Brazil’s new forest protection finance facility does not obviate need for states to directly address root causes of tropical deforestation 

In response to the launch of the Tropical Forests Forever Facility (TFFF) by the Brazilian government on November 6, 2025, Forests & Finance issues the following statement. This statement is based on the TFFF concept note 3.1, the most recent document detailing TFFF structure and function available to date.

While attempts by the Brazilian government to address the enormous lack of direct financing for countering tropical deforestation are laudable – especially the inclusion of direct funding for Indigenous Peoples and local communities, who are the best defenders of tropical forests – the TFFF design contains major flaws that will undermine its goals.

The TFFF purports to move away from the market logic that values tropical forest biomes for their ability to produce commodities and ecological services rather than all their non-monetary ecological, climate, biodiversity and cultural benefits. However, the program – particularly the structure and governance of the TFFF’s financing mechanism, the Tropical Forest Investment Fund (TFIF) – may undermine this very goal. In the first place, to generate the desired returns, the fund will have to invest in profitable assets, which tend to be extractive by their very nature. And despite a commitment to not invest in deforestation, the Fund lacks strong criteria to prevent that. And in the second place  because the TFIF (and the TFFF overall) lacks a connection to regulatory policies to address the underlying drivers of deforestation – both the commodity production that requires extraction from forests, and the financing that enables it.

Furthermore, the TFIF does not:

• ensure long term sustained finance for forest countries, instead gambling on making money in volatile financial markets,
• cede sufficient governance power to the Indigenous Peoples and nations and other forest communities,
• include a grievance mechanism system, 
• adequately exclude deforestation-linked securities from its possible investment portfolio, or 
• sufficiently support or provide legal protections for Indigenous Peoples and local communities.

If Brazil and other states participating in the TFFF as either sponsors or participants truly want to end the current treadmill of deforestation, they must change the structure of the TFIF and enact strong regulations on deforestation-enabling industries like finance.

Lack of regulatory approach

Existence of the TFFF does not preclude the need for sponsor and receiving countries to enact and enforce strong regulation to protect land rights and  prevent corporate actors – whether producers or financiers – from engaging in deforestation-related activities. In fact, lack of regulatory action in this regard undermines the TFFF’s goals. As a coalition specifically focused on the role of the financial industry, we note a particular obligation on sponsor states – particularly  financial centres that channel billions into deforestation, such as the US, UK, China, Brazil, Indonesia, and the EU – to make it illegal for banks, asset managers, and investors to invest in or finance activities related to deforestation, forest degradation and human rights violations.

Reliance on underregulated financial markets and Global South debt

In order to generate funds for the TFFF, the TFIF will take contributions from sponsor countries (which could take the form of grants, but might also include loans or other concessional finance) and invest them in public and corporate bonds. This creates a dangerous paradox: the financial returns meant to reward forest protection will at least in part be generated by debt payments from the very developing countries needing deforestation-prevention financing and/or corporations that may be involved in the resource extraction driving deforestation in the first place. We have seen similar complex financial products fail forests and people while enriching investors, as is the case with carbon offset markets.

Governance power for Indigenous Peoples and local communities in TFFF and TFIF

While the TFFF governance structure includes an “Indigenous Peoples and Local Communities” (IP&LC) advisory council, we note that this council does not appear to hold decision-making power. Given the essential role of these communities in forest protection, they should have a role in decision-making. Furthermore, the TFIF governance structure lacks any kind of role for IP&LC representatives, which is also an unacceptable gap. Technical and scientific experts should also have a role in the TFFF’s decision-making bodies. 

TFIF grievance mechanism

The TFFF grievance mechanism is not intended to address concerns and complaints with the TFIF investments, and the TFIF itself lacks a grievance mechanism. While the TFFF would require participating countries to have a grievance mechanism, communities and advocates would have no redress if those countries were themselves to engage in behaviour that violates TFFF principles. An effective, accessible grievance mechanism needs to be in place in order to comply with international frameworks of principles for responsible business, like the UN Guiding Principles on Business and Human Rights. It should prevent the fund from engaging in harmful investments and ensure redress for affected communities and the environment if harm is done.

Exclusion of deforestation-linked investments

As outlined in detail in the letter Forests & Finance sent to the Brazilian government on October 28, we strongly urge the adoption of strict investment criteria for the TFIF, in order to ensure that the TFIF’s investments do not undermine the goals of the TFFF, both in terms of environmental criteria as well as human rights.

We also urge the TFIF to:

• develop criteria for asset managers hired by the facility. Asset managers must have an internal policy for all assets under management that, at minimum, meets the TFIF’s investment criteria (assuming it is improved in the ways outlined in our October 28th letter), and
• make public the investment criteria and list of investments of the TFIF so that residents of the countries receiving the funds can scrutinize them.

Inadequate support and security for IP&LCs

As the TFFF materials themselves acknowledge,  Indigenous Peoples and local communities are the best protectors and defenders of forest ecosystems and therefore should receive substantial financial support. However, the TFFF does not adequately acknowledge or address the reasons why IP&LCs have historically not been able to sufficiently defend forests: the financial incentives for corporate and government actors to pursue deforestation-driving activities, the lack of adequate land tenure rights for IP&LCs and enforcement of those rights, and the threats and attacks against these communities for their attempts to protect forests (see page 46 of v3.0).  Without strong and robust legal systems and fair laws, effective protection mechanisms, and public support for forest and rights defenders, these communities will continue to be hamstrung in their efforts to protect forests, even with increased funding. Furthermore, we note the existence of highly-efficient funds that channel money to IP&LCs directly, based on their needs and systems of governance, obviating the need for complex financial products built on existing financial systems implicated in forest destruction.