AGBI: Promoting regenerative agriculture in Brazil through stakeholder engagement

Organisation details 

Name: AGBI Real Assets 

Signatory type: Investment manager 

HQ country: Brazil 

AUM: $25 million 

Covered in this case study 

Asset class(es): Farmland 

Geography: Latin America 

AGBI, a Brazilian fund manager specialising in agricultural investments, has been integrating sustainability into its investment strategy for over a decade. By converting degraded pastureland into productive cropland, AGBI showcases a commitment to regenerative agriculture as a means to enhance food security, combat climate change, and deliver financial returns. 

Why we focus on regenerative agriculture 

Brazil is facing a significant environmental and economic challenge due to extensive land degradation: there are 28 million hectares of degraded pastures across the country.^[1] Converting this land into productive agricultural use can reduce deforestation and other habitat destruction, preserving critical ecosystems.  

However, the agri-food sector globally is responsible for a third of greenhouse gas emissions, is the primary driver of biodiversity loss, and is the largest user of freshwater. We have adopted regenerative agriculture practices, which capitalise on natural processes to counter these trends.  The World Economic Forum defines regenerative agriculture as a farming approach that prioritises soil health. This method includes practices such as minimising ploughing, which helps retain CO2 in the soil, enhance water absorption, and preserve essential fungal communities. Additionally, crop rotation is used to improve biodiversity and animal manure and compost are used to replenish soil nutrients. By moving grazing animals between pastures, soil degradation is minimised. These practices not only increase food production and nutritional value but also support carbon storage and biodiversity.^[2]

Figure 1: Overview of regenerative agriculture  

Source: IUCN/Vivid Economics^[3]

Challenges and opportunities for investors  

The barriers to adopting regenerative agriculture in Brazil include a lack of awareness among farmers about these practices, the initial costs associated with transitioning, and the absence of clear regulatory frameworks and incentives, which reduce the availability of capital and access to capital markets.^[4]  Another challenge is that traditional farming methods focus on short-term yields over long-term sustainability, deprioritising environmentally friendly farming practices that are essential for preserving the land’s agricultural viability over time.^[5]   

We believe the adoption of regenerative agricultural practices presents clear opportunities for agricultural expansion and for investors pursuing sustainability outcomes. We feel that the government should provide more incentives to invest in this space. Presently, foreign investors are banned from having control of Brazilian land, and there are few companies or publicly traded funds that offer them exposure to typical farmland, let alone regenerative farmland, especially in Brazil’s Midwest region.^[6]   

How AGBI is supporting regenerative approaches  

We have proactively engaged in strategic policy advocacy and public opinion shaping to address regulatory barriers, misaligned incentives and other challenges to sustainable investors. Our initiatives aim to increase awareness and educate a broad audience – including producers, investors, regulators, policymakers, and the financial markets – about our practices. By doing this, we facilitate a clearer understanding of the issues and foster a supportive regulatory environment. 

Through active participation in the Comissão de Valores Mobiliários-Laboratório de Inovação Financeira, and other relevant meetings and policy debates, we have worked to highlight the economic benefits of regenerative practices. This proactive approach has supported the dissemination of knowledge about regenerative agriculture, contributing to the development of the Brazilian Sustainability Taxonomy and the Brazilian Carbon Market Regulation. In addition, our contributions to the Agriculture Investment Fund (Fiagro) structure (an investment structure similar to a real estate investment trust but focused on agriculture) have helped frame the discussion about the structure’s vital role in carbon markets and its need for versatility to adequately respond to the dynamics of both agricultural and green finance market developments. 

Example: AGBI III Carbon  

AGBI´s public opinion work and policy engagements paved the way for our AGBI III Carbon initiative. The fund is the first agricultural fund in Brazil to be recognised as a Dark Green Fund by an independent second-party, the consultancy NINT ERM.

To receive this label, the fund aligns with widely used sustainability taxonomies, such as the Climate Bonds Initiative (CBI) and the Sustainability Related Financial Disclosure (SRFD). We believe AGBI III Carbon’s thesis on land restoration provides a template for other investment managers and investment products.  

The fund generates capital by acquiring farms with degraded pastureland in Brazil – intending to convert these areas to higher value productive cropland. The fund exemplifies regenerative agriculture by, for example, restoring soil health in degraded pastures, leading to increased carbon sequestration.  It also enhances biodiversity by creating set-asides or buffer zones, and improves water retention by implementing effective soil management techniques. Additionally, the fund boosts farmer livelihoods by increasing crop yields and productivity.  

The fund is poised to benefit from the growing demand for carbon credits, driven by global awareness and regulatory mandates for sustainable practices. Carbon credits are created based on the amount of carbon sequestered by the soil and so represent the emissions reduced above the soil. ^[7] This global trend enhances the fund’s potential to attract international investors through future sales of carbon credits. 

We are currently selecting tenants, mostly small and rural producers, who will develop the land using agricultural practices established by the fund. The fund’s Sustainable Land Investment Manifesto states what is expected of all stakeholders in the process and includes specific guidelines or principles, which help ensure that farmers adhere to our sustainable practices or standards, promoting consistency and alignment with the fund’s sustainability goals. For example, the fund is committed to the use of techniques such as Crop-Livestock-Forestry Integration, which can reduce the  loss of soil organic carbon relative to traditional techniques. We have also committed to using zero-tillage farming, the maintenance and replanting of forests, and the preservation of natural capital. The fund also had to include in its bylaws the commitment to replant native trees in any areas which have been deforested since the enactment of the Brazilian Forest Code in 2012.   

The success of AGBI III Carbon is demonstrated by it having attracted triple the financial commitment compared to its predecessor investment vehicles, Brasil Agro II Fund and AGB Nobres SA holding company. AGBI III Carbon aims to showcase how investments in regenerative agriculture can be both responsible and profitable to effectively demonstrate the practicality of regenerative agriculture to a wider audience. The fund has also been used as a case study in policymakers’ research of the regenerative agriculture landscape in the country, leading to invitations for us to share our insights at the Brazilian Agriculture Ministry’s AgroCarbon Discussion Chamber and the Brazilian Securities and Exchange Commission’s Innovation Laboratory.