The Tropical Forest Forever Facility (TFFF): A New Model for Long-term Forest Finance

Last updated: 06/10/2025

Member Briefing - For CAFA Members Only

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In Short

Tropical forests are essential for regulating the climate; their destruction could add ~1°C to global warming, accelerate species extinction, reduce food sources, and displace entire populations. Yet existing incentives to keep them standing are weak, underfunded, and typically undervalue their full social, economic, cultural, and ecological benefits.

A paradigm shift in finance for forests. The Tropical Forest Forever Facility (TFFF), a global south-led initiative supported by key tropical forest countries, sponsors and organizations^[1], has the potential to reverse the long-standing trend of deforestation, by replacing traditional, short-term, aid-based project funding with a long-term, investment-style model that rewards verified forest protection through direct, annual payments over the long term.

Support global goals. If successful, the TFFF could help halt and reverse deforestation by 2030, support efforts to limit global warming to 1.5°C, strengthen adaptation, and conserve 30% of the Earth’s land by 2030, alongside other multilateral commitments.

A robust political signal. The TFFF is expected to launch formally at COP30 in Belém, Brazil, as a standalone initiative aligned with the Baku-to-Belém Roadmap. This launch will send a strong political message at a crucial moment when multilateral institutions and international cooperation are experiencing unprecedented challenges.

UNGA80, NYCW, and Pre-COP are among key moments for calling on sponsor governments to collectively make significant commitments, which can be deployed to leverage USD 100 billion in private investment.

What is the TFFF & Why does it Matter?

The Importance of Forests in the Fight Against Climate Change

Tropical forests play a critical role in regulating the global climate while also serving as the home to IPs & LCs and sustaining tremendous biodiversity. Their loss could add around 1°C to global temperatures. Yet incentives to keep forests standing are weak: existing mechanisms such as REDD+^[2] focus largely on mitigation through reducing deforestation are severely underfunded, and fail to capture the full social, economic, and ecological value forests provide. With few financial alternatives, forests are often sacrificed in the interest of seeking short-term profits.

The Purpose and Features of the TFFF

The TFFF (or the Facility), an innovative financial mechanism, seeks to change this trend by directly paying tropical forest countries proportionally for maintaining forest cover. Rather than relying on traditional, aid-based project funding (which is often short-term, donor-driven, limited in scope and unsustainable once the funding ends) the TFFF aims to deliver relatively predictable, large-scale, annual payments over the long term that are tied to verified forest conservation performance, offering an alternative to the long-standing trend of their destruction^[3].

What Makes the TFFF so Unique?

A new way of raising money. Instead of depending only on grants, which can be unpredictable and tied to political cycles, the TFFF aims to mobilise USD 125 billion from both governments and private investors, by offering them an investment opportunity with modest financial returns.
Self-sustaining: Using an endowment-style model^[4], investment returns are anticipated to generate around USD 4 billion annually; there is no need for replenishment following initial contributions, with the TFFF designed to return initial contributions of capital (over a period of 30 years).
Low-cost and transparent monitoring. Forest cover is tracked using satellite-based remote sensing, keeping costs low and ensuring accuracy. Countries can use their own systems or global ones, as long as they meet strict transparency and quality standards.
Performance-based. Up to 74 tropical forest countries could receive annual payments based on the amount of forest they keep standing^[5]—covering over a billion hectares worldwide. Payments decrease if forests are lost or damaged by fire, creating a system that directly rewards good performance, subject to further refinement to ensure robust methodologies.
Direct, guaranteed support for IPs & LCs. At least 20% of all payments will go straight to IPs & LCs, who are generally the best forest stewards. The choice over what is financed, who benefits, and how resources are delivered from that percentage of payments will be governed directly by IPs & LCs through their chosen representatives. Countries may choose to either facilitate IPs & LCs’ direct access to the funds nationally or rely instead on an international solution.
Robust governance. Two arms, each with an independent Board, will manage the mechanism—the TFFF allocates payments and the Tropical Forest Investment Fund (TFIF) raises and invests capital. There is also a Scientific and Technical Committee to the TFFF Board.

Background

First formally introduced at COP28, the TFFF has since been co-designed and refined by an interim Steering Committee comprising representatives of tropical forest countries (TFCs) and potential sponsor governments, including the DRC, Colombia, Ghana, Indonesia, Malaysia, France, Germany, Norway, the UAE, and the UK.

In parallel, consultations have engaged finance experts, economists, NGOs, and IPs & LCs. The Brazilian government has also convened ministerial-level discussions to build consensus and mobilise political support.

Concept Note 3.0 of the TFFF was released in August 2025 and the Facility is expected to be formally launched at COP30 in Belém, Brazil, as a voluntary standalone initiative outside the UNFCCC negotiations, while remaining closely aligned with the Baku-to-Belém (B2B) Roadmap.

Unpacking the TFFF in Detail

Eligibility Criteria

All tropical forest countries (up to 74) that meet the eligibility criteria and sign the charter can join^[6]. Periodic technical reviews will progressively raise standards over time. Payments will be strictly performance-based, adjusted for deforestation and degradation rates, and released only upon verification of the results. Participating countries must demonstrate transparent financial management, publicly report how funds are allocated, and ensure spending aligns with conservation outcomes.

An Innovative Finance Mechanism for Tropical Forest Conservation

The Numbers

The TFFF is designed for massive scale, with a target of aggregating and investing USD 125 billion in senior and junior capital^[7], thereby delivering forest conservation incentive payments calibrated to achieve results. It brings together and invests government, philanthropic, and private capital to provide annual payments over the long term to tropical forest countries that keep their forests standing. Unlike traditional grant-based models, the TFFF is built around a one-time capitalization through long-term investments as well as opportunities for Sponsors to provide guarantees or other concessional capital. This structure allows it to repay investors while continuing to provide meaningful incentives for tropical forest conservation well into the future, without constant replenishment.

The backbone of the TFFF is the Tropical Forest Investment Fund (TFIF), which is proposed to be composed as follows:

$25bn Sponsor Tranche, capitalised through long-term investment and other catalytic or concessional capital contributed by sovereign countries and philanthropic investors.
$100bn Senior Debt Tranche, representing approximately 80% of the TFIF’s capital base, is to be raised from institutional investors (e.g., pension funds, insurers) via AAA bonds issued by the TFFF.

The TFIF will be invested in a fixed-income portfolio (sovereign and corporate bonds) – prioritizing green and sustainable investment in ODA-eligible geographies – with a target weighted average of BB or BB+. In other words, the TFIF will go out to the market to borrow $100 billion at a low rate, and invest that capital together with the $25 billion Sponsor Capital in higher risk / higher return investments. The spread between the annual investment returns and the cost of capital (i.e., the amount that must be paid annually to the AAA bond holders) will form the basis for incentive payments to TFCs for sustaining intact forests. The Sponsor Capital will be deployed to absorb investment risk and thus enable institutional investors to participate in allocating $100 billion in capital through AAA-rated bonds. Following a 10-year grace period, the Sponsor Capital would be gradually returned to Sponsors over a 20-year period of time as the TFFF becomes an enduring finance mechanism.[1] [2]

At full scale, the TFFF is expected to generate around USD 4 billion in annual payments, equivalent to about USD 4 per hectare for one billion hectares of eligible tropical forests.

The Governance Framework

The system has two main components (see the figure above from Concept Note 3.0). The TFFF oversees how forest performance is measured and rewards are distributed, while the Tropical Forest Investment Fund (TFIF) raises and invests the capital. A Secretariat coordinates between the two to ensure the system runs smoothly. The TFIF invests in a diversified portfolio designed to generate stable returns for at least 40 years. Crucially, investments are screened against a strict exclusion list to prevent financing of environmentally damaging activities such as fossil fuels, large-scale deforestation, or projects with high greenhouse gas emissions. The investment strategy is designed to prioritise long-term environmental, social, and governance (ESG) goals—along with climate and biodiversity objectives—over short-term returns, thereby safeguarding both sustainability outcomes and the financial integrity of the TFFF Trustee.^[8]

The TFFF complements other forest finance mechanisms such as REDD+. On its own, it cannot close the global forest finance gap or fully offset the economic incentives that drive deforestation. Additional public and private investments, as well as reforms to harmful subsidies, will be needed alongside the TFFF to achieve lasting forest conservation.

Indigenous Peoples and Local Communities as Key Partners of the TFFF

IPs & LCs play a central role in safeguarding forests: they hold or manage 54% of the world’s remaining intact forests, and 40% of Key Biodiversity Areas (KBAs) overlap with their lands and territories. They are therefore not only beneficiaries of the TFFF, but essential partners in achieving global climate, biodiversity, and conservation goals—and have been actively involved in shaping the initiative’s design.

Recognising their critical but chronically underfunded role, the TFFF commits to directing at least 20% of all forest payments to IPs & LCs through a dedicated mechanism. This could make the TFFF the largest international source of finance for forest stewards, potentially tripling current annual flows. Importantly, funds will be channelled directly to IPs & LCs—rather than only through governments—and used for IPs & LCs’ own priorities rather than pre-defined projects. The process is intended to be flexible, inclusive, and informed by lessons learned from other funding mechanisms (such as through the Forest Tenure Funders Group^[9]).

Concept Note 3.0 reinforces the TFFF’s commitment to equity, rights, and inclusion. It ensures that IPs & LCs are not just recipients of finance but key decision-makers in governance and implementation, such as by requiring TFCs to have or establish robust grievance and redress mechanisms that satisfy the TFFF's minimum criteria.

To ensure implementation of these principles and effective participation of IPs & LCs, at the global level, an IPLCs Advisory Council will advise the TFFF Board on matters affecting IPs & LCs. The Advisory Council may be called upon by the TFFF Board to review the operations of the fund, advise on grievances related to IPs & LCs matters that are brought to the TFFF Board’s attention and advise the Board and the Secretariat on the selection process of the IPLCs Global Executing Agency.

A Ratchet Mechanism

While discussions on the operationalisation of the TFFF will continue in close consultation with all relevant stakeholders, it is important to highlight that one of the main principles of the facility is to seek continuous improvement over time through learning and periodic revisions.

A predefined review of the eligibility and monitoring criteria will take place within three years of the TFFF’s operational launch, and every five years thereafter to determine whether any strengthening or improvement should be made.

The Technical and Scientific Advisory Panel and the IPLCs Advisory Council will provide advice to the Board to continue enhancing transparency and stakeholder engagement.

What You Can Do

What you can do (including at UNGA80, CWNYC, Pre-COP, and non-state actor mobilizations)

Governments

Champion the TFFF by joining as sponsors, including both donor countries (e.g. France, Germany, Norway, the United Kingdom, Australia, Japan) and new partners (e.g. Singapore, China, UAE, and Saudi Arabia).
Use platforms like Climate Week in New York and Pre-COP to signal support and build momentum.
Highlight how the TFFF can help deliver on GST-1 mandates, the New Collective Quantified Goal (NCQG), and the B2B Roadmap, while strengthening synergies across the Rio Conventions.

Private Sector, Philanthropy, and Investors

Indicate interest in investing, particularly as Sponsors through family offices and philanthropic organisations, as well as institutional investors who can signal interest in the Senior / market-borrowing tranche.
Recognise the TFFF as a credible, large-scale mechanism that combines modest financial returns with measurable conservation outcomes and payments to IPs & LCs who serve as forest stewards.

Civil Society and Expert Community

Encourage governments (e.g., France, Germany, Norway, UK, China and UAE) to step up as crucial TFFF Sponsors with meaningful commitments of capital.
Engage in upcoming consultations to hone the design of the TFFF, including by sharing lessons from existing mechanisms to strengthen safeguards, monitoring, and governance.
Advocate for transparency, equity, and additionality in the Facility’s operation.

Relevant Resources

^[1] The TFFF already has significant global support from leaders of the G20, BRICS, Amazon and Congo Basins , UN leaders and sponsor ministers.

^[2] REDD+ stands for Reducing emissions from Deforestation and Forest Degradation, plus related activities like forest conservation, sustainable forest management, and enhancing forest carbon stocks in developing countries. It's a UNFCCC (United Nations Framework Convention on Climate Change) mechanism that provides financial incentives to these countries for reducing greenhouse gas emissions by protecting their forests. By valuing forests for their carbon storage, REDD+ aims to make forest preservation an attractive economic decision, helping to fight climate change while supporting sustainable development.

^[3] Tropical countries lost 6.7 million hectares of primary rainforest in 2024 alone.

^[4] The model relies on building a diversified portfolio of investments with low correlation to minimize risk and optimize returns.

^[5] The payments will be based on their hectares of eligible forest cover which meet the performance requirements.

^[6] At entry, countries should apply a canopy coverage threshold (between 20–30% within a minimum mapping unit of 1 hectare), using the most recent three-year average of deforestation data, and are subject to updated degradation and deforestation discount ratios.

^[7] Senior capital refers to funding that has priority when it comes to repayment. It is considered lower risk and is the first to be paid back if a project or fund generates income. Junior capital takes on more risk and is repaid only after senior capital has been paid. It often acts as a buffer or shock absorber, protecting senior investors from losses.

^[8] The model has recently been refined (Concept Note 3.0) to shorten the repayment period to 30 years, add a 10-year grace period, diversify investment options, and strengthen environmental and social safeguards through the introduction of a more comprehensive negative exclusion list. These measures are currently under review with credit rating agencies to ensure the fund’s long-term credibility and financial sustainability.

^[9] The FTFG convenes the 25 bilateral and philanthropic donors who are part of the COP26 Forest Tenure Pledge. Together, they aim to provide $1.7 billion by December 2025 to help advance IPs & LCs land tenure rights, and their role in sustainable forest management, and IPs & LCs-led conservation efforts in ODA-eligible tropical forest countries.