Around 74 countries with tropical rainforests marked with green dots are potential recipients of the TFFF. Source: COP30 official website.
To be selected as beneficiaries, countries will require transparent financial management systems and must commit to allocating 20 per cent of the funds to Indigenous peoples and traditional communities, according to the draft rules.
These countries would need to have a deforestation rate – averaged over the previous three years – of no more than 0.5 per cent of their total forested area, with standing forest areas having a canopy cover of at least 20-30 per cent in each hectare to be eligible for payments.
The TFFF’s third concept note says that areas that transition from above to below this 20-30 per cent threshold would be “considered deforested”.
In a recent Yale Environment 360 article, forest ecologists warned that the low level of this threshold – for what counts as a forested area – is “not scientifically credible” and “would allow payments even where industrial logging is occurring in primary forests”.
However, TFFF argues that “including forest areas with lower canopy cover does provide an incentive for maintaining these areas”.
Additionally, payments would be reduced for each hectare of forest loss and for each hectare degraded by fire.
The funds for Indigenous peoples would be “put aside in a different account, following different rules”, Aquino said during a press briefing attended by Carbon Brief.
Brazil’s ministry of environment and climate change invited five countries with rainforests to support the creation of the fund: Colombia, the Democratic Republic of Congo, Ghana, Indonesia and Malaysia.
Individual national governments that are beneficiaries of the scheme would be free to define how and where the generated funds would be distributed.
The TFFF is split into two entities, with a secretariat to coordinate between them.
The facility is the first of these. It is tasked with setting up the rewards system, eligibility criteria, monitoring methodologies and disbursement rules, as well as engaging with participating recipient countries.
The other is the TFFF’s main financial arm, the Tropical Forest Investment Fund (TFIF) – responsible for raising and managing the TFFF’s resources.
So far, five potential sponsor countries have shown interest in supporting the fund: France, Germany, Norway, the United Arab Emirates and the UK.
These countries, along with five potential recipient countries – Brazil, Colombia, the DRC, Ghana, Indonesia and Malaysia – formed an interim steering committee to shape TFFF’s development.
The TFFF’s governance structure, according to an August concept note. Source: TFFF (2025)
According to its third concept note, published in October, the TFIF would be a “blended finance vehicle”, pooling public, philanthropic and private funding.
The TFIF is split into two tranches. The first is a “sponsor” tranche, where donor countries and philanthropies are invited to contribute long-term, low-cost capital investment to the tune of US$25 billion, either from long-term loans, guarantees or outright grants.
So far, Brazil’s initial pledge of US$1 billion to the facility is the only such pledge. Other governments, such as the UK, have played an “active part” in establishing the TFFF.
(Five days before COP30 kicked off, Bloomberg reported that the UK would not be investing in the TFFF, after the government’s treasury department warned that the investment is “not something the UK can afford at a time when it’s trying to tackle its surging debt burden”.)
This US$25 billion from sponsor countries, in turn, would be expected to absorb risk, cover losses and serve as a catalyst to raise US$100 billion from institutional investors in the global bond market.
(This sum raised from private investors is described as the “senior market debt” tranche of investment: if the markets see a downturn, private investors are protected first, making their interests “senior” to donor and recipient countries.)
TFIF and its asset managers then invest this US$125 billion of capital into a mixed portfolio of investments, including public and corporate market bonds, but excluding those with a significant environmental impact. (In a joint letter, issued in October, advocacy and research groups called for a more detailed exclusion criteria.)
Income from these investments, in turn, will be used to pay investors first, then interest to donor countries and, finally, to pay participating forest countries. The payments to participating countries will be roughly US$4 per hectare of standing forest (subject to annual adjustment for inflation), as verified by satellite imagery.
The World Bank confirmed in September 2025 that it will serve as a trustee to the facility and host its interim secretariat.
Liane Schalatek, a climate finance expert and associate director of German policy thinktank Heinrich-Böll-Stiftung’s Washington office, tells Carbon Brief:
“It’s a very clear hierarchy: you serve the money raised on the market and capital investors first before you go to the intended purpose of the fund – and that is compensating countries for basically leaving their tropical forest standing. To me, it seems that the focus is on the money, not necessarily on the outcome. That is really worrisome.”
While sponsor countries are guaranteed their money back over a 40-year period, payouts to forest countries depend on investment returns. These are subject to market risks and volatility and, therefore, are not guaranteed.
According to Frederic Hache, co-founder of the EU Green Finance Observatory thinktank, payouts promised by the TFFF are “really not appropriate to the emergency of the [biodiversity and climate] crises” and do not address their “root drivers”. Hache tells Carbon Brief:
“Even if you meet the very hard criteria as a country to get this money, obtaining this conservation funding is conditional upon financial market conditions and the skill of an asset manager. That’s not very generous and that’s not very appropriate.”
Hache warns that if the fund does not make enough money or experiences losses, the “first thing that is impacted is the forest payment”, which could be put on hold, while “sponsor capital protects private investors with taxpayer money”.
What issues might the fund face?
Civil-society organisations and climate finance experts have warned of several risks and gaps within the facility.
Finance fragmentation
Experts who spoke to Carbon Brief expressed concerns that TFFF could erode the legitimacy of existing, but under-resourced, multilateral funds for climate and biodiversity, as well as dilute the legal obligations of developed countries to pay their “fair share” of nature finance.
While the TFFF hopes to contribute to the goals of all three UN conventions – climate, biodiversity and land degradation – the fund is not officially part of any of the three treaties.
To Schalatek, the fact that the “biggest thing that is going to come out of COP30” is “outside” the UN Framework Convention on Climate Change (UNFCCC) and depends to a large extent on private investment is cause for disappointment.
A keenly awaited report ahead of COP30 is a roadmap towards a wider climate finance target of US$1.3tn a year, which could include various sources beyond the jurisdiction of the UN climate process.
Schalatek tells Carbon Brief:
“While we’re trying to have a discussion about protecting the provision of public finance from developed to developing countries [after Baku and amid aid cuts], TFFF is almost contributing to a further undermining of the financial mechanism of the UNFCCC and the Paris Agreement.”
Sarah Colenbrander, director of the climate and sustainability programme at the UK-based global development thinktank ODI, tells Carbon Brief:
“The creation of the Tropical Forest Forever Facility risks not increasing total resources for climate and biodiversity finance, but rather fragmenting the funds already available.”
Potential financial risk
Given the fund’s long-term horizon, a significant challenge is managing financial risk down the line.
This could take the form of a debt crisis in emerging markets, which could “wipe out” sponsor capital and “halt rainforest flows, possibly before they even begin”, economists Max Alexander Matthey and Prof Aidan Hollis wrote in a Substack post in September.
Higher return rates for investors – as mentioned in the third draft of TFFF’s concept note – in combination with high financial fees and operational costs, have left several experts questioning what remains in the way of “rewards” to rainforest countries.
Hache tells Carbon Brief that the TFFF might be “fantastic” for investors who get a “AAA-rated investment without sacrificing any returns”, but real risk is borne by tropical forest countries.
In addition, the mooted payments of US$4 a hectare is “ridiculous and not enough to displace alternatives” such as growing cash crops for export, he says, adding:
“US$125 billion sounds much better than, ‘Oh, we put US$2.5 billion on the table conditionally’. While there is very little political appetite for giving grant money, this is one of these mechanisms where innovation can obfuscate the lack of ambition and generosity by global-north countries.”
Commodification and transparency
Other experts fear that the new facility could contribute to the commodification of forests and a possible lack of adequate accountability.
The Global Forest Coalition (GFC), an alliance of not-for-profit organisations and Indigenous groups working on forest issues worldwide, have urged countries, Indigenous peoples and civil society to reject the TFFF.
In a press release in October, the GFC said that the TFFF views forests as “financial assets” and warned that the fund is “subject to investment returns, liquidation risks and payouts that are not even guaranteed”.
The press release quotes Mary Louise Malig, policy director at the GFC, who said:
“This is not about conserving forests; it is about conserving the power of elites over forests. It is the continuation of a free market model dressed up as climate finance.”
Information on transparency and governance of the TFFF is unavailable at the moment, says Tyala Ifwanga, forest governance campaigner at Fern, a civil-society organisation that works to protect forest people’s rights in the EU. She tells Carbon Brief that this makes it difficult to assess whether the facility can ensure payments meet the fund’s objectives, adding:
“Corruption is not the only issue we should have in mind here. Some tropical forest countries have autocratic regimes and very limited civic space.”
Pablo Solón, executive director of the Solón Foundation, is also quoted in the GFC press release. He warned:
“The TFFF is a distraction that diverts attention and resources from real solutions like regulation, corporate accountability and direct financing for Indigenous and local initiatives.”
Low Indigenous involvement
Another concern highlighted by the GFC is that while Indigenous peoples and local communities are expected to have “consultative roles”, the “decision-making power rests with governments and financial institutions”.
According to Fern’s Ifwanga, the Global Alliance for Territorial Community – a political platform bringing together coalitions of Indigenous peoples and local communities for defending nature – was involved in developing the TFFF concept notes related to Indigenous peoples and local communities.
She says that although the alliance agrees with the facility, “they are very aware that a lot of work remains to be done to ensure that their voices are heard at every level of the mechanism”.
She also encourages countries to increase direct access to funds for Indigenous communities.
Schalatek says that it is “sinister” that forest communities are being asked to “provide continued stewardship” and preserve forests “without any predictability on how much they’re going to receive for it”, while fund managers can get their money back. She concludes:
“This [TFFF] is exactly the kind of vehicle that gives developed countries the sick leave to not contribute to the GCF [Green Climate Fund], not contribute to the Adaptation Fund…We all know the world has changed, but that doesn’t apply to legal obligations you have signed on to.
“One could probably argue that the Brazilians put a lot more effort into the TFFF than in, for example, thinking about how to deal with the finance agenda within COP30.”
This story was published with permission from Carbon Brief.
