A $125 billion fund will use profits from global markets to invest in forest protection. Can we trust the same financiers driving deforestation to save the world’s forests?
The UK and US financial sector are better known for financing businesses driving deforestation. But now, the government of Brazil is seeking their advice on how to unlock billions of dollars in finance for forests.
The Tropical Forests Forever Facility (TFFF) model aims to get wealthy sponsor countries and philanthropies to deliver an initial tranche of $25 billion to act as a “cushion” to attract an additional $100 billion from private finance. The total $125 billion fund will be invested primarily into emerging-market bonds, with sponsor countries first to absorb losses in cases of low repayments.
The interest earned from these investments, minus the expenses associated with running the facility, will be paid in annual instalments to forest-rich nations equivalent to US$4 per hectare of standing forest each year, with at least 20% of profits earmarked for Indigenous Peoples and local communities.
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The fund’s launch is expected to be a major focal point of the COP30 climate summit this November.
Supporters view the TFFF as a bold bid to channel much-needed capital into forest protection efforts. However, critics have cautioned against a model that rewards private investors for the damage they have helped to cause.
Forest guardians are being asked to trust and understand a model that is market-based, opaque and highly technical. These features alone give ample reason to scrutinise the TFFF closely, before trust is asked of those who stand to bear the greatest risks.
Generating the projected profits will depend on several uncertain factors: winning sufficient backing from countries and private investors, securing a strong credit rating, and delivering consistent returns from a high-risk asset class.
Lion’s Head and Bracebridge: Who are the key financial players behind the TFFF’s design?
With so many financial actors currently complicit in driving deforestation, scrutiny of the firms shaping the TFFF is essential.
Tucked away in a leafy corner of London’s affluent Belgravia, a boutique financial advisory firm is working on plans for a project they hope will save the world’s forests.
Top of the list is London-based investment banking and financial advisory firm, Lion’s Head Global Partners, whose founding partner, former Goldman Sachs banker Christopher Egerton-Warburton, has led on the financial engineering of the structure.
Speaking with Global Witness, Egerton-Warburton acknowledges that for the TFFF to succeed, “The sun, the moon and stars have to all come together” – adding that he is under “no illusion what a big ask this is” for governments like the UK to support the facility in light of ongoing political crises.
Lion’s Head has experience in delivering innovative funding vehicles in the healthcare space, but Egerton-Warburton’s personal involvement with forest-related projects dates back to the Copenhagen climate talks, where he helped the UK government translate ideas from the Prince’s Rainforest Project into material they could take to the negotiations.
He also provided informal support to Kenneth Lay, a former Treasurer to the World Bank who first conceived plans for a forest investment fund over a decade ago.
The sun, the moon and stars have to all come together
Christopher Egerton-Warburton, Lion’s Head Global Partners
In Spring 2024, Egerton-Warburton was approached to help shape the concept of the TFFF, after early plans for the facility received lukewarm interest from the private sector.
He recalls that a “lightbulb” moment for Brazil was realising that with the “lever structure”, only $25 billion in public capital would be needed, with the private sector investment making up the bulk of the money behind the fund.
Egerton-Warburton notes that the plan to focus the fund’s portfolio on emerging-market bonds was driven by aim of channelling more capital to “Global South” countries for the energy transition, because most “asset backed” deals are concentrated in the “Global North”.
He adds that the main country sponsors are “increasingly focused” on this “secondary benefit of the TFFF” – “over and above its benefit to the tropical forests countries”.
Global Witness understands that another firm involved in the design of the investment strategy is a Boston-based Bracebridge Capital, known for taking high risk bets on debt from struggling economies – a similar approach planned for the TFFF.
Bracebridge Capital – which operates with a low profile – declined to speak with Global Witness for this piece. The firm does not appear to have a public track record in forest-related finance; in recent years, it has built a sizeable presence in cryptocurrency markets, while other high-profile deals involve recently bailing restaurant chain Hooters out of bankruptcy.
In 2016, Bracebridge Capital drew international attention for its aggressive pursuit of claims against Argentina following the country’s 2001 debt default, leading it to be dubbed a “vulture fund“.
Evaluating risk: How will the TFFF make a profit?
Global Witness understands that both Lion’s Head and Bracebridge are tasked with creating two alternative proposals for how the funds will be invested.
The first is Lion’s Head’s original model – which relies on the fund receiving a “credit rating” from an agency like Fitch or Moody’s, to assure investors it is a safe investment.
However, because the TFFF currently operates a bit like a “startup”, it may be that what is known as the “unsecured” version receives sign-off from the ratings agency – currently understood to be Fitch.
As a result, Bracebridge Capital is said to be separately designing a Plan B model, known as the “asset backed structure”, where the bonds are tied to a specific pool of assets as collateral. This approach is generally seen as less efficient but is easier for ratings agencies to assess.
In at least one promising move, the TFFF recently committed to keeping its portfolio free of fossil fuels and deforestation-linked assets, a development seen as a “big win” by insiders, although more details are still required about how this commitment will work in practice.
A fragile proposition
Whichever option is selected will not change the facility’s purpose. Yet the need for a fallback option underscores the facility’s fragility, echoing concerns raised by some civil society groups and academics, who have argued that using taxpayer’s money as a “cushion” to absorb any financial losses could shield private investors from risk, while allowing them to continue to profit from deforestation through other investments.
Global Witness is calling for governments to back the TFFF with laws that also stop finance from reaching companies tied to deforestation and human rights abuses more broadly.
Frédéric Hache, a sustainable finance academic from Sciences Po in Paris, tells Global Witness that the TFFF equates to an “all carrot, no stick” proposition for investors: a way to “empower private finance, centring them when they don’t hold the solution.”
[TFFF equates to] all carrot, no stick
Frédéric Hache, sustainable finance academic, Sciences Po in Paris
Researcher and co-founder of the Climate Impact Auctions initiative Max Alexander Matthey, argues that probable defaults in already volatile emerging-market bonds could interrupt forest payments, creating instability for countries that will start to depend on the TFFF’s annual funding for conservation programs.
The TFFF acknowledges this risk, noting in its concept note that payments may be reduced or halted if the fund underperforms.
However, to mitigate the risks associated with country defaults, Egerton-Warburton insists that there will be strict limits on exposure to any single country, capped between 3-4% overall, with the ceiling adjusted downward for higher-risk sovereigns. Meanwhile, investors are “being paid for this risk.”
The question remains as to whether tying up climate finance in this bet on the market is a reliable approach for generating consistent returns.
Deforestation backers’ pivot to forest protection?
Another tension lies in the integrity of the investors feeding into the fund’s proposals. Several prominent public backers of the TFFF, like Barclays Bank and Bank of America, have been shown to fund companies fuelling deforestation in investigations published by Global Witness.
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For the facility to function, governments will be backing a financial system with a poor track record on forests. Data from Global Canopy’s Forest500 ranking recently revealed that 60% of the world’s financial institutions with the greatest deforestation risk do not have a deforestation policy in place.
Bracebridge, despite its pivotal role in the TFFF, does not appear to have publicly available investment policy on deforestation either.
Global Witness understands that names of firms interested in managing the investment fund include major emerging markets investors such as PIMCO, JP Morgan, and Wellington in the United States, RBC BlueBay Asset Management in Canada, and the UK’s Ashmore Group.
None of these firms stand out for having particularly robust policies on deforestation – and each of these five firms declined to comment on this for this article.
Egerton-Warburton insists that because this role will likely be competitive, with investors perceiving the TFFF as a “moneymaking operation”, factors such as their commitment to ending deforestation will need to be accounted for during the selection process.
Asset managers entrusted with climate finance should, at a minimum, have clear deforestation and human rights policies, and show evidence of enforcing them across past investments.
For forest defenders, the stakes are clear, but in its current form, the plan is less so. Much depends on financial actors, with mixed track records on deforestation, building a workable vehicle the public can entrust with forest payments.
Update (11.10.2025): After publication, Bracebridge Capital provided the following statement: “Bracebridge Capital is a $12 billion alternative asset management firm that has managed fixed income absolute return funds for more than 30 years. The firm’s extensive expertise in fixed-income structuring and emerging-market and corporate debt has suited it well to advise the Brazilian government and the World Bank in the creation of a durable, scalable financing mechanism for forest conservation in the TFFF.”
Authors
Polly Bindman, Forests Investigator
