The World Bank & HSBC Finance Amazon Reforestation

Created in 1944, The World Bank provides loans, guarantees, risk management products, and advisory services to support the Sustainable Development Goals and to end extreme poverty and promote shared prosperity. 

As the original member of the World Bank Group, The World Bank provides leadership to coordinate regional and global responses to development challenges.

It’s most recent investment? Reforestation. 

Financing reforestation

Focusing on the Brazilian Amazon region, The World Bank has mandated HSBC to structure a new outcome bond focused on reforestation. 

The World Bank (International Bank for Reconstruction and Development, IBRD) has mandated HSBC to structure a new outcome bond to address reforestation efforts in the Brazilian Amazon region.

The US$200m principal bond – The World Bank Amazon Reforestation Outcome Bond – supports the bank’s sustainability actions as well as boosting carbon reduction in the area.

In practical terms, the deal aims to re-establish around 25 forests in deforested areas of the Brazilian Amazon biome, each with at least 30 million trees of more than 100 native Brazilian species, many endangered. In total, the reforestation aims to cover 70,000 acres and generate hundreds of jobs for local communities.

“The World Bank continues to pursue innovative ways to finance sustainable development, and outcome bonds are a perfect illustration of this commitment.

"We are excited to unveil plans to expand our suite of outcome bonds, aligning investors’ financial returns with measurable and impactful outcomes in the fight against climate change,” said Jorge Familiar, Vice President and Treasurer of the World Bank.

In some ways, this bond is a test by The World Bank – if successful, it will springboard another method to support the bank’s mission to eradicate extreme poverty and boost shared prosperity on a livable planet. 

Mombak: Rebuilding the Amazon

Reforestation is the largest-scale opportunity to remove carbon from the atmosphere, says Mombak, the company working with The World Bank on this project.

Based in Brazil, Mombak specialises in large-scale reforestation projects in the Amazon by developing high-integrity carbon removal projects.

It says: “We cultivate native, biodiverse forests that remove carbon from the atmosphere in the highest-integrity way possible. Our projects have high additionality and durability and low leakage. In addition to removing carbon, they enhance biodiversity and foster socioeconomic development in local communities.

“We’ve started with the Amazon rainforest – arguably the world’s most valuable single natural resource. We bring together science, technology, forestry and carbon markets to create both the highest quality and the largest quantity of nature-based carbon removal credits in the world.”

The carbon credits generated by the projects are sold via spot market sales and offtake agreements – which will be linked to the bond’s targeted return.

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