AXA Fund to Invest $49 Million in Brazil Reforestation Projects

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An alternative investment vehicle controlled by French insurer AXA said on Tuesday it will inject $49 million into reforestation projects in Brazil led by local startup Mombak.

AXA IM Alts, which has over 185 billion euros ($208 billion) under management, will take a minority stake in the startup to help scale up operations and technology.

Mombak, which is also backed by Bain Capital, will lead projects to reforest over 10,000 hectares of degraded pastureland, generating up to 6 million carbon credits.

“We are building the largest carbon removal projects in the world,” Mombak co-founder Peter Fernandez said in an interview. “The single largest opportunity that humanity has to do reforestation is in Brazil.”

Mombak buys degraded land from farmers and ranchers or partners with them to replant native species in the world’s largest rainforest, which has been increasingly destroyed in recent years.

That business model, ultimately generating CO2 removal credits that can be sold in carbon markets, helps Mombak shield itself from some of the risks non-governmental organizations face to reforest the Amazon, Fernandez said.

Critics of carbon offset markets, including Greenpeace, say they allow emitters to continue to release greenhouse gases.

Reuters reported last month that although experts see reforesting the Amazon as a promising bulwark against catastrophic climate change, the non-profits attempting it face a series of challenges including illegal land-grabbers and tight budgets.

“The land purchase model gives Mombak the ability to execute on all its quality procedures and also assure the long-term permanency of the forest being created,” AXA IM Alts’ natural capital lead Adam Gibbon said. “But it does require capital.”

“This is our first investment in Brazil,” he noted. “We would like to significantly scale up our deployment in Brazil and other Amazon basin countries.”

($1 = 0.8913 euros)

(Reporting by Gabriel Araujo; editing by Brad Haynes and Josie Kao)

Photograph: In this Nov. 25, 2019 photo, highway BR-163 stretches between the Tapajos National Forest, left, and a soy field in Belterra, Para state, Brazil. Carved through jungle during Brazil’s military dictatorship in the 1970s, this highway and BR-230, known as the Trans-Amazon, were built to bend nature to man’s will in the vast hinterland. Four decades later, there’s development taking shape, but also worsening deforestation. (AP Photo/Leo Correa)