It began as an idea that Kenneth Lay, then the World Bank’s treasurer, had back in 2009. And last week, the Tropical Forest Forever Facility, or TFFF — born of that more-than-a-decade-old proposal — finally came to fruition.
Just days before the 30th United Nations Climate Change Conference, or COP30, kicked off in Belém, Brazil, the fund launched with an unexpected splash — $5.5 billion in first-day commitments from governments including Norway ($3 billion), Brazil ($1 billion), and Indonesia ($1 billion). France, Portugal, and the Netherlands also chipped in.
The fund’s goal: to pay countries to protect their tropical forests through investments, not aid — a shift that’s already drawing attention in global climate finance circles. The plan fits well amid a global push to harness private finance as official development assistance falters.
“There was no way you were going to get these major sovereigns to stand up and just pay cash,” Lay tells Devex. “We had to make sure it didn’t compete with other overseas development assistance. So we made it an investment rather than a grant.”
TFFF uses a layered investment model. Sovereign governments contribute the first layer of capital — ideally around $25 billion — which serves as a cushion to absorb potential losses. This initial investment is meant to attract around $100 billion from private investors, who would face lower risk.
“It represents everything that developed countries have been asking for in the climate finance debates,” Andrew Deutz, the managing director of global policy and partnerships at the World Wildlife Fund, tells Devex. “It is based on investments rather than foreign aid grants; the investor pool includes developing countries; it effectively leverages private investment; it has the full backing of the majority of the world's tropical forest countries; and the codesign process has been led by a developing country.”
Brazil, as COP30 host, helped shepherd the facility from concept to reality. It will be housed at the World Bank.
When Lay first came up with the idea, he wanted to make conservation profitable rather than charitable. Despite the overall shift away from climate change language, Lay says that the fund’s framing could also make it appealing to Washington: It’s “a very Republican-friendly proposal,” Lay says. “It’s investments that will pay them interest and their principal.”
While still far short of its $25 billion target, the fund’s launch marks a notable turn toward market-based conservation — and a test of whether protecting forests can finally compete with the profits of cutting them down.
Read: The untold origins of COP30’s flagship multibillion-dollar forest facility
Background: Brazil's forest finance plan takes shape ahead of COP30
Read our COP30 curtain-raiser: Road maps, resilience, and reform — what to watch at COP30 in Belém
A change in tone
Multilateral development banks issued a joint statement yesterday at the start of COP30, saying that they are “aligned” on their commitment to support client country priorities “in the face of intensified climate shocks and ecosystem degradation.”
They tout working better together as a system to do “climate smart development: resilient, economically sound, rooted in trust, and built to last.” And they say that identifying “climate co-benefits” shows how embedded climate action is within development goals. We heard the term “climate co-benefits” a lot at the World Bank and IMF annual meetings — it seems to be the new lingo, perhaps aimed at appeasing the U.S., which has criticized MDB focus on climate change.
And it’s a notable change in rhetoric from last year’s joint statement at COP, which said “MDBs remain firmly committed to support ambitious climate action” and pledged to provide $120 billion in climate finance annually to low- and middle-income countries, $42 billion of which would go to adaptation, as well as mobilizing $65 billion from the private sector.
Yesterday’s statement said the MDBs are on track to meet those commitments and that they provided $137 billion in 2024 “for sustainable development that delivers on adaptation and mitigation” which helped mobilize an additional $134 billion in private capital.
Read: COP30 reporters’ notebook — Day 1
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Missing the mark
How the MDBs are actually tracking climate finance data to ensure they meet those goals is being questioned by a new report from Publish What You Fund. It finds that $54 billion of the MDBs’ reported climate finance cannot be traced to specific projects.
“MDBs are central to the global effort to scale up climate finance. But unless their billions can be tracked to individual investments, stakeholders cannot know whether funds are reaching the right sectors and countries, or whether claims about mobilising private finance are credible,” Gary Forster, CEO of Publish What You Fund, said in a statement. “This database shines a light on the gaps and demonstrates that full, investment-level disclosure is both possible and urgently needed.”
The report recommends that MDBs release a central dataset to go along with their annual joint climate report, publish complete climate finance project-level data, and make disclosure policies more standardized and transparent.
What’s next for DFC?
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The U.S. International Development Finance Corporation has plans to open a new office in New York, several sources tell Devex. But no details on when it might open, what teams might work there, or the motivations have yet been shared publicly.
A DFC official tells Devex that the agency “does not have any updates at this time on the reported possibility of establishing a regional office in New York City. DFC’s headquarters will remain in Washington, D.C.”
Bloomberg first reported the rumors of a new office in July, saying that Benjamin Black, who last month officially started as the CEO of DFC after being confirmed, has made it clear “he wants to connect Wall Street” with DFC. A move to New York City would certainly bring it closer to big banks it might look to work with, or hire from.
But it would not exactly follow its recent expansions — it opened new offices in Brazil and in Côte d’Ivoire last year as part of an effort to expand its global presence and get closer to the deals it was trying to develop.
DFC has been unable to do any new business and is operating a minimal staff as its authorization lapsed amid the U.S. government shutdown after Congress failed to pass a budget for the federal government. While efforts to reopen the government appear to be progressing, it’s not entirely clear if DFC will get at least a temporary extension in its ability to operate when the government reopens.
Talks are also ongoing to pass a long-term reauthorization of DFC, including a meeting last Friday to try and find common ground between the House of Representatives and Senate bills, sources tell Devex. Unfortunately, those talks fell apart without a resolution, sources say, with a key sticking point being the guardrails that could be placed on DFC’s ability to invest in high-income countries. The Senate bill included an 8% cap on such investments and language to maintain DFC’s focus on development, but the House bill does not.
ICYMI: DFC’s authorization has lapsed. What happens now?
See also: Trump’s DFC nominee stresses ‘dual mandate’ of US development finance
Background: Five years in, DFC navigates growth, reform, and global competition
What we’re reading
Have climate finance targets changed what the World Bank actually finances? [Center for Global Development]
Warren Buffett will speed up plans to give his fortune to his children’s foundations, he writes in one of his final letters before stepping down. [New York Times]
The Republic of Congo returns to global stock markets after almost 20 years. [RFI]
The long rise of private finance in development and the implications for policymakers. [Journal of Developing Societies]
South Africa wins $925 million World Bank loan for ailing cities. [Bloomberg]
About the authors
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
Jesse Chase-Lubitz
Jesse Chase-Lubitz covers climate change and multilateral development banks for Devex. She previously worked at Nature Magazine, where she received a Pulitzer grant for an investigation into land reclamation. She has written for outlets such as Al Jazeera, Bloomberg, the Organized Crime and Corruption Reporting Project, and The Japan Times, among others. Jesse holds a master’s degree in Environmental Policy and Regulation from the London School of Economics.
