Closing the nature finance gap
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The Restoration Seed Capital Facility (RSCF) provides early-stage funding to support private fund managers and projects focused on forest and landscape restoration, with the goal of mobilizing more private investment in nature; so far the RSCF has supported 7 projects across multiple regions, leading to over $50 million in additional investment; however, challenges remain around the resource intensity required for fund and project development at the necessary scale of investment.
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Closing the nature finance gap
- 1. #LuxFinance4Nature #LuxFinance4Nature Closing the Nature Finance Gap Practical solutions to mobilize private investment for landscape restoration
- 2. #LuxFinance4Nature #LuxFinance4Nature Join at Slido.com #RoomD What sector do you come from?
- 3. #LuxFinance4Nature #LuxFinance4Nature Join at Slido.com #RoomD What is the greatest challenge to mobilizing private finance for landscape restoration at scale?
- 4. #LuxFinance4Nature #LuxFinance4Nature Investment in nature-based solutions must double by 2025 and triple by 2030 to meet global climate change, biodiversity, and land restoration targets State of Finance For Nature Report, United Nations Environment Programme, 2022
- 5. #LuxFinance4Nature Main obstacles: • Pre-investment stage resource-intensive and risky • Fund managers often have limited funding available to cover this resource-intensive stage • Result is reduced pipeline of investment opportunities and, ultimately, reduced levels of investment in FLR Funding is not being deployed at the scale needed
- 6. #LuxFinance4Nature The Restoration Seed Capital Facility (RSCF) aims to stimulate more private fund managers and investment advisors to set up new funds that focus on forest and landscape restoration, build strong pipelines and make sure that more projects reach financial close. RSCF provides early-stage support in the form of reimbursable grants for: • Fund development • Pipeline development • Project development Making investments in landscape restoration happen
- 7. #LuxFinance4Nature • Launched in late 2020, running until 2027. • 4 partners onboarded so far, all for pipeline and project development support • 7 investments supported to date in their development phase across Latin America, sub-Saharan Africa, and South-East Asia • 3 of these already successfully closed, leading to over USD 50 million in investment • Strong pipeline with more focus on fund development support RSCF: results so far
- 8. #LuxFinance4Nature • Fund development remains a major challenge • Pipeline and project development support remains important especially for complex and risky projects • Resurgence of voluntary carbon market has radically changed the sector but still risky • Mismatch between need to scale and time/resources needed to implement sound strategies at the landscape level Lessons learnt so far
- 9. #LuxFinance4Nature #LuxFinance4Nature Arbaro Advisors Investing in sustainable forestry in Latin America and Sub-Saharan Africa
- 10. #LuxFinance4Nature Background of Arbaro Advisors Unmatched combination of skills and track record, including the Arbaro I fund ESTABLISHED IN 2009. TEAM OF 280+ STAFF 880+ COMPLETED INVESTMENTS IN 50+ COUNTRIES. Fully authorised Alternative Investment Fund Manager headquartered in Frankfurt, 16 offices worldwide EUR >2.8 bn assets under management (6 funds) ESTABLISHED IN 1998. TEAM OF 100+ STAFF. 700+ SUSTAINABLE FORESTRY PROJECTS ACROSS 75 COUNTRIES. Global forestry consulting and management company headquartered in Freiburg
- 11. #LuxFinance4Nature Introducing Arbaro Fund I Sustainable forests and timber production in Latin America and Sub-Saharan Africa Deliver financial return to investors Generate global and local environmental benefits Contribute to social development in the target countries Grow forests Manage forests Protect natural habitats Process timber
- 12. #LuxFinance4Nature Arbaro Fund I Portfolio Diversified portfolio in seven countries across Lat-Am and Sub-Saharan Africa
- 13. #LuxFinance4Nature RSCF Support Two service lines – pipeline support and project development Three projects received project development support: • Prosperidad Peru • Forestal del Caribe Guatemala • Ecua America Teak Ecuador Project development support allowed Arbaro to undertake several critical studies and assessments simultaneously, these included in all cases various land tenure assessments, Environmental and Social impact assessments and E&S compliance reviews All three projects reached bankable stage and resulted to re-flow of funds back to RSCF
- 15. #LuxFinance4Nature Ecua America Teak in Ecuador Case study • Project comprises of 1,000 ha of land, of which 870 ha are planted with teak, and two integrated facilities: a sawmill and a nursery • Arbaro plans to expand the operations up to 1,700 ha of plantations and increased sawmilling capacity • Plantations and industry are very well located in a region that is highly developed in terms of infrastructure, agriculture and forestry business, and within short distance to Guayaquil, the most important export harbor in the country • The objective is to export teak roundwood, as well as blocks and sawnwood, to the global teak market • Arbaro introduced major improvements regarding formal labour relations, occupational health and safety in operations, environmental and social safeguards, and FSC certification The project supports restoration and conservation in several ways: • reforest areas that are currently not forested • conserve and protect any natural forests and also any other vulnerable ecosystems in the project area. • reforest any harvested areas
- 16. #LuxFinance4Nature Maderas Prosperidad in Peru Case study • Maderas Prosperidad is a Peruvian wood processing company founded in 2015, it produced pallets for the fast-growing regional agroindustry out of pine sawnwood imported from Chile • Arbaro funds the expansion of industrial operations as well as backward integration, which allows the company to rely on local supply and becoming fully integrated • Communities will benefit from income from wood sales and lease, as well as employment opportunities and skill development in sustainable and improved forest management The project supports restoration and conservation efforts in three ways: • utilize existing plantations that are poorly managed and could therefore e.g. potentially create a fire hazard. Good management practices are introduced. All harvested areas are replanted (Currently harvested plantations are not replanted in the region) • reforest areas that are currently not forested • conserve and protect any natural forests and also any other vulnerable ecosystems in the project area.
- 17. #LuxFinance4Nature Forestal del Caribe in Guatemala Case study • Forestal del Caribe is a greenfield project in the Izabal region, where it will establish 1,000 ha of Gmelina plantations for producing pallets • Initial land titles include several landuses from poorly managed rubber and euca plantations to large areas of protection forest. • Main protection areas are separated into another land title and in cooperation with a local NGO Fundaeco put under permanent protection status removing the risk of these areas taken into commercial utilization or other such land use change • The remaining land includes more than 500 ha of natural habitats for conservation and put under protection by the company • The project helps onshoring of the value chain and replaces supply from currently imported sawn timber The project supports restoration and conservation in several ways: • reforest areas that are currently not forested • conserve and protect any natural forests and also any other vulnerable ecosystems in the project area. • reforest any harvested areas
- 18. #LuxFinance4Nature Video: Mabel Morán E&S Manager Ecua America Teak, Ecuador Please note, this film is in Spanish. Please tune the headphone found at your seat for live translations: 01 English 02 French
- 20. #LuxFinance4Nature SWC – WHO WE ARE Project developer and operator sWc Latin America Europe Africa Corporate partners / offtakers & … & … Investors NGOs, communities, companies, governments… Local partners Pipeline development
- 21. #LuxFinance4Nature SWC’s mission is to protect existing ecosystems, restore degraded land and produce sustainable forestry and agricultural products closely built with local communities Vision & Mission PROTECT FOR THE VERY LONG TERM 20-30 years RESTORE AT SCALE PRODUCE SUSTAINABLE VALUE CHAINS FOR PEOPLE Multi-revenues Landscape approach Stakeholder engagement Community development Biodiversity Protection Impact by design
- 22. #LuxFinance4Nature PROTECT existing forests and ecosystems from deforestation and/or degradation PRESERVE carbon sinks National parks, conservation concessions, national protected areas hosting biodiversity hotspots Sustainable Forestry Natural Forest Protection Biodiversity Protection Agroforestry REGENERATE degraded lands and biodiversity building on agroforestry systems and timber value chains BUILD or enlarge carbon sinks and biodiversity Agroforestry and forestry plantations REGENERATIVE PROJECTS CONSERVATION PROJECTS
- 23. #LuxFinance4Nature CASE STUDY – PROJECT PADOUK Project type : conservation concession Geography : Congo Basin Area : 200’000 hectares Landscape approach Land mapping Biodiversity protection Conservation areas and reduced forest fragmentation Scientific & research partnerships Activities contributing to improve livelihoods Inclusive Community development Trainings & monitoring Stakeholder engagement Participative Control & surveillance Creation & animation of governance bodies Constant communication
- 24. #LuxFinance4Nature #LuxFinance4Nature Ask a question via Slido.com #RoomD Presenter Q&A
- 25. #LuxFinance4Nature #LuxFinance4Nature Join at Slido.com #RoomD What are the opportunities to scale up private finance for landscape restoration?