What We’re Reading – Landscape Finance Edition – November/December 2021

by | December 14, 2021 | Finance and Economics, Finance Team Newsletter

Landscape finance was the talk of the town in Glasgow, Scotland, during November’s UN COP26 climate conference and another held by the Global Landscapes Forum (GLF). In this edition of the 1000L Finance Solutions Design Team newsletter, we review some of the critical landscape finance-related developments and reports that emerged from these events. 

The 1000L 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.

News & Developments

Landscape finance-related themes that emerged at COP26 and the GLF conferences included:

  1. Extensive discussion on financial flow and company supply chain transparency (i.e., demonstrating that flows are aligned with the Paris Climate Accords)
  2. The importance of landscape investment risk reduction: patient capital is needed, as farmers and smaller enterprises often require more time to generate returns
  3. The emergence of new debt instruments for developing countries to support restoration projects (in addition to well-publicized debt-for-nature swaps)
  4. Combatting seasonality and intermittent flows in smallholder access to capital

For a thorough review of high-level developments and investment pledges made at COP26, we recommend this overview from S&P Global.

The Food Systems, Land Use and Restoration Impact Program (FOLUR) Introduced
FOLUR, a $345 million, seven-year initiative funded by the Global Environment Facility (GEF) and led by the World Bank, seeks to transform food and land-use systems. The program consists of a global knowledge platform and 27 country projects. Country-level work focuses on accelerating action in landscapes and along value chains for eight major commodities. 

Joint Statement by Multilateral Development Banks on Nature, People and Planet
The statement included a pledge to promote opportunities to “step up nature financing and efforts to mobilize or leverage private finance for investments in nature.” The development banks also relayed their commitment to support the private sector in identifying and accessing appropriate finance forms.

Luxembourg and the European Investment Bank Set Up a Climate Finance Platform to De-risk Projects
The Luxembourg-GLF Finance for Nature Platform aims to help key Luxembourg organizations and global partners increase their engagement with sustainable finance for nature-based solutions. The platform includes knowledge sharing and resources for catalyzing private-sector engagement in sustainable land-use financing.

Business Case for Collective Landscape Action, a New Partnership, Announced
The Rainforest Alliance, global non-profit CDP, Clarmondial and Conservation International formed a partnership seeking to bring together private-sector, government and local actors. The partnership’s goals include reducing commodity-driven deforestation, increasing forest restoration, conserving biodiversity and improving livelihoods in critical tropical ecosystems. Specifically, the effort will support landscape stakeholders in developing a standard set of performance data to help companies meet sustainability goals, attract financing and provide local employment.

Convergence and Australian Government Agency Announced Support for New Finance Solutions
Convergence (a global blended-finance network) and Australia’s Department of Foreign Affairs and Trade will support the development of four new blended-finance solutions for sustainable agriculture, sustainable forestry and renewable energy across Southeast Asia and the Pacific. One of these four solutions is the Asia Climate-Smart Landscape Fund, which will provide medium- to long-term (5 years or longer), small ticket size ($5-20 million) loans to small and medium-sized enterprises (SMEs) engaged in sustainable agriculture, land regeneration and forest protection in Indonesia.

OECD Sustainability Finance Platform Unveiled at COP26
The Organisation for Economic Co-operation and Development (OECD) shared details on its Finance SMEs for Sustainability Platform, scheduled to go live in December. The platform will feature a forum to foster dialogue and knowledge-sharing among public and private financial institutions, policymakers and SME representatives.

Green Finance for Sustainable Landscapes (GF4SL) Project Introduced at COP26
GF4SL is a joint initiative of the Collaborative Partnership on Forests, led by the United Nations Environment Programme and the Center for International Forestry Research. The project will promote business commitments to deforestation-free, sustainable commodity production and sustainable land use. One component focuses on developing standardized measurement and monitoring of environmental and social impact related to forest and agriculture investments through a standard set of key performance indicators.

The World Bank and Germany Share Update on PROGREEN Partnership at GLF Conference
A GLF panel provided an update on PROGREEN’s efforts to counter declining biodiversity, loss of forests, deteriorating land fertility and increasing risks such as uncontrolled forest fires. The organization has assisted select countries in Asia, Africa and Latin America. Resources provided by PROGREEN include land-use planning tools and multi-sector investment plans.

Inter-American Development Bank (IDB) Presents New Amazon Bioeconomy Fund
The IDB approved a series of loans, grants and equity as part of the Amazon Bioeconomy Fund. This $600 million fund (including a $279 million Green Climate Fund investment) seeks to address barriers, including risk-related challenges, to support climate change adaptation and mitigation in the Amazon basin.

Landscape Enterprise Networks (LENs) Platform to be Launched as an Independent, Incorporated Entity
LENs is a platform that matches the needs of businesses or agencies that depend on a landscape with actors or organizations that provide or protect those resources. In late 2021, LENs will become an independent, incorporated entity (it’s currently an initiative from 3Keel, a sustainability advisory firm). One result is that any organization in a community may be able to participate in a LENs regional trading system of a collaborative value chain.

Reports

Understanding the Impacts of Financial Flows in the Landscape
Turning from the COP and GLF conferences for a moment, we are proud to report that the journal Land has published an academic article on the LAFF (Landscape Assessment of Financial Flows). EcoAgriculture Partners and Tropenbos International developed this methodology.

Linking Sovereign Debt to Climate and Nature Outcomes
This report discusses innovations in sovereign debt financing to address the triple crisis of high and rising debt levels in developing countries, the climate change emergency, and the accelerated degradation of the natural world. Authors include the International Institute for Environment and Development (IIED), Potomac Group and several United Nations Partners.

Food Finance Architecture: Financing a Healthy, Equitable and Sustainable Food System
The World Bank, the International Food Policy Research Institute and the Food and Land Use Coalition have developed Food Finance Architecture. This policy brief lays out the building blocks for how banks, investors, development institutions, companies, farmers and governments can shift capital to optimize public spending and mobilize private capital to transform global food systems. The authors explore five core imperatives.

Global Resilience Index Initiative Launched during COP26
This index provides an assessment of resilience across sectors and geographies. The open-source resource seeks to help policymakers, financial markets and exposed communities better understand their climate risks to make more informed decisions on actions. The UK Centre for Greening Finance and Investment, an organization seeking to accelerate the adoption of climate and environmental data and analytics by financial institutions, published the index.

 

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.

Top Image: Photo by Joshua Hoehne on Unsplash.

Author

  • David Hecht is a finance intern at EcoAgriculture Partners. He supports research on innovative landscape finance mechanisms and the work of the 1000 Landscapes for 1 Billion People Finance Accelerator team.

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