IN THIS EDITION
Dear Friends of Partnerships for Forests and the Blended Finance Taskforce,
Welcome to our first Pipeline Newsletter in 2022. This Pipeline Newsletter is part of a collaboration between Partnerships for Forests (P4F) and the Blended Finance Taskforce (BFT). The collaboration aims to mobilise finance for regenerative and sustainable business models that can sustain forests, improve sustainable land use, secure improved rural livelihoods and deliver on development and climate goals.
As teased in last year’s Pipeline Newsletter Sneak-Peak, we are planning to build on the success and positive feedback of our Future Food Shark Pitch Event and scale – up our efforts to connect regenerative and sustainable businesses with mission-aligned investors. Besides our pipeline newsletter, we are also planning to hold another Shark Pitch event as well as investors knowledge forums this year.
In addition to showcasing a selection of pipeline companies, our newsletters feature case studies of relevant funds, transactions and individuals that have championed sustainable finance in the forest and land-use space. Please reach out to: email@example.com if you would like to be featured in future editions.
In our Changemaker spotlight series, we are interviewing “changemakers” about their work in financing sustainable businesses in the forest and land-use value chain.
A conversation with Tanja
How were you attracted into the world of sustainable finance for nature?
I was born and raised in Tanzania and Kenya with parents working in development assistance. I got to travel to many rural areas growing up and saw first-hand the importance of agriculture as a driver of environmental and social development. I then studied tropical environmental sciences, environmental economics & environmental law, and did field work on tropical soils in SE Asia, before working in finance – I saw the opportunity to use cross sectoral knowledge to mobilize more resources. Finance for nature can be unlocked when there is technical knowledge of the issues, understanding of local context and ability to translate this into transactions and financing structures.
What have been your biggest learnings from the last one year of the Fund’s operation?
That supporting the transition to sustainable agriculture requires committed value chain partners to mitigate market risk, as well as appropriate financing instruments (including working capital) that allows stakeholders in the supply chain in a manner that creates more value, in particular for rural communities.
Tanja Havemann, Co-founder and director of Clarmondial
What are the biggest opportunities that excite you the most in the coming years?
Emerging opportunities exist both on the demand and supply side. We do see more investors want to allocate capital to sustainable agriculture and supply chains and Nature Based Solutions but there is a lack of suitable investment vehicles with relatively few funds that meet their criteria. On the other hand, corporate commitments on sustainable procurement are increasing, which is translating into corporates changing how they engage with suppliers. It includes providing longer-term visibility on off-take and supporting suppliers’ access to finance.
Call for action: what would be your messages for actions to other stakeholders in the sector to accelerate sustainable financing for nature?
Investors and companies want to contribute to sustainable practices but often expect to do so with a business-as-usual approach. Accelerating sustainable financing for nature requires stakeholders to work differently. For example, that companies support their suppliers in accessing appropriate financing to implement such practices. And, that investors consider allocating resources to new investment strategies and partners.
If you have a superpower to fix the one thing in sustainable financing for nature, what would you fix?
The ability to convert commitments into action!
Clarmondial is an independent, employee-owned investment advisory company that mobilizes capital for the sustainable management of natural resources, with a focus on sustainable land management and nature-based solutions in emerging and frontier markets. Since its establishment in 2010, Clarmondial has worked with a range of clients including investors, development agencies, foundations, and leading corporates. Most of the work is based on structuring transactions and financing mechanisms that target a positive environmental impact alongside financial returns. The company is headquartered in Zürich, with team members also based in Abidjan, London, Nairobi, and San José.
Building on opportunities identified in its advisory work, Clarmondial has structured and developed the Food Securities Fund, which started operations in March 2021. The Fund provides an additional source of working capital to agriculture companies operating in emerging and developing markets, with the intent to generate financial returns and a positive impact. The Fund contributes to climate change mitigation, biodiversity loss, and rural economic development (jobs, training) and women’s economic empowerment. The Fund’s development was supported by the blended finance platform Convergence, the Good Energies Foundation, the Sall Family Foundation, WWF, and Conservation International. Investors include a US family office, the Global Environment Facility and a Dutch bank.
THE FOOD SECURITIES FUND AT A GLANCE
|Type of institution||Private investor|
|Geographical focus||Emerging and developing markets globally|
|Ticket size range||USD 1-5m|
|Instrument||Short-term loan for working capital (up to 12 months), which can be renewed|
The Food Securities Fund builds on companies’ commitments to sustainable and traceable agricultural supply chains, which often increase the pre-harvest working capital requirements of aggregators that intermediate between farmers and larger agricultural traders and brands. This exacerbates the financing gap that prevails in agriculture, particularly in emerging and frontier markets.
The Fund focuses on deal size range between USD 1-5m, with a preference for loans of USD 2-4m.
Since March 2021, several transactions have been made. As an example, the Fund has extended a working capital loan to a company sourcing coffee in an East African country. The season-long loan enables the borrower to develop sustainable supply chains by providing pre-harvest support to smallholders and farmer organizations. This includes supporting the certification process (e.g., organic, Rainforest Alliance), promoting agroforestry (e.g., providing shade tree seedlings), and improving product quality by investing in coffee washing stations. With the loan from the Food Securities Fund, the borrower can increase its supply chain engagement and number of smallholder coffee farmers it sources from.
Companies showcased* in this newsletter series are sourced from Partnerships for Forests portfolio (marked as P4F portfolio company), pipeline builders, other organisations, as well as from general submission. We prioritise showcasing companies that are:
- focusing on the forests, agriculture, food, and land-use sector;
- operating in tropical rainforest countries, mainly in South East Asia, East and West Africa, and Latin America;
- looking for ticket sizes of up to USD 20m; and
- raising equity, debt, or relevant hybrid instruments.
It should be noted that our work in connecting investors with companies is a free service and neither P4F, not the BFT will take a commission. The P4F and BFT team are fortunate to have support and collaboration with various institutions that have been doing tremendous work in creating and developing a pipeline of investable businesses. We hope that this synergy would galvanise strong momentum to mainstream the much-needed financing and investment to scale the solutions in the sector.
Raise ask (USD)
Honey aggregator, processor, packager and trader sourcing from, and working with smallholder farmers
Selling stories and net-zero transitions through a vertically integrated community based coffee business
* Please note that the showcased companies have not undergone a financial screening, with only an initial impact screening done through the pipeline providers and ourselves based on the initial information provided by the companies. Due to this, we will not be liable for any of the presented information and strongly encourage prospective investors to perform a financial and impact Due Diligence before investing.
Join the pipeline
We are continuously sourcing companies to be featured in the pipeline newsletter and to participate in the next Shark Pitch this year. If you would like to be part of our pipeline database, please fill out our online form.
Food for Thought
- Financial mechanisms for forest, food and land-use companies. If you are interested in case studies of financial mechanisms that have boosted sustainability in the food and land use sector, we invite you to access the Blended Finance Taskforce’s Better Finance, Better Food publication, and its associated case study catalogue.
- Analysis of barriers and solutions for mobilizing investment into Forest Ventures. Multistakeholder Forestry Program 4 (MFP4) works with Blended Finance Taskforce (BFT) to analyse key barriers to accessing capital for Forest Ventures in Indonesia and solutions to unlock them in the Mobilizing Investment into Forest Ventures report. Produced by the Blended Finance Taskforce team, this report touches on key barriers to accessing capital for Forest Ventures that can support Community Based Forest enterprises and the solutions to unlock their growth. To understand how to mobilize investment, interviews were carried out with Forest Ventures, international experts, and investors operating in the impact and land use spheres in Indonesia.
- Pipeline database focusing on Agri-SMEs. The World Business Council for Sustainable Development’s Agri-SME Digital Finance Platform is built to connect investors and donors with pipeline Agri-SME companies. If you are an investor or an Agri SME currently fundraising, we highly encourage you to join the platform here.
- New Food and Agriculture Partnerships providing supported by P4G. P4G has provided more than $7 million in catalytic grant funding for a new round of partnerships across their four focus themes of transparent food and agriculture value chains, affordable and safe water and sanitation solutions, inclusive e-vehicle transition for cleaner cities and better plastic waste management increasing the incomes of waste collectors and sorters. P4G is continuously looking for new partnerships to accelerate. If you are interested, apply here until March 11 to be considered for funding.
- Online hub for small businesses (and other interested players) in the sustainable food space. Good Food is an online hub for small businesses that are “making our food more nourishing, sustainable, equitable and resilient.” Created by Wasafiri, the platform seeks to provide a space for food entrepreneurs, established food businesses, NGOs and foundations to “share their ambitions and struggles, “access resources and support; and to advocate together for a more conducive business environment”. Sign up to the platform here.
We believe collaboration and synergy are crucial to driving impacts for our shared goals in mobilizing capital for forests and nature-positive supply chains, including through the Pipeline Accelerator. We are looking forward to hearing potential ideas for collaboration from you through firstname.lastname@example.org
Partnerships for Forests and the Blended Finance Taskforce
About The Blended Finance Taskforce
The Blended Finance Taskforce was established to help mobilise largescale capital for the UN Sustainable Development Goals. Launched by the Business & Sustainable Development Commission in 2017, the Taskforce identified key barriers to the effective use of blended finance and called for action from leaders in the investment and development finance community in its flagship report “Better Finance, Better World”. The Taskforce is now implementing an ambitious Action Programme to increase mainstream private investment for high-impact sectors, with a focus on emerging markets. It is supported by a steering committee of more than 35 experienced practitioners and experts that brings together leaders from finance, business, development and policy. We work with private-sector champions across the investment community, including pension funds, sovereign wealth funds, insurers, asset managers, project developers, foundations and think tanks. The Taskforce gains deep expertise from the public-sector institutions that have shaped the blended finance market, including development banks and aid agencies. All this is done in close collaboration with existing initiatives, notably those led by the Organisation for Economic Co-operation and Development, the Multilateral Development Banks/ Development Finance Institutions’ working groups, the World Economic Forum, the New Climate Economy, the GIIN, the THK Forum on Sustainable Development and many others, to make sure efforts are complementary and coordinated.