Food Security
Tropical Forests Are Disappearing Before Our Eyes
Despite urgent warnings the reality is stark: tropical forests continue to vanish at an unprecedented rate. In 2024, the tropics lost a record-breaking 6.7 million hectares of primary rainforest—an area nearly the size of Panama—according to the University of Maryland’s GLAD lab data, published by the World Resources Institute’s (WRI) Global Forest Watch. This equates to 18 football fields of forest disappearing every minute, nearly double the loss recorded in 2023.
The world cannot meet its climate goals without ending deforestation, especially in tropical and sub-tropical regions where cattle ranching and agriculture drive land-use change. These forests are not only biodiversity hotspots but also critical carbon sinks. One striking example is the Gran Chaco - South America’s second-largest forest after the Amazon - which faces relentless pressure from cattle and soy expansion. Despite billions of dollars flowing annually into agriculture in this region, only a fraction supports sustainable or regenerative land use to protect native vegetation.Billions flows into agriculture while forests disappear
In 2024, tropical primary forest loss to fires was five times higher than in 2023. According to WRI, these fires are almost entirely human-caused. They may be triggered initially by clearing land for agriculture and then spreading uncontrollably into forests.
The Gran Chaco spans 1 million square kilometres and is rich in biodiversity, emerging as a key agricultural frontier. Yet, there’s a critical disconnect while billions in private capital continue to flow into soy and beef production – driving economic growth and rural development – this investment rarely aligns with efforts to curb deforestation or protect native ecosystems.
“The overwhelming majority of this capital goes toward expanding soy and beef production, not deforestation-free or sustainable practices.” explains Mauricio Nuñez of The Nature Conservancy.
This crisis is part of a broader trend. Unless financial systems evolve to support regenerative and deforestation free production, as well as other nature-based solutions, capital, capital will continue to flow toward short-term returns, often overlooking the long-term risks to the climate and ecosystems.
Innovative finance could be the answer
While the Gran Chaco attracts substantial agricultural investment, most capital still flows through traditional channels that are not equipped to prioritise sustainability. Without the right tools, technical support and incentives, even producers adopting regenerative and deforestation-free practices face disproportionate challenges, such as higher risk premiums, upfront investments, limited credit access, and a lack of tailored financial products to support their transition toward more sustainable models.
“Sustainable producers often face higher risk premiums, a lack of tailored financial products, and a scarcity of credit history, all of which make financing regenerative models much harder.” — Mauricio Nuñez, TNC
Innovative finance can change this. Innovative financial mechanisms such as blended finance - which combines public, philanthropic, and private capital - can help de-risk sustainability-focused investments and make climate-smart production more viable. For example, in 2024, Paraguay marked a significant milestone with the launch of the Procampo Verde pilot program. Developed by the local development agency, Agencia Financiera de Desarrollo (AFD), the initiative aims to de-risk direct commercial loans for ranchers adopting sustainable cattle ranching and water efficiency practices. The program was shaped through collaborative technical advisory led by The Nature Conservancy (TNC), alongside partners such as WWF-Paraguay and the Tropical Forest Alliance (TFA), working directly with AFD.
This loan facility has a novel disruptive potential for conservation of native vegetation through its commitment with Deforestation and Conversion Free criteria. The Innovative Finance for the Amazon, Cerrado and Chaco (IFACC) has been following closely its deployment to recommend adaptative measures so to assure its commercial demand and wider adoption by local banks explains Tomás Kovensky, TNC.
Similarly, mechanisms like green bonds, exemplified by products such as Fondo Biorregional del Gran Chaco, managed by Sumatoria– an Argentinean asset manager focused on impact investments, reward environmental impact and unlock greater private investment, turning capital into a powerful force for conservation and change within the region.
“Through the Fondo Biorregional del Gran Chaco, we’re de-risking investments in sustainable soy and cattle production. By offering green bonds and sustainability-linked loans tied to measurable environmental outcomes, we are incentivizing positive change.” — Fatima Ochoa, Sumatoria
Aligning policy, practice, and capital: global frameworks can have a local impact
However, it is important to note that financial innovation alone isn’t enough to halt deforestation or drive sustainable production. As Mauricio Nuñez of The Nature Conservancy says, “Financial innovation alone won’t solve the problem. For success, it must be integrated within a coherent policy and institutional framework. Only then can we scale sustainable finance in the region.”This means building an ecosystem where finance works hand-in-hand with strong policies and collaborating to support sustainable practices. Initiatives like Paraguay’s Mesa de Finanzas Sostenibles and Argentina’s Protocolo de Finanzas Sostenibles are early but crucial steps, groups that can convene a wide set of good practices and generate innovations so to unluck this transition.
Initiatives like the “Protocolo de Finanzas Sostenibles” are a critical first step in setting common language, ambitions, and minimum commitments across Argentina’s financial sector. They help create awareness, establish baseline ESG criteria, and signal that sustainable finance is no longer peripheral—it’s becoming part of the future mainstream. — Fatima Ochoa, Sumatoria
These programs set self-regulatory ESG baselines and build capacity among local banks to expand sustainable finance., However, advancing these efforts to the next level will require creating innovative financial sulutions aligned with higher ESG requirements, creating conditions that attract concessionary funding from multilaterals and institutional investors that can de-risk investments and unlock larger-scale impact.
Real transformation demands alignment. Financial institutions, public regulators, and producers must work together to create a system where sustainability is not only incentivized but financially viable. Nuñez highlights that to drive systemic change, we need alignment across financial institutions, public regulation, and the incentives for sustainable production. This is where initiatives like IFACC play a crucial role.
IFACC: change on the ground
The Innovative Finance for the Amazon, Cerrado, and Chaco (IFACC) initiative led by The Tropical Forest Alliance (TFA), The Nature Conservancy (TNC), and the United Nations Environment Programme – Finance Initiative (UNEP FI) is pioneering this integrated approach. Almost $500 million was disbursed towards deforestation-free agricultural production through the IFACC Initiative in 2024, bringing it almost halfway to its $1 billion goal by end of 2025. Since 2021, IFACC has engaged with a broad range of actors in the Gran Chaco, from global commercial banks to local financial entities, development agencies, and companies across the commodity value chain, advocating for innovative finance based on a collaborative approach.
IFACC is convinced that these actors can finance a transition to commodity production models that increase productivity and profitability while protecting native vegetation. IFACC’s work focuses heavily on capacity building through local networks, such as the Paraguayan Mesa de Finanzas Sostenibles and the Argentinian Protocolo de Finanzas Sostenibles, which are composed of local banks. Strengthening these institutions is critical for fostering innovative financial products tailored to sustainable practices, and generates awareness and conditions so these institutions can be part of this transformation, joining the intiative.
Local partners like Sumatoria – the first organisation in Argentina to join IFACC – highlight its transformative role. With a strong focus on social and environmental impact, Sumatoria manages a dedicated fund for investing in the Gran Chaco region, promoting regenerative agriculture and cattle ranching to help reduce deforestation.
“IFACC is a game-changer. It connects global capital and technical expertise with local actors, allowing us to design and deploy financial tools that are fit for purpose. It’s the kind of partnership that drives real change on the ground.”—Tomás Kovensky
Thanks to IFACC, Sumatoria has expanded capacity, accessed peer learning, and unlocked pathways to scale their regenerative finance initiatives in the Chaco.
What’s next?
The tools exist. The capital exists. Changemakers from initiatives such as IFACC and beyond are proving that sustainable finance can work. But unlocking it fully requires alignment, risk-sharing, and bold leadership from policymakers, investors, corporations, and civil society alike.
The Gran Chaco is a microcosm of a global challenge. If we can close the finance-forest gap here, we can replicate that success across the world’s most threatened ecosystems turning the tide for forests, climate, and communities worldwide.