Despite a slowdown in global deforestation since 1990, the world’s forests are nevertheless still disappearing at alarming rates. Global forest area shrunk by some 5 million hectares every year between 2010 and 2020 – an area roughly the size of Costa Rica. Predominantly the result of human activity, including agriculture, logging, and harvesting for fuel production, forest degradation is further exacerbated by climate change-related declines in the length and intensity of rainy seasons.
The Arbaro Fund aims to combat these developments by investing in sustainable forestry in Latin America and sub-Saharan Africa – regions that are home to more than two-thirds of the deforestation hotspots identified by the World Wildlife Federation. By offering a sustainable source of timber, Arbaro is tackling head-on one of the main drivers of deforestation while creating reliable employment opportunities in rural communities.
“An increasing demand for wood is putting natural forests at risk,” says Hanna Skelly, Managing Director of Arbaro Advisors GmbH. “When developed and managed in a responsible manner, sustainable forest plantations provide an efficient, renewable, and long-term source of raw material for local markets. What is more, by creating socially responsible jobs in rural areas, our projects also aim to generate socioeconomic benefits in areas where people are frequently driven to move to urban centers to find an income.” Arbaro was established in 2018 as a collaboration between Finance in Motion and the forestry experts at UNIQUE Forestry and Land Use. By the end of 2020, the fund had already invested in plantations in Paraguay, Ghana, and Sierra Leone. 2020 also saw another milestone. In November, Arbaro announced its second closing: Investors had committed a total of USD 110 million to accelerate the activities of the sustainable forestry fund.
“Arbaro is about more than growing trees, it is about taking a long-term view for healthy people and a healthy planet.”
Marco Kaiser, Managing Director, Arbaro Advisors
“We were so pleased at this confirmation of our investors’ commitment to long-term environmental health, especially in a time of such widespread uncertainty,” says Arbaro Advisors Managing Director Marco Kaiser. “The COVID-19 crisis poses all kinds of challenges across industries and geographies, but we nevertheless remain committed to our mission.” “And that included retaining a safe working environment,” continues Kaiser. “In fact, Finance in Motion contributed by donating EUR 20,000 to our investee in West Africa, Miro Forestry, for equipment to protect workers, their families, and local health service providers from the coronavirus. Miro also provided financial support to those unable to come to work – for example, someone with a condition that put them in a high-risk group or those staying home due to quarantine.”
Hanna Skelly adds: “Now, with this second closing, the fund is poised to really amplify our impact. We recently signed a letter of intent with the government of Ecuador to facilitate investments in commercial sustainable forestry projects. Ecuador’s forests are some of the most biodiverse areas of the world and need protecting. We are looking forward to helping develop the local timber industry in a sustainable manner while retaining and expanding job opportunities.” “Arbaro is about more than growing trees,” says Marco Kaiser. “It is about taking a long-term view for healthy people and a healthy planet.”