Case: MLR Forestal – Sustainable agroforestry in Nicaragua

“This is an amazing hot spot for biodiversity,” summarises Harold Gordillo, Environmental and Social Adviser at Finnfund.

In December 2022, Finnfund and MLR Forestal, a Nicaraguan agroforestry company, launched an innovative pilot project to restore 554 hectares of degraded forest lands with significant biodiversity potential in Nicaragua.

MLR Forestal, established in 2013, a Finnfund investee since 2019, is an agroforestry company focusing mainly on production of teak and cocoa. The company manages approximately 5,000 hectares of land mostly in Siuna and a small proportion in Bonanza. The company areas are known for their high levels of biodiversity and are located close to various important protected areas which together are known as the Bosawas Biosphere Reserve.

“This is an amazing hot spot for biodiversity,"

Harold Gordillo, Environmental and Social Adviser, Finnfund

With the funding provided by Finnfund, the company is aiming to implement an ambitious restoration plan by enhancing regeneration which will then improve connectivity to nearby protected areas with high biodiversity value. Using the expertise of local and international experts, the company is planting native tree species on these degraded lands, testing different species and planting schemes to find best models for restoration.

“The ecological restoration project embodies MLR Forestal’s raison d’être, which is defined as an economically viable, environmentally sustainable and socially responsible impact investment. By enhancing the regeneration of these 554 hectares we are making our objectives a reality. This is a major undertaking for a private company in Nicaragua and it would have been much more difficult if we did not work hand in hand with organizations like Finnfund,” says Luis López, Sustainable Development Director at MLR Forestal.

Prior to the project, MLR Forestal has already worked to protect and enhance biodiversity in their area of influence and with the support of Finnfund and FMO, a Dutch development financier, have further developed their biodiversity management plans and monitoring systems. The forests are certified under Forest Stewardship Council Forest Management ^TM (FSC-FM ^TM), and the cacao plantations are certified under the Rainforest Alliance. More than 28% of the area is designated for conservation.

Goal: increased biodiversity level and ecosystems services provision

The enhanced connectivity between ecosystems and natural habitats aims to both increase the biodiversity level and quality of ecosystems services provision. For example, through improving riparian buffer zones, the project aims to enhance water quality for the benefit of both biodiversity and the communities living in a wider area.

“We are thrilled to launch this project with our investee company MLR Forestal. The company has demonstrated high commitment to protecting and enhancing biodiversity,” says Harold Gordillo.

“Through this cooperation, we aim to take this work to the next level and benefit not only the natural capital and ecosystem services in Nicaragua for Nicaraguans but also the company and the forestry sector as a whole,” he continues.

At the heart of the MLR Forestal operation is the sustainable business operation of growing teak and cacao, processing products and marketing sales internationally. Peter Chapell, Investment Manager at Finnfund, sees the viability of the business as key for being able to generate positive development impacts, such as biodiversity net gains.

“MLR Forestal is the embodiment of how sustainable agriculture, agroforestry and forestry can provide a solid foundation on which innovative biodiversity projects can be built. The success of the business and the success of sustainability and impact work have a symbiotic association,” says Chappell.

Encouragement and lessons learned for the forestry sector

MLR Forestal has registered the project under the Verified Carbon Standard. The company sells emissions reductions and the funding will be used towards the biodiversity action plan and restoration work. Through this project, Finnfund aims to provide a great example and encouragement for other forestry companies.

“Sustainable forestry is one of our key sectors, and we strongly believe that companies can have a vital role to play in the fight against biodiversity loss and climate change,” says Anne Valto, Senior Development Impact Adviser at Finnfund.

“We hope that MLR’s example and lessons learnt from this project will encourage and help other companies to enhance their efforts in protecting and managing biodiversity, and further increase forests’ contributions in the fight against the climate change,” Valto concludes.

MLR Forestal in a nutshell

MLR Forestal is an agroforestry company that operates mainly in the municipality of Siuna, in the North Caribbean Coast of Nicaragua. The company establishes and manages of Teak plantations and Cocoa plantations in association with Teak. These are impact investments that are economically viable, environmentally sustainable, and socially responsible. The plantations have three main products: fine aroma cocoa, teak wood, and charcoal. MLR Forestal is a private investment with Canadian, American, and Nicaraguan capital established in 2013.

The operation as of November 2022 has 3,101.57 hectares divided into 1,387.96 ha. of cocoa with teak shade, 1,673.94. of exclusive plantation of teak and 1,450.80 ha. ha. of conservation areas destined for the exclusive protection of forests and biological diversity in the buffer zone of the Bosawas Biological Reserve, in accordance with the Sustainable Development Goals SDG. The company aims to reach a coverage of 6,069.18 ha. by 2030, which would be divided into 1,492.05 ha. of cocoa with teak shade, 2,811.35 ha. of teak and a total of 1,765.78 ha. destined for conservation.

Julkaistu 23.1.2024