6th Finance Briefing: Building Blocks for Financing Deforestation-Free Supply Chains (Smallholder Focus)

Deforestation-free supply chains cannot be achieved through regulation alone. They require sustained investment and inclusive rural development that places smallholder farmers — who underpin many global commodity systems — at the centre of the transition.

Therefore, Climate & Company published the Finance Briefing “Building Blocks for Financing Deforestation-Free Supply Chains (Smallholder Focus)” , developed in partnership with the SAFE (Sustainable Agriculture for Forest Ecosystems) project implemented by GIZ. The briefing presents a practical framework to help translate deforestation-free ambition, including those emerging through the EU Deforestation Regulation (EUDR, into financeable solutions that work for smallholders and rural communities.

A shared framework for coordinated action
The Building Blocks are ten modular, interlinked components that together create an enabling environment for smallholder-inclusive, deforestation-free value chains. They combine the “foundations” needed for a resilient financing ecosystem—such as regulatory and policy alignment, access to technology, socio-economic enabling conditions, and effective data and financial flows—with “accelerators” that help scale implementation through capacity-building, awareness-raising and stakeholder cooperation.

Rather than a checklist of compliance requirements, the framework is designed as an enabling architecture that helps different actors—financial institutions, policymakers, corporates, NGOs, and farmer organisations—align incentives, clarify responsibilities, and co-design solutions tailored to local realities.

From compliance pressure to financeable solutions
The briefing illustrates how the Building Blocks can be applied in practice using Uganda’s coffee sector as a reference case. It highlights how challenges such as limited access to finance, fragmented data systems, climate risks, and gender inequality can be addressed through coordinated action and appropriate risk-sharing and financing structures.

At the same time, the Building Blocks are not sector- or country-specific. They are intended to be adapted across geographies, commodities and transformation pathways—depending on local socio-economic conditions, institutional capacity and development priorities.

You can download the Briefing below: