The case of &Green Fund (“&Green”) and IDH investing in a more sustainable beef supply chain through global producer Marfrig  

Supply chain:

Cattle production



A USD $30 million, 10-year loan from &Green to Marfrig in Mato Grosso (Brazil) linked to sustainability performance conditions


Projected impacts

  • >1,250,000 ha

    forest conserved, of which 600,000 ha are beyond legal requirements

  • >7,000 ha

    land sustainably intensified

  • >6,000 ha

    forest restored

  • Smallholder ranchers

    included in their supply chain, including through pilot implementation with 157 calf producers in Juruena Valley


Land-use dynamics leading to deforestation

  • Cattle ranching is seen as the sector with the greatest impact on Brazilian forest loss. In the Brazilian Amazon, pastures accounted for nearly 80% of deforested land from 1996 to 2006.
  • Brazil’s Forest Code requires landowners to maintain between 20% and 80% of native vegetation on their land, but the appropriate systems to facilitate compliance are not fully implemented.
  • The current scenario for small and medium-sized farmers in Brazil is the low productivity of cattle. Presumably, 50% of farms will be excluded from the productive system in the next ten years.
  • Pressure from the international market and civil society groups led major Brazilian meatpackers to make public commitments to stop deforestation in 2009. These commitments resulted in exclusion policies, which were limited to direct suppliers (producers who deliver the cattle to the slaughterhouses).
  • Traceability and monitoring are challenging for indirect suppliers (producers conducting cattle breeding and/or rearing) due to the fragmentation and informality of the sector. Cattle is primarily traded on the spot market, with little or no long-term link between producers and the beef industry.

Transaction Background

The PCI Institute and IDH set targets

IDH’s Landscape Program in Mato Grosso began in 2015, primarily to support the government of Mato Grosso’s green-growth strategy, the Produce, Conserve and Include (PCI) strategy. As part of the implementation of the PCI Strategy in Mato Grosso State, IDH landed its investments at the regional level (with the Juruena Valley Compact) and at the field level (with the Sustainable Production of Calves Program) in 2018. In 2019, Marfrig and IDH became two of eight founding members of the PCI Institute.

Marfrig, the second-largest meatpacker in Brazil

Marfrig is the second-largest beef meatpacker in Brazil with approximately 30,000 direct suppliers and over 60,000 indirect suppliers, most of whom are cattle ranchers spread across the Amazon and Cerrado biomes, supplying primarily national but also international markets (over 70% of Brazilian beef production is consumed domestically).

Marfrig established a sourcing policy for direct suppliers in 2009 with a deforestation-free cut-off date of 2008, in line with the major beef companies’ 2009 Amazon Cattle Agreement. While the Agreement strengthened compliance mechanisms within the beef supply chain, it also resulted in excluding many small and medium-sized producers from the formal supply chain thereby reducing its effectiveness as a measure to halt deforestation.

Designing and prototyping field-level interventions

To include the smaller-scale ranchers and develop a business case for sustainable intensification and forest protection, in 2018, IDH, Agro Jacarezinho Farms (a direct supplier of Marfrig), and Carrefour Brazil (an important buyer of  Marfrig) partnered in the Sustainable Production of Calves Program   in Juruena Valley. The pilot currently supports 157 calf suppliers towards a traceable, zero-deforestation supply chain. The first slaughtering of animals produced under the program took place in 2021 in Marfrig’s unit in Tangará da Serra (MT).


&Green’s initiative to support Marfrig’s supply-chain ambitions 

In July 2019, Marfrig issued its Sustainable Transition Bond, and a year later, it launched its Verde+ Plan to achieve a deforestation-free supply chain in the Cerrado and Amazon, becoming the first Brazilian meatpacker to publicly commit to engaging indirect suppliers in both biomes.

While the USD $500 million sustainable-transition bond provides the company with working capital to purchase deforestation-free cattle from the Amazon, Marfrig must create proof-of-concept to trace and extend no-deforestation policies to all of its suppliers. Based on this ambition, Marfrig and &Green started their engagement with the facilitation of IDH. The objective was to catalyze the full utilization of the transition bond through a sustainability-linked loan designed to fund the necessary supply-chain transformation.



Support Marfrig’s commitments related to transition to an inclusive, sustainable, and deforestation-free cattle supply chain in the Amazon and Cerrado biomes by:

  • Achieving 100% supply-chain traceability
  • Applying legal and deforestation-free supply-chain criteria to all suppliers
  • Promoting social inclusion of suppliers through Technical Assistance services and financial incentives as a means of compliance

A USD $30 million loan from &Green to Marfrig in Brazil


10 years

Enabling the utilization of USD $500 million raised in capital markets

By implementing &Green’s requirements, Marfrig can fulfil the sustainability conditions of its 2019 sustainable transition bond and de-risk the USD $500 million raised.


Linking investment with environmental protection

&Green’s financing is linked to two core documents to leverage Marfrig’s ambitions and build it further: the &Green Action Plan and the Landscape Protection Plan (LPP). Marfrig will use the &Green loan to implement these plans.

These two covenants were developed alongside Marfrig’s Verde+, a long-term plan co-designed by Marfrig and IDH, and the three plans are aligned in vision and scope.

  • The &Green Action Plan defines Marfrig’s roadmap for achieving a deforestation-free supply chain and aligning its practices with internationally recognized standards (e.g., IFC Performance Standard) and concrete and auditable deliverables based on milestones.
  • The Landscape Protection Plan is a sustainable long-term land use and management plan focusing on Marfrig’s impact on land use through its supply chain.

Risk management

Marfrig’s operations and supply-chain practices were assessed against the IFC Performance Standards. Due-diligence activities were completed by the Fund’s investment advisor and specialized independent experts.

According to &Green’s contractual obligations, Marfrig must deliver on the Environmental and Social Action Plan (ESAP) and LPP targets (accountable through third-party audits) – publicly sharing results. Lack of progress will be addressed based on contractually defined obligations and ramifications.

The loan’s pricing includes an incentive mechanism in the form of interest-rate discounts for anticipated compliance with traceability and compliance requirements for indirect suppliers in both biomes.

Maximizing Impact

Given &Green’s innovative funding terms and conditions, &Green and IDH developed a technical assistance facility (TAF) dedicated to providing technical assistance (TA) to &Green’s prospective and current clients to meet international standards and realize environmental and social (E&S) targets.

To support Marfrig, the Technical Assistance Facility is investing approximately EUR €100,000 in grants to pilot a project to support the remediation and reinsertion of direct suppliers compliant with legal requirements but non-compliant with Marfrig’s purchase policy. The pilot will afford the opportunity to reach compliance through restoration activities and thereafter towards inclusion in Marfrig’s supply chain. The pilot will:

  • Implement in 2021
  • Cover 25 properties
  • Promote the direct restoration of 10 ha of forests per supplier in the Amazon biome
  • Provide training for at least 50 women
  • Contribute to restoration commitments made by Marfrig under the LPP to restore 6,000 ha

Key lessons for stakeholders

Incorporating landscape strategies and the &Green Fund demonstrates a business case behind investing in landscape governance and the PPI strategy. A strong foundation of enabling conditions (e.g., PCI Strategy, Juruena Valley Compact, and the Sustainable Production of Calves Program) creates a favorable timing for this investment and all those still to come.

The coordinated investments from &Green to catalyze impact funding to foster innovative business models in jurisdictions where IDH is also investing grants to build sustainable commodities production at scale and landscape governance models show a complementarity to maximize the impact level for investors with lower-risk profiles.

For additional details about this transaction as well as IDH and &Green’s convergent strategies leading to &Green’s investment, you can read the publication here.

About &Green Fund

The &Green Fund aims to prove that financing agri-commodity operations, which are inclusive, sustainable, and deforestation-free, can be commercially viable and replicable. &Green seeks to support a market transformation of global supply chains by de-linking them from deforestation and producing a positive climate-change impact, while still feeding the world.

&Green can absorb higher, shorter, and medium-term risks and therefore, partially compensate its investees for the additional upfront project-development costs, particularly related to its environmental and social requirements. &Green offers loan or guarantee instruments with the capacity to provide long-term tenors. The pricing of investments is structured in a manner maintaining the Fund’s capital base over time by covering its risks and operating costs.