August 2, 2021

What We’re Reading – Landscape Finance Edition – July 2021

David HechtEcoAgriculture Partners

Activity continues to bubble over in the world of landscape finance, place-based investment, conservation finance and transformations finance, making it challenging to keep up with all the most relevant reports and news. The 1000L Finance Solutions Design Team is working on system change, so we think it’s important to stay well-informed about the latest innovations and actors operating in the space.

Towards this end, we’re happy to introduce our monthly newsletter, a resource to help our community gain more perspective on landscape finance. So, here it goes…these are the landscape finance-related developments and reports that caught our eye in July.

News & Developments

Transforming the Role of the World Bank and International Monetary Fund

BlackRock CEO Larry Fink argued these institutions need to transform from their traditional roles to insurers who catalyze and mitigate risk for private investors.

One takeaway: Fink says that the core financing challenge is to create long-term “durable returns” in developing economies by mitigating volatility and protecting principal.

IFAD Investment Program to Boost Private Funding of Rural Businesses and Small-scale Farmers

The UN’s International Fund for Agricultural Development (IFAD) launched a program that aims to strengthen private investment in small- and medium-sized enterprises, farmers’ organizations and financial intermediaries. It will provide loans, risk management instruments such as guarantees and equity investments.

One takeaway: This program takes more of a sector focus as opposed to a landscape one. IFAD seeks to mobilize $200 million from public, private and philanthropic sources to leverage $1 billion in private investments.

IKEA Foundation and Rockefeller Foundation Announce $1 billion initiative to Catalyze Renewable Energy Investments

The foundations are creating a global platform that seeks to deploy catalytic capital more efficiently and at a scale that supports the expansion of local renewable energy projects.

One takeaway: They intend this step to help impact investors and governments combine their resources and expand their global philanthropic reach. The Rockefeller Foundation will incubate the platform in RF Catalytic Capital.

Reports

Catalyst 2030 – Ecosystem for Financing Transformation Report

This report emphasizes a fundamental need for solid agreement among participants in defining their transformation capital goals. It includes a list of eight shared challenges to EFT development and cites the work of 1000 Landscapes for 1 Billion People.

One takeaway: Catalyst 2030 proposes experimenting with an EFT Action and Learning Hub connecting individuals and initiatives creating EFTs.

Exploring the Processes and Finance Mechanisms Supporting Integrated Landscape Management

Tropenbos International proposes a methodology to identify the finance mechanisms that effectively channel funding from investors to individual or recipient groups supporting integrated landscape initiatives. This report also discusses possible criteria for selecting individual recipients and cites the work of several 1000L members.

One takeaway: The implementing agency (such as an NGO) should have extensive knowledge of and experience in the landscapes where it channels its financial flows. This knowledge should include insight into key stakeholders and the main drivers of changes in the landscapes.

Green Finance Institute Shares a Pathway for Action for the Financial Sector

In calling for measures to expedite the shift of private capital away from nature-negative outcomes and embed nature into financial decision-making, the Green Finance Institute released 10 recommendations for the financial sector and two critical recommendations for the public sector.

One takeaway: Credit-rating agencies could help overcome the cost-of-capital hurdle for issuer decisions by including key natural capital parameters in their credit-rating analysis.

The World Bank – The Economic Case for Nature

Presents a novel modeling framework that integrates select ecosystem services into a computable general equilibrium model. The model allows the study of how change impacts select ecosystem services on the global economy and vice versa between 2021 and 2030.

One takeaway: The World Bank report cites the importance of employing landscape-level planning to minimize land-use change for land and forests transition (including conserving intact ecosystems).

Earth Security – Blended Finance Playbook for Nature-based Solutions

This report explores four types of blended finance tools that can help public finance institutions leverage private capital. The Earth Security publication also shows how public institutions can use balance sheets more strategically and build the global capacity needed to link capital with nature’s assets.

One takeaway: Earth Security identifies four main modes of blended finance for nature: Design and Preparation Funds; Technical Assistance Funds; Guarantees and Risk Insurance; and Concessional Finance.

US Impact Investing Alliance – Emerging Sources of, and Strategies for, Community Investment Capital

Discusses emerging investment strategies in the US that seek to support social, economic and environmental outcomes while at the same time delivering a financial return for investors. Though not specific to ILM, it provides an insightful overview of the advantages and drawbacks of strategies.

One takeaway: One example is a capital stack that reverses the traditional debt financing structure – the highest return is provided to smaller investors with shorter timeframes, while larger investors who take in the highest risk (such as philanthropic foundations or other sophisticated investors) receive the lowest return – the goal being to combat wealth inequalities.

Spatial Finance Data More Accessible to Assess Climate Risk

Technology advancements have enabled spatial finance to play an increasing role for financial institutions. This report explores how technology helps users measure and manage risks and externalities.

One takeaway: There’s some discussion of the local landscape context. However, the general debate is on global- and national-level utility.

Impact Alpha: Two dozen charts map the trajectory of sustainable finance, food, energy and mobility

In its annual trends report, Generation Investment Management (an investment firm cofounded by Al Gore) documents the rising investment tides in sustainable finance.

Through a sector orientation, the report identifies heightened investor commitment to carbon sequestration and alternative food proteins, among other markets, and how commodity markets are being reshaped.

Relevant Past Publications

WWF – Bankable Nature Solutions Report

Recognizing landscape-scale considerations, the report addresses bankable projects that improve biodiversity and climate mitigation while also attracting financial institution investment. Presents case studies/solutions that generate a financial return and also have a positive impact on nature. Partly developed by 1000 Landscapes for 1 Billion People partners.

One takeaway: Many projects fail due to a lack of focus on the implementation phase. Landscape-level programs are designed for the long term and therefore need to be secured from changes in government, donor, corporate or NGO policy to ensure sustainability.

International Monetary Fund – How Big Are Green Spending Multipliers?

Findings reveal that investments in energy and land/sea use transitions are likely economically superior to those offered by supporting economic activities involving unsustainable ways to produce energy and food.

One takeaway: Stimulus spending in conservation spending generated durable economic benefits in addition to mitigation and carbon-sink gains from preserving wildlife. In contrast, the effects of a spending “shock” to support industrial farming activities were considerably shorter-lived and completely dissipated after five years.

We hope you’ve found this newsletter helpful, and we welcome your feedback. We also invite you to share insightful reports and news developments as you come across them. Please reach out to dhecht@ecoagriculture.org.

 

Featured Photo by Visual Stories || Micheile on Unsplash

More From David Hecht
More In in What We're Reading

No comments

Leave a Comment