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As essential reading we'd recommend starting with the 1) Little Book of Sustainable Landscapes, 2) Landscape Elements resource and Ecoagriculture Partners' 3) Business for Sustainable Landscapes report

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&Green - webinar

Posted by Anton Gigov Mar 14, 2018 Posted in Past webinars

 

Sail Ventures, &Green's investment manager held a webinar for the Lab's community presenting the fund's investment strategy and goals.

 

Webinar Summary (also see attached slides)

  • SAIL Ventures is the investment advisor of &Green Fund, responsible for the identification, preparation, structuring and execution and monitoring of &Green investments, including syndication with co-investors
  • Thus far the fund has raised EUR125m (EUR100m from Norwegian International Climate and Forests Initiative and EUR25m from Unilever), of its EUR400m target 
  • &Green can finance commodity businesses at different points of the supply chain, however the investment shall have a direct impact on land use (e.g. food processing companies are unlikely to be financed) and deliver on the fund’s definition of environmental returns
  • To reach smallholders &Green would typically use an aggregator (local bank, MFI etc.)
  • While investing in businesses and not landscapes &Green expects its investees to be covered by a Landscape Protection Plan, covering the surrounding landscape
  • The geographical focus is on tropical countries. The approved jurisdictions to date are in Brazil, Indonesia and Liberia. Other jurisdictions are not excluded, but require separate approval by the fund’s Advisory Board,; Government involvement is crucial; jurisdictions are assessed against the Jurisdiction Eligibility Criteria
  • Sector focus is on soy, livestock, palm oil and forestry sector, as these suggest highest environmental returns, however the fund is generally open to all commodity supply chains which source from tropical forest regions
  • To engage the stakeholders on the ground - SV would encourage its investees to work with an actor like WWF. The investor wouldn't be involved in the landscape design, but encourage WWF teams to look for investable projects within a landscape

 

 

Q&A Session

Q – Investees usually don’t have control over landscape protection plan – why are they being made accountable for events/actions beyond their control? 

A - The condition for investment is just the existence of a Landscape Protection Plan (LPP), however investees will not be made responsible for actions outside their control. It’s part of SAIL Ventures mandate to assess the probability of the LPP being implemented.

 

Q - I like the idea of the jurisdictional evaluation criteria. Would you invest in the case where a jurisdiction does not yet meet the criteria but could meet them as a result of the investment? Can you only invest after the criteria has been met? 

A - &Green cannot invest in a jurisdiction until it is approved. The governance structure does not allow for this however WWF could help to have these jurisdictions approved. e.g. in some of Indonesia’s provinces it is only a matter of having a clear gross deforestation target which is holding back the approval. The REDD program is different as it establishes a base line but no incentive to go further as one gets rewarded for being below a baseline, irrespective of whether it is set high or low. However, to achieve large scale change one needs a target for jurisdictional governance which drives beyond business as usual. 

 

Q: You mentioned that Social inclusion is a critical component, how do you measure it? Which other criteria do you measure for assessing the environmental return? Also, what type of financing may be included in the 2billion commercial capital catalyzed?

A - &Green doesn’t involve directly with the smallholders but would operate through an aggregator e.g. bank, intermediary company, and therefore looking at indirect impact on smallholders. The questions to be asked then are:

  • Is the company including the small holders in the supply chain?
  • Are they measuring households impacted through this?
  • re they including communities within the landscape in their plan e.g. hiring communities to provide information in terms of crops and other research? 

The answers to those question feed into the environmental return analysis.

 

Q - To build on the previous point, are you looking at monetising the non-financial benefits? Such as forest restoration, carbon sequestrating, but also social benefits (business creation…)? Are your shareholders interested in this monetisation?

A – The fund’s purpose is to set incentives to unlock finance that is not already available. To achieve that it has structural ways on rewarding projects that meets its environmental targets (back load payments, forms of profit-sharing)

 

Q - Is there some finance available for project preparation (technical assistance)? Do you envisage specific co-financing partners (including with grants instruments for public work)?

A – The fund was deliberately set up to not provide technical assistance funds, as these are considered available in the market. However some of our co-investors will have technical assistance windows e.g. IDH, CI, TNC. We can offer to link potential investees to technical assistance funding providers from our network, linked to the progress of a project evaluation in our investment process.

 

Q - How early will you engage with projects?

A – We are interested to speak to project proponents early on. If there is no identified recipient of funding it is potentially too early stage for &Green to get involved, however if you're working with an aggregator we would be interested to engage in talks with that entity. We wouldn't be able to provide formal input to the scoping effort as this is too early stage and often subject to substantial change.

 

Q- Please elaborate on the types of clients you expect to engage with. 

A - Producer, agri-business, large soy / cattle farmer, land users who owns land, trader who is buying from land users, input provider like a fertislier company, service provider leasing land from a farmer. We could also finance an aggregator e.g microfinance institutions or cooperative(s) 

 

Q – Please elaborate on your target crowd-in ratio

A – We structure financings with the client and bring in co-investors parallel or structurally senior to our investment. On a single investment basis we look to invest up to 25% (up to 30% for LDCs, smallholder projects) of the total investments size, i.e. crowd-in 3x the invested capital. The fund’s overall target is to crowd-in 5x the invested capital

 

Q - Can you go beyond forests to grasslands? 

A – We are still defining the concepts for what consists a landscape, in future we might also consider grasslands or similar biomes but it not part of the current &Green mandate.

 

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DISCLAIMER: This summary is an abridged log of a webinar held by Sail Ventures, &Green’s investment advisor for the Landscape Finance Lab community members and team. It is provided for educational purposes on a non-reliance basis.

 

This post was edited on Jun 28, 2018 by Deesha Chandra

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Comments (1)

Rocio Sanz says... Mar 14, 2018

Thanks for posting this summary! 

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