Peter Graham is Climate Advisers’ lead expert on forest and climate issues consulting for governments, financial institutions, and global NGOs. He was lead negotiator and policy advisor on reducing emissions from deforestation and forest degradation for Canada under the UNFCCC.
The world’s forests are essential to climate stability, biodiversity and sustainable development. Yet financial mechanisms to support their preservation remain limited. The expected launch of the Tropical Forests Forever Facility (TFFF) at the COP30 UN climate summit later this year in Brazil presents an opportunity to enhance conservation finance – provided governments and investors commit to it.
The TFFF represents a significant shift in conservation finance. Rather than focusing solely on emissions reductions, as REDD+ initiatives do, the TFFF is a permanent endowment fund that compensates governments for maintaining or restoring forested areas.
If fully capitalised, it could integrate conservation into national economic planning, ensuring long-term sustainability. Previous commitments, such as the Glasgow Leaders’ Declaration on Forests & Land Use, have set ambitious targets to halt deforestation by 2030. The challenge now is translating those commitments into tangible action.
New approach to an ongoing challenge
The concept of a sovereign-backed investment fund for forests has been discussed for years. It first emerged in 2010, but was put on hold due to shifting political priorities. It resurfaced in 2016 through research institutions and NGOs, culminating in the 2018 Center for Global Development proposal for a Tropical Endowment Fund.
The core idea was to create a financial instrument similar to a sovereign wealth fund, using government-backed guarantees to reward countries for conserving their forests. The World Bank later explored a variant – the International Financing Facility for Forests – but progress was hampered by the impacts of the COVID pandemic.
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Brazil’s President Luiz Inácio Lula da Silva has now reinvigorated the concept, making it a central part of his climate and development agenda. The timing is favourable: Brazil held the G20 presidency in 2024 and will host and assume the Presidency of COP30 in 2025, providing it with a strong platform to build global support.
Brazil’s Minister of Finance Fernando Haddad and Environment Minister Marina Silva, a seasoned advocate for forest protection, are leading the development of the TFFF, with the backing of key financial institutions. Major donors, including the UK, France and the UAE, have expressed interest, increasing the likelihood of success.
Breaking the green ceiling for forest finance
The TFFF’s success depends on attracting sufficient capital. Initial estimates suggest that a $125 billion endowment is needed to ensure impactful payments, with an initial government contribution of around $25 billion to attract private investment.
Private investors interested in patient capital, such as pension funds and re-insurance companies, should be attracted by the government-backed nature of the TFFF fund and how the impact should reduce the underlying, nature-related risk across their portfolios.
While substantial, this figure is modest compared to global financial flows. Norway’s Sovereign Wealth Fund, for instance, manages nearly $1 trillion, while the Abu Dhabi Investment Authority holds close to $800 billion.
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Given the scale of investments in “green finance”, securing the necessary funds for the TFFF is feasible but will need to break through yet another green ceiling for international forest finance.
If successfully implemented, the TFFF could surpass traditional donor-based funding models. Current commitments, such as the 2021 Global Forest Finance Pledge of $12 billion over five years, fall short of what is needed to meet global deforestation targets. The TFFF’s model offers a sustainable alternative by creating an investment-driven structure that prioritises long-term conservation
Geopolitics and other challenges
The TFFF must navigate several complexities. Its eligibility criteria (still to be finalised), requiring deforestation rates to stay below 0.5% per year, strike a balance between pragmatism and effectiveness. While some may argue that allowing any deforestation is problematic, the approach recognises the need for flexibility in national development plans.
Moreover, the fund’s reliance on forest area as a metric, rather than carbon emissions, simplifies implementation while still encouraging conservation.
Geopolitical factors will also influence the TFFF’s trajectory. The outcome of the 2024 US presidential election, with the subsequent withdrawal from the Paris Agreement and freezing of international development assistance, affects Washington’s participation.
However, forest conservation has traditionally garnered bipartisan support in Congress, suggesting some potential for US engagement regardless of administration changes. Even without the US, the TFFF’s viability will depend on commitments from Europe and other global players.
A defining moment for COP30
The stakes are high. COP30 is expected to deliver progress on climate finance after the underwhelming outcome of COP29. If the TFFF is successfully launched with sufficient backing, it will demonstrate real progress in aligning financial incentives with conservation efforts.
A well-capitalised TFFF would highlight the effectiveness of investment-driven environmental solutions and provide a model for other sustainability initiatives.
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The momentum behind the TFFF is strong. With committed leadership and growing international support, the initiative has the potential to set a new standard for conservation finance. If executed effectively, it could mark a turning point in the global effort to protect forests.
By embracing this opportunity, countries can move from pledges to action, securing a more sustainable future for tropical forests and the communities that depend on them. If it stumbles, it will reinforce scepticism about whether the international system can ever mobilise funds at the scale needed to tackle the climate and biodiversity crises.
