The fire in the forest has repeatedly occupied space in the world press, while deforestation in Brazil has advanced at a rate of 20% per year since 2019. reputation of domestic agribusiness, an activity that moves almost a quarter of the Brazilian GDP.
With the discourse of combating the climate crisis gaining ground among investors, getting rid of the reputation of an environmental villain emerges as a necessity for the sector.
Aware of the financial risk that image damage represents, asset managers linked to agriculture seek international certifications to attest to good practices in soil management. Along the way, some are finding opportunities that go beyond exporting grain and meat. They target the billion-dollar carbon credits business.
With technology, entrepreneurs and scientists want to prove that the already profitable business of recovering degraded pastures for planting can also be an ally in the fight against global warming.
While it gathers qualified investors (who have at least R$ 1 million in financial investments) for its third fund focused on buying degraded land to recover it and sell it at a much higher price, AGBI Ativos Reais took a step towards the recognition of its efforts in the pursuit of sustainability.
Based on practices already adopted in its previous investments, the manager recently announced that it had obtained the “green” certification by NINT, a company specialized in businesses with low climate impact, for its new fund.
The certification is based on the European Union standards for sustainable finance SRFD (Sustainability Related Financial Disclosure) and on climate risk mitigation and adaptation criteria from the Climate Bonds Initiative, an international program for sustainable bonds.
Mario Lewandowski, director of new business at AGBI, says that the unprecedented certification along these lines for a Fiagro (Investment Funds in Agroindustrial Chains) emerged as a necessity to assure investors that production on the lands managed by the fund will be able to overcome mistrust and protectionist barriers of an environmental nature abroad.
“To demystify investment in agriculture in Brazil for foreigners, we had to speak their language”, says Lewandowski.
The certification process, which considered criteria such as the preservation of native forest in a proportion equal to or greater than that required by legislation and the capacity of the area (preserved and recovered for planting) to prevent the spread and remove carbon dioxide from the air, now lead to AGBI for a new business front. The company wants to add the potential gains from carbon credits to the areas under its management.
In the project that served as the basis for certification, if it had been applied, the generation of R$ 30 million in credits would compensate for the investment to acquire the area, sold for almost R$ 180 million after it was recovered, according to Lewandowski.
Land recovery for planting
Aurora Farm, in Comodoro (MT), had degraded pasture converted into a plantation area after a fund investment managed by AGBI – Disclosure
Green certification for agro-industrial investment funds is still a novelty in the domestic financial market, but the planting techniques that pave the way for it have been known to Brazilian producers for about 30 years.
The most widespread is the combination of periodic crop rotation in the same cultivated area with the no-tillage technique, a system created in Brazil that allows for sowing without the need to turn over large amounts of soil, as is done in the traditional process of plowing the soil. , explains researcher Ladislau Martin Neto, from Embrapa (Brazilian Agricultural Research Corporation).
During planting with the traditional method, opening furrows in the soil is responsible for releasing carbon dioxide stored in the soil. It is a necessary technique to stimulate the chemical and biological processes that allow the oxygenation of the soil, especially in regions with a temperate climate, where the soil spends part of the year frozen.
However, favorable climatic conditions allow many of the important crops for Brazil to be planted in a less invasive way. The opening of narrow cavities (about 15 centimeters) with greater spacing between the lines drawn on the ground (between 30 centimeters and 1 meter, for example) is sufficient for sowing.
No-till and complementary crop rotation also maintain nutrients and microorganisms in the soil and increase productivity. Soybeans and corn are preferred by producers due to their relevance in world trade.
This mechanism prevents the carbon dioxide absorbed by the plants and fixed in the soil by them from being released in greater quantities during planting or even by reducing soil erosion.
The measurement of how much carbon the recovered area is able to fix is ​​done by a system called Libs (laser-induced plasma optical emission spectroscopy), which fires a laser at soil samples to analyze their composition.
Of the approximately 250 million agricultural hectares in the country (about 30% of the national territory), approximately 40 million use no-till with conservation techniques, according to the Embrapa researcher.
When considering other management techniques that maintain soil cover, the number of areas with the potential to fix more carbon than to emit rises to around 100 million hectares, estimates the researcher.
He states that the size of the areas where these managements are already applied should place Brazil in the position of a global player in agriculture with a low climate impact.
“And if Brazil is all that, why isn’t there more visibility? Because with this history of deforestation we are bringing a problem [aumento das emissões] that enters the country’s account”, says Neto.
Agricultural practices that are less aggressive to the environment are not, however, synonymous with environmental conservation, says conservationist Clóvis Borges, executive director of SPVS (Society for Wildlife Research).
Borges says that, especially in cerrado areas, where agribusiness is practiced on a large scale, respect for legislation that requires the maintenance of 35% of the biome should be a priority for any business that seeks a label that seeks sustainability.
“The cerrado continues to be destroyed because there is no public policy to protect this biome. What exists is an initiative that wants to earn money from carbon, which is commendable and should be encouraged, but which is not synonymous with conservation,” he says.
AGBI’s Lewandowski agrees on the need for conservation. He states that the last area sold by the fund was planted only in pastures, preserving 50% of the cerrado area (the legislation requires 35%), without the need to deforest. “The image risk when deforesting is too big for the business,” he said.
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