizeable upfront to fund the development costs and patient in its nature for return distributions, given the long-term nature of reforestation projects.
Tree Global is addressing this market challenge by designing a scalable financing solution to finance large-scale reforestation projects. Tree Global’s native-only large-scale reforestation projects generate high quality carbon dioxide removal (CDR) credits, enhance biodiversity and ensure equitable distribution of carbon revenues to governments and local communities, supporting sustainable development in the region.
Tree Global draws on 13 years of experience in designing and managing nursery operations across Asia, Africa, and the Middle East. This extensive expertise, coupled with its deep partnerships with host governments and local communities from the outset, ensures that projects are both financially viable and aligned with local environmental and social objectives.
Design Question: How can a blended finance funding structure support the goals of a large-scale reforestation project?
The goal is to develop an innovative green bond structure to finance reforestation projects in countries such as the Democratic Republic of the Congo (DRC), Ghana, Republic of the Congo, Cameroon, Zambia and Tanzania. However, Tree Global recognizes that achieving this vision requires more than green bonds. The organization uses a blended finance approach, combining grants, debt, and equity, to reduce risks during the project development and implementation phases and make the projects more attractive to commercial investors as they scale.
Tree Global has secured critical funding from the SDG Impact Finance Initiative and the Good Energies Foundation. The Good Energies Foundation grant is focused on refining community engagement and ensuring equitable benefit-sharing, key components that help mitigate risks and lay the foundation for sustainable growth.
The SDG Impact Finance Initiative grant supports the creation of a long-term funding mechanism for the projects, potentially through green bonds. The structure may include guarantees and insurance to further reduce operational and credit risks. As the projects gain traction and a proven track record, the green bond financing mechanism will be introduced at the scale-up stage.
