Imfino News

WASHINGTON (January 18, 2018) — Many investors don’t know what restoration is or realize the extent of its potential. A new report by World Resources Institute (WRI) and The Nature Conservancy (TNC) reveals that businesses around the world are making money by planting trees, unleashing a growth opportunity for venture capital, private equity and impact investors. The research indicates the restoration economy is at a tipping point.

The new report, The Business of Planting Trees: A Growing Investment Opportunity, shows that restoring degraded and deforested lands is not only a boon for the environment, but a lucrative opportunity for investors and entrepreneurs. WRI and TNC looked at hundreds of companies – tech startups, consumer goods companies, timber producers, etc – and selected 14 enterprises to highlight from around the world. The publication finds that the sector is growing rapidly, with some businesses poised to grow revenues up to 10 times per year.

“The long-term growth outlook is positive as technology lowers the costs of tree-planting, consumers reward companies who restore forests, governments make large commitments to rehabilitate their land, and business model innovation continues,” said Sofia Faruqi, Manager at WRI and report co-author. “The confluence of these factors signals that now’s the time to invest in restoration.”

The report identifies four emerging themes in the restoration economy: technology, consumer products, project management and commercial forestry. To help investor and entrepreneurs gain insight from real-world examples of companies, the report profiles the following 14 businesses: BioCarbon Engineering, Brinkman, EcoPlanet Bamboo, Ecosia, F3 Life, Fresh Coast Capital, Guayaki, Komaza, Land Life Company, Lyme Timber, New Forests, Symbiosis Investimentos, Tentree, and Terviva.

A range of investors have financed the businesses featured in the report, from venture capitalists to development banks to foundations. Investments include debt, equity and grants. Several companies have recently raised millions of dollars in growth capital.

“If we are to be serious about climate change, we have to get serious about investing in nature,” said Justin Adams, Managing Director Global Lands for The Nature Conservancy. “The way we manage lands in the future could cost effectively deliver over a third of greenhouse gas emissions reductions required to prevent dangerous levels of global warming.”

Recent technologies have paved the way for faster, cheaper, more efficient tree planting, allowing rapid reforestation of broad areas of land. From seed-planting drones to companies enabling credit access for small farmers, technology is changing the face of restoration. Many of these innovations were unavailable even five years ago. As technology brings down the costs of restoration, demand will rise, similar to solar energy.

Consumer goods companies are also integrating restoration in innovative ways, from selling yerba mate grown in restored forests, to using their profits to plant trees. As trendy consumers become more engaged in conservation, many companies see a big opportunity to market forest-friendly products that differentiate them in the marketplace.

Bruno Mariani, founder of Symbiosis Investimentos – a company profiled in the report – said “Large-scale reforestation is lucrative. Forests give us wood, water, oxygen, food, fauna, jobs—and a return on investment. Mainstream finance will inevitably tag along but when you rebuild a forest, you create much more than financial value. You protect a healthy environment for future generations to inherit.”

There’s also a large market for companies to support the millions of hectares of public land being restored by countries. The political momentum for restoration continues as countries seek to meet their commitments to the Paris Climate Agreement, Bonn Challenge, Initiative 20x20, AFR100 and more. With 160 million hectares of land committed for restoration, these pledges present a growth pathway for the companies that design, manage and implement the projects.

April Mendez, co-founder of Fresh Coast Capital - a company profiled in the report - said, “We’re offering investors the opportunity to earn a return from urban green spaces. Private investment can accelerate cutting-edge green infrastructure that improves air quality, health and community cohesion, while providing cost-effective stormwater management for cities.”

Although the timber industry has been around for decades, sustainably managed timber that improves land quality has been a bright spot for innovation. From institutional timber funds that set aside large amounts of land for conservation to business models that incorporate smallholder farmers or focus on extinct species, recent developments indicate that sustainable timber has a rising role to play in the growth story of restoration.

More entrepreneurs continue to enter the restoration economy, finding new ways to make money while restoring degraded land. Read the full report.