AXAHY AXA SA (QX)

By Paulo Trevisani

Brazil's Mombak Gestora de Recursos said Tuesday that France's AXA Investment Managers has committed $49 million to support its efforts to remove carbon dioxide from the air by reforesting the Amazon.

AXA has also taken a minority stake in Mombak, a start-up focused on carbon removal using native species. The Brazilian firm aims to generate credits that can be sold to companies willing to reduce their carbon footprint.

"It is impossible to reach [climate protection goals] if we don't remove carbon from the atmosphere," besides curbing emissions, Mombak Chief Executive Peter Fernandez said. "And the largest opportunity to do carbon removal is in Brazil."

Fernandez said a major global technology corporation is under contract to buy Mombak's carbon credits, but he declined to reveal the buyer's name.

So-called voluntary carbon markets, where offsets are traded regardless of government-imposed emission caps, have been under scrutiny amid doubts about whether the credits really equal the amount of carbon reductions they are supposed to represent.

Fernandez said credits linked to Mombak's reforestation projects are high-quality ones.

Carbon removal projects have attracted the interest of global corporations. Last year, Stripe, Alphabet, Meta Platforms, Shopify and McKinsey Sustainability launched Frontier, a so-called advance market commitment, to link buyers and sellers of carbon removal.

AXA IM Alts, the French firm's alternative investment unit, has over 185 billion euros (around $208 billion) of assets under management. In September, it launched its Natural Capital strategy to invest in nature-based solutions to climate change.

"We were drawn to Mombak because they share our focus on operational and scientific excellence," said Adam Gibbon, who leads Natural Capital, in an email. Gibbon said such initiatives need to be scaled "if we are to achieve net-zero and avert the ongoing biodiversity crisis."

Mombak said it plans to reforest more than 10,000 hectares, or nearly 25,000 acres, an area larger than Lake Superior, of degraded pastureland and generate up to six million carbon credits, each one equal to 1 metric ton of CO2 removed from the air.

A variety of approaches are being deployed around the world to remove greenhouse gas from the air, including machines that suck CO2 for underground storage. Growing trees is a more traditional way to achieve similar results. Regrowing a complex ecosystem such as the Amazon rainforest, however, can be challenging.

"Crucially, rapid reforestation is vital for the Amazon," said Eduardo Ferreira, managing director of Latin America as Climate Impact Partners, a provider of carbon offset projects that isn't involved with Mombak. "This does not mean that there isn't a need for engineered removals, but as they become more readily available, they should be used alongside nature-based removals."

Mombak's Fernandez says his firm is making one of the largest private, nature-based carbon removal projects in the Brazilian Amazon.

Brazil, as large as the contiguous U.S., is home to around 60% of the Amazon, the world's largest rainforest. It is a rich ecosystem that has been shrinking fast, attacked by loggers, cattle ranchers, soy farmers, miners and land grabbers.

Fernandez said Mombak already has a contract with a farm about half the size of Manhattan, N.Y. It is in the municipality of Mae do Rio, in Para, a mineral-rich state three times as large as California where for decades cattle ranches and soy crops have increasingly replaced the rainforest.

More than 500 trees have already been planted since the farm was acquired in January, he said, with funds from its initial investors, including U.S.-based Bain Capital Partnership Strategies.

Mombak plans to plant up to 90 different species, all native to the Amazon, Fernandez said.

Write to Paulo Trevisani at paulo.trevisani@wsj.com

(END) Dow Jones Newswires

July 18, 2023 07:14 ET (11:14 GMT)

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