Scientists and environmentalists have spent decades raising the alarm about the impact of deforestation on the world’s ecosystems. According to Earth.org, about 5 million hectares of trees are cut down annually to clear up space for farmland, development, industry, and other uses, according to Earth.org. The loss of forests sends nearly 5 billion tons of carbon dioxide into the atmosphere annually or about 10% of all human emissions.
Many large forests that ordinarily absorb carbon dioxide – such as the Amazon rainforest – now emit more CO2 than they absorb because of deforestation. Planting new trees is one way to address the problem, but that alone won’t fix it. What’s needed is a comprehensive approach that combines reforestation, conservation, sustainable agriculture, and regenerative land management.
That’s The Shared Wood Company’s strategy, a startup specializing in sustainable agroforestry.
Its mission is to preserve and restore natural ecosystems to capture carbon, mainly in Latin America, Africa, and Europe.
To get there, SWC needs large injections of cash – and that’s what it got in mid-February when French conglomerates Engie SA and AXA SA said they would back the company with $500 million of investment and carbon credit offtake agreements.
SWC plans to use the money to invest in as many as eight projects across Africa and Latin America, Bloomberg reported. The projects will combine conservation, reforestation, and sustainable agriculture to generate carbon credits and produce crops such as cocoa and coffee. SWC plans to commit more than $500 million by 2028.
The company was founded in 2021 by Clement Chenost, Juan Carlos Gonzalez Aybar, and Laurent Vailergue to address environmental and social needs. The latter will be accomplished by providing a source of income for impoverished rural communities by combining the projects with sustainable agriculture.
“It’s not the jaguars or the elephants that deforest, it’s people – and mainly because of rural poverty,” Aybar said. “It’s a strategy where you have protection and production.”
SWC’s goal is to generate 40 million tons of carbon certificates over the following decades. Engie and AXA will purchase the certificates through long-term agreements at pre-set prices. The carbon offsets will be certified by various accounting, financial, and sustainability consulting firms, including TUV Rheinland AG, Ernst & Young, Environmental Resources Management, and DNV.
Each of SWC’s projects will be set up as special purpose vehicles under a holding company. AXA will provide funding in the form of equity or debt. Crops will be sold as high-end organic produce.
SWC will be in charge of the entire project development cycle – including design, development, financing, building, operation, and route-to-market. On the financial side, it will partner with private impact investors and corporations looking for carbon offsets, biodiversity, and sustainable commodities solutions.
In terms of environmental impact, the company has two main areas of focus: emissions reduction and carbon removals.
In the emissions reduction area, SWC will work to conserve forests, curtail deforestation, reduce forest degradation, and promote regenerative agriculture. In carbon removal, its work will include reforestation and agroforestry, which mainly involves restoring degraded lands and developing sustainable value chains in partnership with governments and communities.