Investment
Opportunities
Agri-food sector
in Brazil

Prepared by the Climate Bonds Initiative

This publication is funded by the Gordon and Betty Moore Foundation throughthe Finance Hub, which was created to advance sustainable finance.

Report summary
This report demonstrates how investors canuse Climate Bonds Initiative (Climate Bonds)
transition frameworks and guidance to scrutinise
corporate strategy and identify credible
investment opportunities. The focus of the paper
is entities operating in the agriculture sector.

Content
Report summary 2
Introduction 3
Insights forinvestment opportunities 5

Confronting the impact of agriculture on
greenhouse gas (GHG) emissions is key todealing with climate change and biodiversity
loss. Climate Bonds is working across multiple
hard-to-abate sectors, including agriculture, todevelop science-based tools and guidance forstakeholders to align their business activities
with projects and opportunities consistent witha net-zero future. Developing a transition plan isthe first step in this process.

Overview offinancial instruments 8
Barriers, challenges
and solutions 9
Outlook 9

Brazil’s Scorecard
Total Amount
(USD)

LAC
RankingGreen

15.2bn1stSocial699m

4th

Sustainability

3.2bn

4th

SLB

11.9bn

1stTransition

670.4m

1st & only

Climate Bonds has developed a comprehensive
framework focused on enabling transitions at
the entity level. This framework provides clear
guidance and standards for entities acrossdifferent sectors. Crucially, the entity-leveltransition framework represents a critical shift
from project-specific criteria to a holistic, entitywide approach.

Major Brazilian companies operating in theagri-food sector are developing transition plans,
which are embedded in their sustainability
reporting. Two case studies (Syngenta andAmaggi) provide the standard by which
companies should be assessed using thetools provided by Climate Bonds. They offer
recommendations on the core activities to becontinued, those that should be reviewed, andwhere further disclosure may be required. A
credible transition plan should include detailsof a financing strategy. This report reviewssustainable debt instruments which can beaccessed by those operating in the Brazilian agrifood sector to finance the transition to net zero.
The ability to recognise credible transition plans
will empower investors with an environmental or
climate mandate to discern entities eligible forcapital investment and inspire a broader range ofentities to get started on their transition journey.

Acronyms
A&R: Adaptation and resilience
ASTP Agri-food Systems Transition Programme
CDP Carbon Disclosure Project
CSDDD Corporate Sustainability Due
Diligence Directive
ESG: Environmental, social, and governance
EU European Union
EUDR EU Deforestation Regulation
GHG: Greenhouse gases
GtCO2e Billion tonnes of carbon
dioxide equivalent
LCA Agribusiness Letter of Credit
SLB: Sustainability-linked bond
UN SDGs United Nations Sustainable
Development Goals

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative2

Introduction
Brazil ranks as the 7thlargest greenhouse gas(GHG) emitter worldwide,
contributing nearly 3% of
the global total of 50 GtCO2e
in 2020. The country’s
gross emissions stand at 2.16 GtCO2e, with net
emissions at 1.53 GtCO2e after accounting forforestry and land use removals (FOLU). Land usechanges (46%) and agriculture (27%) represent
the most significant sources, accounting foralmost 75% of Brazil’s gross emissions. More than
80% of agricultural emissions are attributed tolivestock emissions, of which cattle constituteover 90% (almost 80% for beef and over 10%
for dairy). Whilst livestock emissions havestabilised since 2005, crop emissions have beensteadily increasing, largely due to the increased
cultivation of crops such as soy (which is also
linked to animal feed), leading to deforestationand land use change across the country.1
Therefore, tackling the impact of agriculture on
the environment is key to limiting climate change
and biodiversity loss.
Sustainable activities are those that meet theneeds of the present without compromising
the ability of future generations to meet theirown needs.2 Due to the agricultural sector’scomplexity, however, a standard narrative on
sustainable agriculture is yet to emerge, leading
to greenwashing and incremental change.
In 2019, Climate Bonds developed science-based
guidelines and screening criteria for assets,
projects and activities based on mitigation,
resilience, and adaptation considerations to
support investors in identifying climate-credibleagri-food investments. These Agriculture
Criteria are a set of rules and standards designed

specifically for agricultural projects and assets
to encourage the transition of the agricultural
sector towards more sustainable and climatefriendly practices.3 These are now being updated
to include transition pathways and address
biodiversity loss, water and waste management,
circularity, and just transition under the Agri-foodTransition Programme.4
As part of this update, the Principles for Credible
Transition and guidance for corporate transition
plans have been published to enable investors to
identify credible and net zero-aligned investments
using the Hallmarks and Principles, which arefurther detailed below. An essential element of thetransition is clear timelines for improvement fordifferent practices alongside phase-out dates for
activities that cannot align with net zero.
The Climate Bonds Transition Principles specify
the fundamental requirements for transition plans
and activities to be credible and ambitious(Figure 1). As such, any entity, activity or project
meeting these principles contributes substantiallyto attaining the Paris Agreement goals and iseligible for capital investment with a climate orenvironmental mandate.6 Whilst they were initiallydesigned to address GHG emissions reductions,they could also be adapted to other agri-foodsystem goals such as biodiversity and water
protection, pollution prevention or just transition.
This approach is currently being developed in
the updated Climate Bonds Sector Criteria due
2024, focusing on key areas for agri-food transition
finance, such as crop and livestock production.
This report presents and exemplifies the use of
Climate Bonds’ screening toolkit, applied to theagri-food sector in Brazil. It presents two casestudies, and then examines the main financial
instruments, barriers, challenges, and solutions.

Climate Bonds Agri-Food Transition Programme
In 2021, Climate Bonds
launched the Agri-food
Systems Transition
Programme (ASTP), under its
wider transition programme.
The overarching goal was
to mobilise global capital for financing thetransition of key sectors of the economy to alignwith a net-zero, resilient, and sustainable future
as well as ensure deforestation and conversion
free agri-food production. The programme had
two key outcomes that contribute to this goal:
Outcome 1: to build a common sharedunderstanding, that is rooted in climate
science, of 1.5-degree and climate resilienttransition pathways (and associatedstandards) that are consistent with other foodsystem transition outcomes.

Outcome 2: to facilitate financial
instruments; including SLBs and loans,transition bonds, and green bonds to beissued for demonstration purposes by
public and private sectors, using common
definitions and standards, for the financeof credible transition assets, activities, andstrategies in agri-food systems.

The Carbon Disclosure Project (CDP)
defines a climate transition plan as a timebound action plan that clearly outlines how
an organisation will pivot its existing assets,
operations, and entire business model
towards a trajectory that aligns with thelatest and most ambitious climate science
recommendations i.e., halving greenhousegas (GHG) emissions by 2030 and reachingnet-zero by 2050 at the latest, thereby
limiting global warming to 1.5°C.5

Figure 1:
Five Transition Principles.7
Principle 1.Credible
transition goals andpathways align with 1.5°C
global warming limits.
Principle 2: Credible
transition goals andpathways are establishedby the climate science
community and are notentity specific.
Principle 3: Credible
transition goals andpathways don’t countoffsets, but should count
upstream scope 3 emissions
as much as possible.
Principle 4: Credible
transition goals andpathways take into
account technologicalviability, but not economic
competitiveness.
Principle 5: Credible
transition means actuallyfollowing the transition
pathway – pledges andpolicies are not sufficient.

Relevant Sector Criteria development started
in early 2023. Crop Production, Livestock
Production and Deforestation/Conversion-freesourcing will be the first under development
and available for Certification under the
Climate Bonds Standard. The new Criteria willbuild upon Climate Bonds existing Agriculture
Criteria, which can already be used to Certify
assets and activities.

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative3

This transition guidance acknowledges thatto meet global climate goals, businesses andorganisations must implement systematicchanges across their operations, not just within
specific projects or assets. The transition
framework, developed in line with the Paris
Agreement’s goals, outlines criteria that entities
must meet to demonstrate the ability and intent
to transition. These criteria cover operations,
including business models, strategic planning,governance structure, as well as clear, sciencebased benchmarks for reducing GHGs, limiting
global warming to below 1.5oC above preindustrial levels. The framework also emphasises
the need for a credible, robust, transparent
transition plan, which demonstrates how
the entity intends to transform its operations
and align with a low-carbon, climate-resilient
trajectory over time. The transition plan issubject to independent assessment andapproval, ensuring transparency and credibility.
This framework is called the Hallmarks of credible
transition and these five Hallmarks are captured
in the Triple A framework of Ambition, Action andAccountability (Figure 2). Together these demonstrate
the company is willing, able, and transparent about
moving toward a sustainable future.
The five Hallmarks enable an encompassing
view of a company’s transition plan, taking into
consideration the following:a. The level of ambition of the targets set(Hallmark 1 - which itself encompasses thefive Transition Principles);b. The willingness and ability to deliver on
those targets (Hallmarks 2 to 4); and,c. General reporting robustness andtransparency (Hallmark 5).
To address concerns from issuers and investors
over the burden of information and reporting
requirements while maintaining robustness andcredibility, the Hallmarks focus on the essentials
needed to demonstrate a credible transition.
While complementing existing ESG frameworks
and methodologies, this framework also goesbeyond them. It emphasises key governanceelements that indicate a company’s willingness
and ability to deliver on its decarbonisation
targets. It also adds the granularity to ensure
those targets are ambitious and alignedwith agreed climate goals. This framework
was built upon material from the Transition
Pathways Initiative and the Climate Action 100+benchmark, CDP’s initiatives (Assessing LowCarbon Transition Initiative and Science Based
Targets initiative), UN’s Race to Zero, ICMA’s SLB
Principles and the TCFD recommendations.
All of these frameworks have been designed
to improve information for investors or offer
guidance to corporates, with the objective ofdriving ambitious corporate action.

Figure 2: Triple A transition plan framework and five hallmarks8
Ambition

ActionAccountability

Performancetargets

Robustplans

ActionGovernance

Disclosure

Climatemitigation

VisionInterimmilestones

Board andseniorexecutive
responsibility

Information todisclose

Adaptation andresilience
NatureJust transition

Strategic
narrative
Action plan
scope 1, 2 & 3
GHGs

Annualverification ofprogress

Actionplans - otherperformancetargets(Re) setting andmonitoringtargets andplans

Comparability
andaccessibility

Corrections

Internal policyalignment
Sensitivity
analysisHallmark 1

Hallmarks 2 & 3

The Hallmarks can be used by investors to
scrutinise the strategies of companies anddetermine their environmental credentials. In
order to do that, the Hallmarks should be applied
respecting the following hierarchy:
i. There must be a public commitment toambitious targets (Hallmark 1);
ii. These targets are only valid when thefoundation has been established to deliver onthem (Hallmark 2);

Hallmarks 4 & 5iii. There must be evidence of change derived
from tangible milestones in the corporate strategy
and capex/opex investments (Hallmark 3);
iv. Internal feedback must be present to trackprogress and recalibrate plans if necessary(Hallmark 4);
v. External reporting is essential to build trust in
the market (Hallmark 5).

Transition Plans need to include:• Key Performance
Indicators (KPIs):
measurable values suchas a company’s total
greenhouse gas (GHG)
emissions; and• related Performance Targets (PTs) todefine what needs to be achieved, e.g., a
50% reduction in GHGs by 2030.
A company’s specific KPIs need to be:• relevant, which is defined as beingmaterial to the firm’s core sustainability
and business strategy, and addressing
relevant sector environmental, social and/Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative

or governance challenges. They also need
to be under management control, of highstrategic significance to the firm’s current
and/or future operations,;and• measurable or quantifiable on a consistentmethodological basis,• externally verifiable, and• able to be benchmarked using externalreferences or definitions.
Transition Plans must also define a robust andtransparent implementation plan to define
how they will achieve their goals.

4Insights for investment opportunities
The first step to identifying potential investmentsin the agri-food sector is to target thosecompanies with transition strategies, andassess the pathways using the Hallmarks andPrinciples for credible transition to establish
whether a company has environmental
credentials. Large corporates in the sector suchas Bunge, Syngenta, Marfrig, Minerva Foods,
Carrefour, Danone, Nestle and Amaggi haveformally disclosed their strategies within theirsustainability reports.9,10,11,12,13,14,15,16 Among thesenames, two case studies were selected to serve
as benchmarks illustrating how companies
should be assessed against the tools provided
by Climate Bonds. Brief recommendations
are made on the main actions the company
should continue doing, as well as aspects
that it should review and/or where it should
provide more information.

Syngenta case study
Syngenta is a leading
science-based AgTech
company, serving
millions of farmers
worldwide, and provides
various inputs for foodand fibre production, suchas pesticides, herbicides,
fungicides, and fertilisers. The company is
the source of relatively large scope 1, 2 and3 emissions, and potentially poses threats toother environmental assets, such as biodiversity
and water through its activities. The company
publicly commits to fast-track innovation andinvest in promoting more sustainable agricultural
practices, beneficial for nature, farmers, andsociety as a whole. The following analysis was
conducted based on the company’s 2021 ESG
report and its Carbon Disclosure Project (CDP)
annual reporting.17,18
The Syngenta Foundation for Sustainable
Agriculture (SFSA), an integral part of thecompany, is dedicated and reported to be
spearheading innovation that bolsters smallscale farmers in developing countries with thedeclared aim of enhancing their productivity,
income, and resilience. The Foundation
concentrates on improving seed access,offering insurance, and providing agricultural
services. In support of these initiatives, SFSA
is involved in research and development withthe goal of increasing yields for smallholdings,
and advocates for policies fostering better
opportunities for farmers and rural youth.
Syngenta underscores its commitment totransparency by disclosing its transition KPIs
as part of the Good Growth Plan (GGP). The
term GGP is used to define the company’s ESG
strategy, which seeks to deliver on these KPIs

through strategic actions and consistently
reporting on its progress. Syngenta targets
scope 1, 2 and 3 emissions. Scope 3 emissions
include 12 of the 15 scope 3 categories under
the CDP Reporting framework, excluding only
the categories: use of sold products, franchises,
and investments. Regarding the use of soldproducts, the company states that the end-use of
its products results in carbon savings through themore efficient use of resources and land in the
agricultural value chain.

Continue:
Governance structure
Review: Transition pathway
1.5°C aligned
Provide: A broader
financial strategy to meet
performance targets
Hallmark 1:
Performance targets
Under the GGP, Syngenta hasestablished targets categorised into
four groups, each aligned with a primary objective:
1. Accelerating innovation for farmers andnature which includes continuous investment insustainable agricultural breakthroughs, delivering
two new sustainable technological innovations
each year, and striving to minimise residues incrops and the environment.
2. Striving for carbon-neutral agriculture,
which involves measuring and facilitating carbon
capture and mitigation in agriculture, improving
biodiversity and soil health on three million
hectares of rural farmland annually, and a reductionof 50% in the carbon intensity of Syngenta Crop
Protection and Seeds operations by 2030.
3. Helping people stay safe and healthy
which includes achieving zero incidents inoperations, training eight million farm workers
annually on safe usage, and advocating for fairlabour throughout the supply chain.
4. Partnering for impact involves building
cohesive partnerships and publishing theirsustainability objectives, initiating innovation
dialogues for inclusive consultation onsustainability, and implementing board-levelsustainability governance.
Simultaneously, the company’s carbon reduction
targets are set and validated by the Science
Based Targets initiative (SBTi) guidelines, marking
them as science based. SBTi asserts Syngenta’s
pathway aligns with sector-specific guidelines tolimit warming below 2°C although the company
is encouraged to augment its ambition further tobecome fully aligned with a 1.5°C scenario.

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative

Additionally, all targets within the GGP are
declared to be aligned the UN Sustainable
Development Goals (SDGs), clarifying the
primary objectives. In general, targets
are comprehensive and embed major
environmental and several social issues.
However, Climate Bonds encourages Syngenta
to broaden its targets, confronting additionalrisks its activities may trigger, such as thoserelated to the unabated use of pesticides,
herbicides, and fungicides. While Climate Bonds
recognises that these inputs are essential for
thriving global agriculture and food safety, thedevelopment of a global target prioritising theshift, where possible, to less harmful solutions,such as biocontrol and biofertilizers, isrecommended. Even though Syngenta has been
investing and developing in these areas throughacquisitions and research, the company needs
to restructure its business model and prioritise
these solutions over chemical inputs.

Hallmark 2:
Foundation andHallmark 3:
Implementation plans
Syngenta’s stated long-term
objective is to foster and establish
a stronger foundation forsustainable agriculture. While
Climate Bonds commends Syngenta’s meticulous
disclosure of GHG emissions from scopes 1, 2,
and 3 upstream processes, these boundaries
exclude the deleterious effects its products may
pose to the environment and society. Climate
Bonds encourages Syngenta to assess these risks
more rigorously and establish clearer plans totackle this broader issue.
Despite these disclosures, the strategy lacks
specific information regarding the corporate
vision for its future business model. Climate
Bonds encourages Syngenta to formulate a morein-depth, strategic narrative detailing the interim
or stranded activities, which articulates how they
will be phased out and provides insights into thecompany’s future business model.
Syngenta has implemented a delivery plan
for all primary objectives outlined in its ESG
strategy. To reach the 2030 carbon intensity
reduction target for GHG emissions in scopes
1 and 2, the company is concentrating on
enhancing manufacturing process efficiency,
designing and rolling out site-specific energysaving programmes, expanding the proportionof renewable energy sources, and collaboratingwith crop protection and seed suppliers todiminish their carbon footprint. Syngenta’s
internal policy framework, the Health, Safety,
and Environment Policy Framework (HSE),aligns with its ESG plan execution.

5However, the strategy would benefit fromfurther details on the finance plan, including thefinancial implications of the strategic narrative
and the action plans. The company shouldelaborate on how future investments andfinancing will facilitate the achievement of its
performance targets.

Hallmark 4:
Governance
Climate Bonds commends
Syngenta’s approach tosustainability governance. This aspect is overseenby the Board of the parent company, Syngenta
Group Co. Ltd., which offers strategic guidanceon all sustainability issues. The Board alsodelegates some of its responsibilities and powers
to the Syngenta Group Sustainability Committee,
the senior management body responsible forthe company’s ESG strategy. This committee
oversees sustainability concerns within
innovation and operations, and assesses thecompany’s sustainable practices. It supervises
the company’s sustainability framework andstandards, including public ESG reporting, itsplan, strategic sustainability partnerships, andinnovation dialogues. Moreover, it reviews andprovides advice on the effectiveness of internal
policy implementation, as each member istasked with incorporating sustainability into
their responsibility.

Hallmark 5:
Disclosure
Syngenta maintains an up-to-dateand easily accessible repositoryof all information pertinent to its ESG plan on
its website. The company clarifies how these
disclosures align with its materiality matrix,
selected frameworks like GRI, SASB, UNGC, SDGs,
and the GGP. Syngenta also identifies which
performance indicators have been subjected
to external assurance. Finally, as noted above,
Syngenta reports against the CDP questionnaire.

Amaggi case study
Amaggi, a major Brazilian
corporation, plays asignificant role in theagri-food value chain. Its
operations encompass
the production of grains
and fibres, the sourcing ofagricultural commodities, and the processing andtrading of these products. The company’s logisticalactivities include managing terminals, ports,
grain warehouses, soy-crushing plants, a fertiliser
blending plant, and providing transportation
services via water and land. Furthermore,
Amaggi has been ramping up its investments
in renewable energy generation through five
Small Hydropower Plants (SHPs) and six solarpowered plants located in Mato Grosso. It has
a global presence with offices and operations
across Brazil, China, Argentina, Paraguay, theNetherlands, Norway, and Switzerland.
Amaggi has set ambitious goals, including
achieving a 100% monitored and traced
grain supply chain (soy and maize), free fromdeforestation and conversion (Deforestation andConversion Free - DCF) from the field to the port
by 2025. The company also aims to reach netzero emissions by 2050. It commits to the Science
Based Targets initiative (SBTi) with strategies todecarbonise by 2035 and neutralise potential
residual emissions. These targets are backed
by a detailed implementation plan, subject
to external auditing, and fully disclosed in the
Amaggi ESG Report 2022.19

Continue: Pursuing
science-based targets.
Provide: Broader guidanceon reducing global emissions;a more detailed long-term
financial plan.
Hallmark 1:
Performance targets
Amaggi’s states that performancetargets are based on sciencebased guidelines such as those provided by
the Science Based Targets initiative (SBTi),aligning the company’s ambition with 1.5°C
pathways, with specific milestones in 2035 and2050 (see below). These targets are divided
into environment, social, and governance.
Furthermore, each target is linked to a specific
UN SDG, clarifying the core objectives.

Environmental targets encompass:• Providing innovative products and solutions foran ethical, zero-deforestation and conversionof native vegetation, regenerative, and lowcarbon value chain;

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative• Investing in renewable energy to maintain selfsufficiency in production versus consumption;• Ensuring a grain supply chain that is 100%monitored and traced, free from deforestationand conversion (DCF) for agricultural
production until 2025 for direct suppliers, andapplicable to all biomes, countries, and regions
where the company operates;• Achieving net-zero emissions by 2050, aligningwith the SBTi through decarbonisation
strategies by 2035 and neutralisation ofpotential residual emissions, primarily
through promoting regenerative, low-carbon
agriculture capable of protecting biodiversity;• Remaining DCF (since 2008) for agricultural
production on owned farms, ensuring
expansion only in existing areas.

Social targets include:• Encouraging initiatives to bolster agricultural
productivity and income for small farmers, witha focus on rural women and family farmers;• Ensuring and promoting a healthy environmentthat prioritises safety, quality of life, and thewell-being of employees and contractors;• Significantly increasing the number of courses
offered to employees and contractors through
AMAGGI University;• Investing in actions to develop critical suppliersin the chain and facilitating the professional
development of vulnerable individuals fordecent work opportunities;• Highlighting the positive impact generated in
the communities where the company operates,
prioritising projects in strategically significant
territories for the business and the mostsocially, economically, and environmentallyvulnerable populations;• Upholding activities that respect and promote
human rights in all operations and throughout
the value chain, especially among indigenous
peoples and traditional communities.

Governance targets comprise:• Enhancing the communication process of
relevant ESG issues to stakeholders concerning
metrics, indicators, form, and content;• Implementing a diversity program by 2025,
aiming at social inclusion for all;• Ensuring the continuous improvement of
the company’s corporate governance andrelations with all stakeholders that preservesa culture of integrity, ethics, responsibility, risk
management, and best business practices;• Maintaining the Confidential Channel for all
stakeholders and the Woman Channel toaddress non-compliance with the Amaggi
Code of Ethics and Conduct.

6

Hallmark 2:
Foundation andHallmark 3:
Implementation plans
Amaggi has structured a strategy
for its transition plan, highlighting
strategic objectives and prioritiesaligning with the company’s targets.
The focus is on future economic activities andbusiness models, such as promoting regenerative
agriculture as a prevalent future production
system. Amaggi lays out a strategic narrative,
describing its transition towards this vision.
For instance, the company plans to promote
regenerative agriculture initially within its farms
and gradually expand the concept and practices
to include production partners. This strategy
involves investing in agricultural technology
and employing innovative techniques that
support ecosystem regeneration. In 2022,
Amaggi partnered with ReNature, a consultancy
specialised in regenerative transition, withthe goal of providing support in developinga regenerative agriculture programme, now
named Amaggi Regenera.20 The company statesthat the programme aims to improve initiatives
and performance indicators to ensure climate
targets are effectively met through regenerative
agriculture, and monitor regenerative transitionindicators informing necessary improvements.
The programme was launched in June 2023.
However, Climate Bonds recommends that
Amaggi should further clarify which indicators areto be monitored and how much is actually being
invested in this transition of practices.
Amaggi’s vision and strategic narrative bothalign with social and environmental aspects. For
instance, Amaggi’s productive activities occur
outside full protection conservation units andindigenous lands boundaries. The company
implements policies and monitoring activities
to ensure respect for traditional communities,
family farmers, and land use rights. Additionally,
the company has initiated a pilot programme tomonitor the flora and fauna of the agriculturallandscape, forming a task force to understand its
comprehensive impact on biodiversity.
Amaggi has established a clear roadmap
featuring action plans, milestones, and initiatives
that it is currently implementing (or planning) toachieve its performance targets. The company
effectively uses internal policies to support thisstrategy, frequently revising and adapting themto meet future target requirements.
This implementation plan highlights the Originar
traceability platform, designed to ensurecompliance with social and environmental
criteria.21 This tool comprehensively monitors
the entire grain supply chain using satellite
imagery for socio-environmental and agricultural
production analysis. This is cross-referenced
with the company’s commercial data, enhancing

safety and traceability. Originar 2.0 continuously
refines its process for monitoring suppliers andtracing the grains sourced, adopting geospatial
identification of all suppliers at the point of
product trading.
Climate Bonds commends the company’s
annual release of the GHG emissions report via
the Public Emissions Registry of the Brazilian
GHG Protocol Programme. This report includes
scope 1, 2, and 3 (upstream) emissions, clearly
associating data fluctuations over time with
their causes and highlighting actions to addresseach indicator. Despite the clarity in reporting
structure and a 31% reduction in scope 2
emissions, the company disclosed an increaseof 83% in scope 1 and 23% in scope 3 emissions
its 2022 ESG report. The company attributes theincrease of scope 1 to:

executing the plan and ensuring all necessary
resources are available. This structure is ideal fordelivering a credible transition plan.

Hallmark 5:
Disclosure
Amaggi ensures that all information
pertinent to its sustainability plan isaccessible and regularly updated on its website.
The company prepares all its reports anddisclosures in compliance with the guidelines set
by the Global Reporting Initiative (GRI).23

i. Completion of the system integration
process initiated after the acquisition of O Telhar
Agro Group’s operations in Brazil;
ii. The governance improvements resulting
from this process which have enabled moreaccurate reporting;iii. The expansion of cultivated area throughthe optimisation of less agriculturally suitableareas within farms, which required increased
investment in inputs and the use of agricultural
practices tailored to the soil characteristics;
iv. An accidental fire outbreak accountingfor 67% of the total increase in emissions
within this scope.22
For the increment in scope 3 emissions, thecompany states that increased agricultural
production and, consequently, higher shippingand export volumes were the main cause.
Climate Bonds strongly opposes the increasein Amaggi’s GHG emissions. This goes against
the objective of transition strategies to alignindustries to 1.5oC pathways, which are essential
to meeting the Paris Agreement goals. Rather
than increase GHG emissions, Amaggi needs
to develop a better strategy to reduce global
emissions in line with its decarbonisation targets.
Furthermore, Climate Bonds recommends moreclarity in Amaggi’s ESG reporting on the financial
actions to fund their transition plan. The disclosureof the finance plan should encompass more thanjust its current sustainable debt issues. It should
also outline future deals and funding plans to
support the company’s performance targets.

Hallmark 4:
Governance
The Board provides generalguidance for business, policies,
targets, and long-term goals. As such, they
oversee the company’s transition strategy,
approving and monitoring targets. The Directorof ESG is the Board member responsible forInvestment Opportunities Agri-food sector in Brazil Climate Bonds Initiative

7

Overview of financial instruments
Recent innovations in
Brazilian agri-food financing
have broadened financial andcapital market opportunities.
This trend is set to continue,as agriculture remains a
critical sector for the country’s economy,
contributing to social justice and overall welfare,both of which are key policies of the current
government elected in 2022.
In the Brazilian capital market, popular
agricultural finance instruments include theAgribusiness Letter of Credit (LCA), Rural ProductNotes (CPR), Agribusiness Receivables Certificate(CRA), and Investment Fund in Agro-industrial
Production Chains (FIAGRO). Although tradefinance instruments are less widely used in the
sector compared to the instruments mentioned
above, they have potential to serve as asustainability lever and should be considered byboth issuers and investors.
LCAs have become an important funding source
for rural credit in Brazil, increasing from less than
1% of rural credit flows in 2014 to 15% in 2020,
which represents approximately BRL43bn.25 LCAs
are particularly appealing to domestic investors
due to their 35% income tax exemption, whichgoes towards funding rural credit.
CPR is a credit instrument rural producers andcooperatives use to secure resources, primarily
for production costs. Despite its widespreaduse, the extent of its usage has been obscured
as most transactions still need to be officiallyregistered. Recent regulatory changes, however,mandate that all CPRs must be registered as of2024, resulting in a surge in registered transactions
by over 400% in 18 months. Registration is an
important factor for investors, as it assures
the instrument is being priced properly andadministered according to local legislation. By theend of 2021, registered CPR transactions reached
BRL86bn with volumes expected to align with thetotal amount of rural credit by 2024.26
The Green Rural Product Certificate (Green CPR),
designed to fund reforestation activities andnatural resource protection on rural properties,
represents a promising innovation to traditional
CPR. The barrier to uptake of Green CPRs is therequirement for specific methodologies to verify
and validate environmental services.
CRAs, backed by receivables, are another form of
fixed-income security. Companies can transfer
their receivables to a securitisation company,
which will issue CRAs for capital market trading,usually supported by a financial institution. This
allows the company to anticipate its receivables.
Although CRAs have historically been backed bya single corporate credit, the market is starting
to explore diversification to broaden potential

Figure 3: Evolution of share of rural credit by funding source; total in BRLbn.24
Compulsory Resources

Rural Savings (restricted)

Agriculture Letter of Credit (LCA)
Unrestricted resources
100%

139

164

154

BNDES/ FINAME (equalizable)

Rural Savings (unrestricted)

Others
116

167

181

179

206

290

BRLbn

80%
Marketinterest
rates

60%

40%
Controlledinterest
rates

20%

0%
2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: SDA Socioeconomic Development Advisors based on Brazilian Central Bank Data (2022). Available at: https://dadosabertos.bcb.gov.br/

issuers, which could lead to a strong expansion of
the registered CPR market.
FIAGROs, a new addition to financial instruments,
are investment funds encompassing various agrifood assets, including credit rights, real estate,securities, and company shares. Since their legal
creation and approval in 2021, FIAGROs haveseen good market uptake and have the potential
to spur market growth, opening up agri-foodassets to new investors.
Brazil is one of the largest potential markets forsustainable finance growth in sectors related toland use and agri-food. A 2020 Climate Bonds
report Unlocking Brazil’s Green Investment
Potential for Agriculture highlighted an estimated
USD163bn investment potential up to 2030.27
Sustainable finance mechanisms are becoming
widely recognised as important alternatives.
The Land Use category of the Climate Bonds
Taxonomy, which covers agriculture, livestock
production and forestry, is a prolific source ofgreen, sustainability, sustainability-linked andtransition bonds representing around 60% of
the total volume originating from Brazil. Other
agriculture related sectors, such as renewableenergy (including bioenergy), industry, buildings,
water, waste and transport are also relevant
across these labels and together represent
around 30% of Brazil’s total issue volume acrossthese four labels.

Brazil team have collaborated with the Treasury
on best practice.28 This deal is expected to
attract crowding in from the private sector andencourage the momentum for green market
creation. The sub-sovereign market is limited
in Brazil, due to guarantees required fromgovernment for municipalities and states willing
to issue any kind of debt; a procedure always
blocked by Brazil’s financial regulators.
Finally, trade finance instruments currently havea limited share of overall rural credit volumes(fluctuating between 10–12% over the last 4 years)
but are also an important channel of investment
for the sector.29 They can embed sustainability
guidelines and benefits into the agri-food value
chain. The Advance on Foreign Exports Contracts(ACC) and Exports Advance Payment (ACE) are
the two primary trade finance instruments in
Brazil, covering about 40–50% of overall Brazilian
exports. The ACC provides working capital forthe pre-shipment stage, while the ACE reduces
payment delays for shipped goods.
The International Chamber of Commerce (ICC)
was the first to propose definitions and guidelines
for sustainable trade finance, stating thatsustainable trade involves the import, export, ortrade of goods and services that actively support
the UN SDGs. ICC’s approach encompasses all
sustainability dimensions (beyond environmental)
and is recognised across jurisdictions.30

Brazil has committed to pricing its first sovereign
sustainability bond in Q4 2023. The Sovereign
Sustainability Bond framework was publishedin September 2023, and the Climate Bonds

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative8

Barriers, challenges and solutions
The Brazilian agri-food sector
promotes optimism in termsof economic growth, GHG
emissions mitigation, and theadvancement of social justicethrough the assurance of both
domestic and global food security. As a competitive
producer of livestock and livestock feed, Brazilsees growing demand for these products. Yet,these commodities have a high environmental
impact and a substantial GHG footprint. Despite
noteworthy strides in reducing the carbon footprintof its major agricultural products, Brazil still has aconsiderable journey towards achieving net-zeroemissions, a target of utmost importance, giventhat climate change could adversely impact thecountry’s agricultural production.
Companies focusing on building adaptation
and resilience to climate impacts will bebetter equipped to thrive amidst the emerging
physical and regulatory transition risks. The transition
also presents numerous opportunities regarding
new technologies and business models. Over the
past decade, more than 1500 start-ups have been
established, each committed to solving challenges
farmers and other stakeholders face in the value
chain. These companies operate across various
segments in the agri-food sector, contributing
to a vibrant innovation landscape. The Brazilian
Agriculture Research Corporation (EMBRAPA)
plays a crucial role in this landscape, conducting
fundamental and applied research to provide thescientific inputs necessary to scale up innovation.

While Brazil’s agri-food sector is a significant
recipient of Foreign Direct Investment (FDI),
and possesses enormous potential within an
innovative environment, some key structuralissues could deter investment. A significant
challenge lies in the bottlenecks in farmgateto-farmgate investment risk assessment, wherelenders and debt holders who are usually
farmers and growers, often need to provide
more detailed financial information andtraceable operations. Additionally, improved
infrastructure and increased funding relative tofarm support is required to develop the sector,
with demand for larger investments in transport
networks and rural infrastructure.31
Despite Brazil’s comparatively low public
support for the agri-food sector, thegovernment maintains a wide range of priceand credit policies, such as interventions in thecredit sector through interest rate subsidies
and mandating that banks allocate at least
29% of their demand deposits to agricultural
lending. While larger farmers who can borrowon international markets see limited benefits
from this controlled credit system, it burdens
medium-sized farmers and other industries
forced to borrow domestically at market rates.
Implementing reforms could reducethe misallocation of resources and reduce thecost of borrowing.

Finally, there is increasing pressure globally forthe establishment of traceable, sustainable anddeforestation-free supply chains, which will
have to be addressed by the public and private
sectors in Brazil in order to maintain access tointernational markets. The European Union has
adopted a new regulatory framework to curb
the bloc’s impact on global deforestation andforest degradation around the world. The EU
Deforestation Regulation (EUDR) requires any
company importing or exporting certain products
derived from cattle, cocoa, coffee, oil palm, rubber,soya, and wood from or to the EU to prove theproducts are deforestation-free through extensive
due diligence on the value chain. The regulation
defines a product as deforestation-free when the
product itself, its ingredients, or its derivatives were
not produced on land subject to deforestationor forest degradation after the deadline of 31
December 2020. These requirements will comeinto effect in 2025, 18 months after adoption
by the European Parliament and Council. In
addition, the Corporate Sustainability Due
Diligence Directive (CSDDD) ‘will set out ahorizontal framework to foster the contributionof businesses operating in the single market to
the respect of human rights and the environment
in their own operations and through their value
chains, by identifying, preventing, mitigating andaccounting for their adverse human rights, andenvironmental impacts, and having adequate
governance, management systems and measuresin place to this end.’32

OutlookA well-functioning agri-foodsector is crucial for ensuring
food safety, promoting humanhealth, and overall well-being.
However, the Brazilian agrifood sector is also a major
contributor to the country’s deforestation, asubstantial emitter of GHGs, and is associatedwith risks such as diminished water quality andbiodiversity loss. To align with the Paris Agreementtargets, entities operating in this sector must
establish ambitious yet achievable transition
goals and redesign aspects of their operations.
This transformation across the entire value

chain requires financial capital throughout thetransition journey. Consequently, investors need
to be prepared to recognise credible opportunities
that will definitively support this process.
Climate Bonds is responsible for developing tools
and outlining processes that ensure capital flows
are meeting the transition needs of companies
following appropriate pathways. The Five
Transition Principles and Hallmarks for crediblytransitioning companies are practical examples
of such tools. These guidelines can be used toscreen companies in the agri-food sector, thereby
identifying credible investment opportunities.

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative

The case studies presented indicate that major
companies in the sector are preparing transition
plans and embedding them in their sustainability
reporting which is a crucial step forward. The
transition conversation is in the early stages, andthe companies assessed still have gaps to fill
but transition plans can be fleshed out as newopportunities to decarbonise become available.
Investors can support entities that have credible
transition plans and encourage more issuers tocommit to a decarbonisation journey.

9Endnotes
1. Climate Watch GHG Emissions - CAIT data (2022). Available
at: https://www.climatewatchdata.org/ghg-emissions?end_
year=2019&start_year=1990
2. Brundtland, G. (1987). Report of the World Commission on
Environment and Development: Our Common Future. United
Nations General Assembly document A/42/427. Available at: https://www.are.admin.ch/are/en/home/media/publications/sustainabledevelopment/brundtland-report.html
3. https://www.climatebonds.net/standard/agriculture
4. https://www.climatebonds.net/transition-finance/agri-food-transitions
5. CDP, (2022), Technical Note: Reporting on Transition Plans
6. Climate Bonds, (2020). Principles for Transition (climatebonds.net)
7. Climate Bonds, (2020). Principles for Transition (climatebonds.net)
8. Climate Bonds Initiative (2023), Guidance to asses transition plans
9. https://www.bunge.com.br/
10. https://www.syngenta.com.br/
11. https://www.marfrig.com.br/pt
12. https://minervafoods.com/en/minerva-proud-to-be-more/
13. https://mercado.carrefour.com.br/?utm_medium=sem&utm_
source=google_branding&utm_campaign=branding&gclsrc=aw.
ds&gclid=CjwKCAjwm4ukBhAuEiwA0zQxky4szCXRHSWUEqxjFr5V6hB
H-C2iTjzWNSgaQMvOSfpmFw996e1GHBoCztcQAvD_BwE
14. https://corporate.danone.com.br/

15. https://www.nestle.com.br/
16. https://www.amaggi.com.br/
17. Syngenta ESG Report (2021). Available at: https://www.syngenta.
com/sites/syngenta/files/sustainability/reporting-sustainability/
Syngenta-AG-ESG-Report-2021.pdf
18. CDP, (2022), Technical Note: Reporting on Transition Plans
19. Amaggi ESG Report (2022). Available at: https://www.amaggi.com.
br/wp-content/uploads/2023/07/ESG_Amaggi_2022_EN.pdf
20. https://www.amaggi.com.br/wp-content/uploads/2023/06/
AmaggiRegenera_PT-azul.pdf
21. http://20.206.65.65/portal-seguranca/
22. Amaggi ESG Report (2022). Available at: https://www.amaggi.com.
br/wp-content/uploads/2023/07/ESG_Amaggi_2022_EN.pdf
23. https://www.globalreporting.org/
24. SDA Socioeconomic Development Advisors based on Brazilian
Central Bank Data (2022). Available at: https://dadosabertos.bcb.
gov.br/25. Brazilian Central Bank Data (2022). Available at: https://
dadosabertos.bcb.gov.br/
26. Brazilian Central Bank Data (2022). Available at: https://
dadosabertos.bcb.gov.br/
27. https://www.climatebonds.net/files/reports/brazil_agri_
roadmap_english.pdf

Prepared by the Climate Bonds Initiative

Author: Leonardo Gava Mataram, Climate Bonds Initiative

28. https://www.gov.br/tesouronacional/pt-br/divida-publica-federal/
titulos-sustentaveis-arquivos/arcabouco-brasileiro-para-titulossustentaveis
29. Brazilian Central Bank Data (2022). Available at: https://
dadosabertos.bcb.gov.br/
30. International Chamber of Commerce (2021). Standards for
Sustainable Trade and Sustainable Trade finance. Available at:https://iccwbo.org/news-publications/policies-reports/icc-standardsfor-sustainable-trade-and-sustainable-trade-finance/
31. OECD (2021). Agricultural Policy Monitoring and Evaluation 2021:
Addressing the Challenges Facing Food Systems. Available at: https://www.oecd-ilibrary.org/sites/c09def7e-en/index.html?itemId=/
content/component/c09def7e-en
32. CSDDD Explanatory Memorandum, (2022). Available at: https://
eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0071
33. www.planet-tracker.org

This publication is funded by the Gordon and Betty Moore Foundation through
The Finance Hub, which was created to advance sustainable finance.

This report was produced by Climate Bonds in consultation with Planet
Tracker. The authors are grateful for the extensive support received from
Planet Tracker in producing the report and the feedback and insights
provided. However, the choice of final case studies, the analysis, andconclusions presented were provided by Climate Bonds and may differ fromthe views presented in Planet Tracker’s own research.33

Acknowledgements: Andrés Felipe Sanchez, Rachel Hemingway,
Oluwatoyin Oyekenu, Maria Alejandra Pulido and Shaoxin Li,
Climate Bonds Initiative
Peter Elwin and Emma Amadi, Planet Tracker
Joe Capp, Jorge Boeira and Clayton Campagnolla,
SDA Socioeconomic Development Advisors
Editorial support: Stephanie Edghill, Caroline Harrison
Design: Godfrey Design, Joel Milstead© Published by Climate Bonds Initiative, November 2023
www.climatebonds.net

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference
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accepts no responsibility for content on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument
or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment
decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of thedesignated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for
any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained
within this, or any other Climate Bonds Initiative public communication.

Investment Opportunities Agri-food sector in Brazil Climate Bonds Initiative

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