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Financing Strategies for Integrated Landscape Investment: Financial Institution Case Studies

Editors

  • Seth Shames

Authors

Date

April 1, 2014

Short Summary

These eight case studies of financial institutions investing in ILM through targeted or multi-sector funding can act as a resource for landscapes seeking finance, investors seeking opportunities, and ILM finance mechanisms seeking to improve their efficiency.

Summary

Manage growing environmental risks and respond to emerging trends

A growing interest in sustainable intensification of agricultural output, and an increasing appetite for more sustainable commodities and greener supply chains are attracting institutions to integrated landscape management (ILM) financing. Thanks to a growing niche, integrated landscape initiatives (ILIs) are able to access finance through mechanisms with primary objectives like agricultural productivity and food security, agro-forestry and renewable energy projects for climate mitigation, ecosystem services for climate adaptation, and sustainable development and Green Economy building. These eight case studies of financial institutions investing in ILM through targeted or multi-sector funding can act as a resource for landscapes seeking finance, investors seeking opportunities, and ILM finance mechanisms seeking to improve their efficiency. Read a brief summary of each case below. Download the PDF for more detail.

Althelia Ecosphere

Bundling mutually reinforcing revenue streams at the landscape level to align investor returns with sustainable development in forest countries

This asset management platform was launched in 2011 for the purpose of investing in sustainable land-use projects that could deliver multi-level returns. Currently Althelia invests in climate resilience, food security, local development, and poverty alleviation – aiming to prove that financial institutions can be committed to environmental stewardship and social development while returning profit to investors. Althelia is working to align stakeholder interests, and develop new investment models to shape policies in the sectors of climate change and natural capital. In 2012, they announced the first closing of the Althelia Climate Fund, which focuses on certified sustainable agriculture.

Bunge Environmental Markets

Addressing landscape inefficiencies through a value chain approach

Bunge is a leading global agribusiness food company, with integrated operations in over 40 countries at every step in the food chain. Bunge’s Financial Services Group develops emissions reduction projects in established and emerging markets through the Bunge Environmental Markets (BEM) program. BEM is intended to create economic incentives for green investment by developing and implementing emissions reduction projects for commercialization with companies and governments. At the Bajo Mira and Frontera Collective Territory in Colombia, BEM is working to scale up an existing agroforestry and conservation project for avoided emissions from deforestation in a way that is both environmentally and economically sustainable.

EcoEnterprises Fund

Market barriers to transforming established businesses into environmental enterprises at scale

For over 15 years, the EcoEnterprises Fund has been financing community-based sustainable businesses in Latin America, focusing on companies that have proven their ability to create healthy economic, social, and environmental landscapes where they operate. Their funds create small- to medium-sized sustainable ventures which operate in business niches including organic agriculture, non-timber forest products, sustainable forestry, and ecotourism. Their initial 10-year fund, Fondo EcoEmpresas, S.A., deployed USD 6.3 million in risk capital to 23 businesses in 10 countries. They are now launching their second fund, EcoEnterprises Partners II, LP (EcoE II), which has the potential to reach USD 35 million and will focus on taking EcoEnterprise’s activities to scale by providing expansion capital to business models that show promise for sustainable landscape management.

Global Environment Facility (GEF)

Seeking synergies across convention siloes: Multiple benefits at scale through multi-focal area financing

The GEF was established in 1992 as a public financial fund with a mandate to serve as the financial mechanism of major environmental conventions like the Convention on Biological Diversity, the United Nations Framework Convention on Climate Change, the United Nations Convention to Combat Desertification, and the Stockholm Convention on Persistent Organic Pollutants. GEF is unique in its total focus on the protection of the global environment. The facility focuses on seven key areas: biodiversity, climate change (mitigation and adaptation), chemicals, international waters, land degradation, sustainable forest management and REDD +, and ozone layer depletion.

Moringa

Diversified returns from agroforestry with positive environmental and social impacts for local populations

Moringa is a private equity investment organization that focuses on developing profitable, sustainable, and replicable agroforestry projects through partnerships with companies in Africa and Latin America. With an emphasis on local social and environmental impacts. Moringa aims to provide returns to investors through revenue from food commodities for export, biomass, and timber, as well as credits for carbon and Payments for Ecosystem Services markets. They envision an agroforestry approach that acts in contrast to timber and carbon funds, providing diversified revenue streams from a range of local and international markets. The diversification of agroforestry projects provides a favorable risk/return profile, given global economic and environmental market uncertainties and deforestation in high-yield tropical forested areas.

Norwegian Agency for Development Cooperation (NORAD)

Enabling investments for REDD+ through funding programmes to address climate, conservation, deforestation and livelihoods at the landscape level

NORAD is focused on empowering countries that receive funding to achieve their own development goals to reduce global poverty.  Norway’s programs concentrate on five key areas: sustainable management of biodiversity and resources, climate change and clean energy access, water resources management, water and sanitation, and hazardous substances. Funds like Clean Energy for Development, the Climate and Forest Support Initiative, and the Climate and Forest Funding Scheme for Civil Society focus on environmental and climate challenges in the Global South.

World Bank BioCarbon Fund

Creating multiple revenue streams from the sustainable transformation of landscapes

The BioCarbon Fund was the first carbon fund to focus on emission reductions from land use, land-use change and forestry sector. As such, the fund opened the carbon market to forestry and agriculture activities. As a public-private sector initiative, the BioCarbon fund mobilizes finance to help develop projects that sequester or conserve carbon in agro-ecosystems, transforming land use and benefitting small farmers. In 2013, the Fund launched the Initiative for Sustainable Forest Landscapes (ISFL), which seeks to ‘deliver landscape level transformations’, reduce emissions, protect forests, and green and secure supply chains. The Initiative providing grants and results-based financing for REDD+ projects, land use planning, and climate smart agriculture practices like improved livestock management.

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