A Q&A with Forest First Colombia CEO Tobey Russ and CFO Jonathan Dodd on climate change mitigation and sustainable forestry in Colombia
The Vichada region of Colombia is a sparsely populated grassland that lacked infrastructure for a meaningful forestry sector, but that hasn’t stopped Forest First Colombia S.A.S., with support from DFC, from building a sustainable plantation the size of the city of Denver — with critical implications for the region and beyond.
Forests play a pivotal role in the global fight against climate change. Not only do they act as carbon sinks, pulling carbon out of the atmosphere, but they also protect biodiversity in ecosystems across the globe. Yet humans are increasingly endangering these crucial habitats through destructive activities such as deforestation.
DFC provided $22 million in financing to Forest First Colombia, a forestry company using a sustainable harvesting approach that is projected over the next 10 years to sequester more than three million tons of carbon — equivalent to the annual emissions of 600,000 gas-powered cars. The project underscores DFC’s commitment to investing in projects that combat the climate crisis while creating economic opportunity in emerging markets.
Forest First Colombia CEO Tobey Russ and CFO Jonathan Dodd explain the trailblazing initiatives the company has employed and how DFC’s financing enabled them to scale this critical work.
DFC has edited their responses for length and clarity.
How did Forest First Colombia originate and what is its business model?
TR: In 2006, a group of us retired from the financial services world and decided that we wanted to do something that had a meaningful impact from a social and environmental perspective. We picked sustainable plantation forestry — the devastation of the natural forest was well-known at that point in terms of how much natural forest we were losing year over year. At the same time, the demand for wood products was growing all around the world.
We knew that we needed to be along the equatorial belt, because that’s where trees grow much faster. We finally ended up in Colombia. Colombia has tens of millions of hectares above the Amazon jungle, which is flat, savannah grassland. None of the issues that you have when you’re getting into forestry exist there. You’re not displacing people, you’re not displacing existing agricultural and food operations, and you’re not taking out a very important natural habitat.
The few people that live there set the grassland on fire multiple times a year due to poor land management practices, and they become uncontrolled wildfires, burning millions of hectares a year. Imagine the environmental degradation that takes place, not only on biodiversity but on carbon stocks and soil, giving off greenhouse gases, promoting erosion, and reducing water quality.
We started a Colombian company called Forest First Colombia S.A.S. in 2010. Our business model was to establish the plantation and to prove to the world that trees grow really well there. By doing that, you create enormous economic opportunity where there was none before — there were no jobs in this region, and now we employ hundreds and soon to be thousands of people. From an environmental perspective, you’re creating a very large carbon sink, improving biodiversity, and getting carbon stocks in the soil. Today, we own 40,000 hectares, and 14,000 of them are preserved and protected areas that are being rehabilitated.
What challenges have you faced in establishing and scaling Forest First Colombia?
TR: In a place like Colombia, where there isn’t an established forestry sector, you have to invent everything from scratch. In Brazil, you have road systems, mills that you can sell to, and established transportation companies that are moving and harvesting wood. None of that exists in Colombia. It’s not as easy as just growing the trees — it’s then getting and importing equipment, hiring and training the people, and building the roads and all of the infrastructure. Everything from waste disposal to water use to electricity all have to be developed as part of the project.
With the products that you produce, you’re introducing them into a country that has never had a source of domestic supply. In the case of Colombia, they import virtually all of their finished wood products, so you have to create the markets for the distribution. Establishing distribution centers and relationships with other distributors and users all falls on us.
Finally, it’s raising capital. The single biggest challenge that a company like ours faces is raising money in significant amounts from institutional investors. By the nature of forestry, you have an additional challenge, which is it takes a long time for a tree to grow. There are a lot of investors that don’t want to invest when it takes that long for the story to come to fruition.
One of DFC’s sector priorities is advancing climate mitigation, adaptation, and resilience. How does Forest First Colombia’s work align with those efforts?
TR: When you think about climate, probably the best contribution we can describe is with carbon. Trees are very big carbon sinks — they breathe out oxygen and they breathe in carbon dioxide, and they store it in the tree. In this area of Colombia, not only are there no carbon stocks in the soil, but there is also no vegetation to hold that carbon. The types of trees we’re growing are called high-yield, fast-growth hardwoods, which means they’re very efficient at taking carbon out of the air and storing it in the wood.
When Colombia became a signatory to the Paris Agreement and started a carbon market in Colombia, we got our plantation certified on that Colombian exchange and later began selling carbon credits on the international market.
Our trees are removing carbon from the atmosphere and restoring it. When we talk about 80,000 hectares planted, that’s 10 to 12 million tons of carbon. It’s a really meaningful difference when it comes to the environment and helping to mitigate the negative effects of climate change.
How has working with DFC helped advance Forest First Colombia’s work?
TR: DFC has helped us a great deal. As part of our loan agreement, we committed to fully implementing the IFC Performance Standards, which are arguably the most rigorous standards in the world, both socially and environmentally.
The other area is the focus on the domestic market. Our original strategy was an international strategy, but DFC strongly encouraged us to focus more specifically on the domestic market opportunity in Colombia. In 2023, we have gone about the process of implementing that plan, and we’ll be selling wood for the first time in a meaningful way in Colombia.
JD: Thirdly, DFC has clearly been a catalyst in our growth and helped catalyze the attention of other potential investors.
TR: DFC carries a lot of credibility around the world, so it’s a catalyst for us for raising new money. People think if DFC is involved, we could be too.
