The UK government has announced its intention to invest £400 million into the Tropical Forests Forever Facility (TFFF) through a loan. This commitment is contingent on the finalisation of the TFFF's governance and operational arrangements, completion of standard due diligence, and the meeting of specific conditions.
Funding the TFFF as a loan, instead of a grant, is intended to ensure value for money for British taxpayers. This approach means that loan repayments will be made while still supporting climate and nature action, reflecting what the government describes as a new approach to climate finance, acting as an investor rather than a donor.
The government states that this method allows for additional climate finance using a different 'financial transaction' budget. This reprioritisation, announced on 22 July, also facilitates a switch of funding to support the cap on single bus tickets at £2, aimed at helping people with the cost of living. Forest countries will not be expected to repay this funding directly; instead, the Facility is designed to generate investment returns from its performance-based model to repay investors and reward countries for protecting tropical forests.
As a condition of the investment, the UK government is seeking participation in relevant fund oversight mechanisms. This is intended to allow the UK to collaborate with other countries to advance its priorities and interests, oversee the investment, and help ensure strong outcomes for UK taxpayers and investors, including the City of London.