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AXA IM Alts, AXA’s subsidiary, invests $49M in Brazilian startup Mombak for reforestation, offsetting carbon emissions with a unique business model.

In a groundbreaking move toward climate-conscious investment, AXA IM Alts, an alternative investment subsidiary of French insurance titan AXA, announced plans on Tuesday to infuse $49 million into Brazilian reforestation initiatives spearheaded by local startup, Mombak.

Operating under the management of more than 185 billion euros (approximately $208 billion), AXA IM Alts will acquire a minority stake in Mombak, an endeavor set to propel the startup's operational scale and technology.

Mombak, already backed by the prominent investment firm Bain Capital, will take charge of reforestation projects targeting over 10,000 hectares of depleted pastureland. 

According to Reuters, the initiative is expected to generate upwards of 6 million carbon credits, contributing substantially to carbon sequestration.

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"Mombak is at the forefront of creating the largest carbon removal projects globally," said Peter Fernandez, Mombak's co-founder, during a recent interview. "The single most significant reforestation opportunity available to us today is in Brazil."

The startup's unique business model involves acquiring degraded lands from farmers and ranchers or partnering with them to replant indigenous species in the world's largest rainforest. This approach, under constant threat from increasing deforestation, also generates CO2 removal credits that can be traded in carbon markets. As a result, Mombak can effectively mitigate some of the risks typically associated with non-governmental organizations' reforestation efforts in the Amazon, according to Fernandez.

However, not everyone is on board with carbon offset markets. Critics, including the environmental NGO Greenpeace, argue that these mechanisms can inadvertently encourage emitters to persist in releasing greenhouse gases.

Reuters reported last month that, despite the widely held view among experts that reforesting the Amazon could be a significant deterrent to catastrophic climate change, non-profit organizations tackling this enormous task are facing numerous challenges, including illegal land encroachments and constricted budgets.

AXA IM Alts' natural capital lead, Adam Gibbon, argued that Mombak's land purchase model equips the company with the capacity to carry out its quality procedures and ensures the newly-created forest's long-term conservation. "But it does require capital," Gibbon acknowledged.

Underscoring the novelty of the investment, Gibbon added, "This is our first investment in Brazil." He went on to express AXA IM Alts' desire to considerably expand its financial involvement in Brazil and other countries within the Amazon basin.

Samira is an Electronics and Communications Engineer by profession, but deep inside, her heart is a nomad! She's a state champion debater, a public speaker, a scriptwriter, a theatre actress, but most importantly — A GREEN CITIZEN! She thinks of herself as a storyteller who thrives on enjoying the life at fullest and telling everyone the tales of life.

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