The goal of transforming climate, biodiversity and land degradation is still within reach but may not remain so without significantly increased investment into nature-based solutions. The world will need $384 billion a year in investments by 2025, more than double the current annual investment of $154 billion. Private capital currently represents a mere 17% of this financing, and in the public sphere, nature-negative investments are 3-7 times larger than those that go into nature-positive solutions.
As part of their shared mission to advance landscape initiatives through public- and private-sector funding, 1000 Landscapes for 1 Billion People (1000L) and 30 of its partners are focused on addressing a key challenge – how to mobilize finance towards thriving landscapes that can help drive large-scale transformations.
To unpack the complexities of this challenge, 1000L and the Laudes and IKEA foundations have launched a three-part dialogue series. These events bring together landscape partnerships and financial leaders who are experienced or interested in contributing their expertise to advance funding for integrated landscape initiatives. The interactive nature of these dialogues aims to create meaningful and fruitful exchanges that can help leaders better understand the challenges of shifting financial flows toward landscape initiatives and jointly find ways to address those challenges.
The first of these dialogues, held in February, focused on the role landscape partnerships play in mobilizing finance for their portfolios of landscape regeneration activities. While we see a growing stream of international public, private and philanthropic funding moving toward these activities, the money often doesn’t reach the people on the ground who can drive tangible change.
DIALOGUE #1: Investing in Landscapes: A Challenge for Finance Innovation, a Wealth of Opportunity
Access the dialogue recording here.
Sara Scherr and Seth Shames and Climate-KIC’s Daniel Zimmer introduced the dialogue and spoke briefly about 1000L’s work in landscape finance. They emphasized the importance of having a vision, strategy, action plan and mechanism for mobilizing finance to inspire landscape stakeholders into collective action.
Two of the 12 landscape partnerships that shared their finance profiles for the dialogue delivered presentations that explored their integrated finance strategies. Percy Summers of Conservation International discussed how smallholder farmers, government and big players like Starbucks work together in San Martin, Peru, to promote a low-carbon and equitable growth strategy. The partnership uses innovative mechanisms, including conservation agreements, to address critical coffee and cocoa value chain issues. They also partner with the Amazon Business Alliance to promote bio businesses and are creating an incubator hub to support a project pipeline. Combining financing modalities provides an integrated view of territories and supports a joint approach to monitor and communicate impact across the landscape, Summers said.
Carl Bruessow of the Mulanje Mountain Conservation Trust spoke about his group’s work in Southern Malawi, home to Africa’s oldest tea industry. The landscape partnership began as a typical conservation trust fund financed by grants but is now seeking a more managerial role over the protected area that will also coordinate other projects within the landscape. The partnership is focused on social contracts to build community interest in conservation. To do this, it has looked at various interventions beyond regular grants, such as establishing social enterprises. It also explores the potential of carbon finance and has considered biomass and efficient cook stove projects. It is continuing to investigate new business opportunities within the landscape.
To close, Commonland’s Alejandro Diaz Loyola and IKEA Foundation’s Annelies Withofs chaired a participant-led discussion on how funders, investors and landscape partnerships can engage with each other more effectively and improve coordination. The goal of this effort is to ensure alignment between different financial streams’, timelines and metrics of success.
TOP INSIGHTS AND TAKEAWAYS
- Strong governance, facilitation and budget planning are critical to building effective landscape partnerships and motivating landscape stakeholders to align on a common set of goals. Finding the initial capital to fund these governance structures can be challenging. Here, philanthropy and patient capital can help develop existing plans and work with institutions and stakeholders to facilitate concrete landscape goals.
- There is value in conducting financial needs assessments for landscapes. From there, landscape leaders can develop a landscape investment portfolio. Financing mechanisms can be designed specifically to support landscape-scale objectives or focus on multiple elements of a landscape portfolio. These landscape finance mechanisms will be discussed more extensively in the second dialogue of this series.
- A landscape’s investment readiness is important to investors. While there’s a lot of innovation underway to blend different forms of financial capital, especially among impact investment funds, projects still need to meet their specifications in terms of deal size, risk, profile and geography. Solutions could include breaking up transactions into elements that are more easily targeted toward specific investors or modularizing or phasing investment opportunities.
- Innovative investment forms such as carbon finance and biodiversity credits already cover the essential aspects of landscape activities and will be vital to scaling landscape investments. Some partnerships already work on such models. So far, in the nature-based solutions category, carbon is the most bankable asset class. As leaders increasingly align water, biodiversity and social outcomes, landscape partnerships can benefit from more diverse finance sources.
- Working at a landscape level is vital for any successful landscape partnership. Both funders and partnerships should move away from funding specific projects towards a portfolio approach that coordinates projects across sectors within the landscape. While project developers and landscape partnerships will engage with potential investors and funders across the finance spectrum to mobilize the resources they need, the focus should be on integrated landscape management, and clarity on how to meet these landscape financing needs is vital.
Integrated landscape finance presents a potentially powerful solution for both landscapes and finance providers. It offers a model that enables financing multi-project, multi-sector investment portfolios to encourage synergies between investments and generate impact across multiple objectives like biodiversity, climate and food production.
1000L is strategically positioned to nurture these vital connections and conversations between funders and local actors, thereby mobilizing funds across sectors and projects within their landscapes.
The Laudes Foundation is committed to supporting initiatives focused on scaling finance for landscapes. We believe this has the potential to drive collective action among governments, businesses, investors and the community toward ecosystem restoration and addressing climate change and inequality.
The next dialogue in the series, scheduled for April 26, 2023, will focus on models and mechanisms for funding private and public landscape projects. The third dialogue will combine these two topics and inspire participants to further discuss the gaps and opportunities between landscape and finance actors.