IFC Invests $165M in São Martinho to Drive Decarbonization and Boost Sustainable Agribusiness in Brazil

Landmark Project Supports Biomethane Production, Greenhouse Gas Reductions, and Inclusive Development.

The International Finance Corporation (IFC), a member of the World Bank Group, has announced a $165 million (approximately R$ 1 billion) investment in São Martinho S.A., one of Brazil’s top producers of sugar, ethanol, and renewable energy. The funding aims to accelerate decarbonization in Brazil's agribusiness sector while supporting climate change mitigation and fostering inclusive growth.

The ten-year IFC loan will finance São Martinho's first biomethane plant at its Santa Cruz Unit. This facility will generate renewable natural gas through the biodigestion of sugarcane vinasse, a by-product of sugarcane processing. Additional funding will be allocated to refurbishing sugarcane fields and enhancing crop treatments at the unit, further advancing biomethane production and sustainable agricultural practices.

Cutting Emissions Through Biomethane-Powered Equipment

A critical component of the initiative involves reducing greenhouse gas (GHG) emissions in agriculture. Biomethane will replace traditional fossil fuels in powering São Martinho's tractors, trucks, and irrigation systems, significantly decreasing emissions while fostering a more sustainable farming ecosystem.

IFC will also collaborate with São Martinho on vocational training programs targeting vulnerable populations, including women in rural areas and underemployed youth, thereby promoting social equity and workforce development.

Agribusiness: A Cornerstone of Brazil’s Economy

Agribusiness constitutes approximately 25% of Brazil's GDP, with the sugar and ethanol sector playing a vital role in renewable energy production. By leveraging the potential of sugarcane by-products like vinasse, São Martinho is spearheading innovations in biomethane and biofertilizer production.

Once processed, vinasse produces biogas, which can be converted into biomethane after filtration and purification. Solid and liquid by-products from the process are transformed into nutrient-rich biofertilizers, offering a sustainable alternative for crop nutrition.

Leadership in Sustainability and Innovation

Felipe Vicchiato, CFO of São Martinho, emphasized the company’s commitment to environmental stewardship. “This transaction strengthens our partnership with IFC and underscores confidence in our innovative, sustainable business model. By producing clean energy from renewable carbon, we are promoting economic growth, preserving the environment, and enhancing social well-being in the communities we serve,” he said.

Manuel Reyes-Retana, IFC’s Regional Director for South America, highlighted the broader impact of the investment: “This project not only reduces greenhouse gas emissions but also fosters sustainable and inclusive economic development. It benefits local communities and bolsters Brazil’s resilience against climate challenges.”

IFC’s Legacy in Brazil’s Agricultural Sector

Over the past decade, IFC has been instrumental in transforming Brazil’s agribusiness, supporting initiatives like increased sugarcane crushing capacity, electricity cogeneration, and biogas production. By funding São Martinho’s biomethane project, IFC reinforces its commitment to best practices in environmental and social sustainability within the agricultural industry.

Strategic Alignment with Brazil’s Economic and Environmental Goals

The investment aligns with the World Bank Group’s five-year strategy for Brazil, which focuses on fostering sustainable economic growth, inclusive development, and environmental sustainability. By integrating innovation with climate resilience, São Martinho's project showcases Brazil’s potential as a global leader in sustainability and climate action.

This partnership between IFC and São Martinho is a testament to the transformative power of public-private collaboration in addressing environmental and social challenges while driving long-term economic growth.