2012 Overview of the Verde Ventures Fund at Conservation International

1. Verde Ventures:
Building Healthy Sustainable
Economies by Investing in
Small and Medium Enterprises
Cheung 2009
Neel Inamdar
Fund Manager

2. • Fund Overview
• VV Monitoring &
Evaluation
• VV Coffee Portfolio
Impacts
VV

3. Fund Overview

4. Verde Ventures invests in small
businesses that contribute to green
economies in Conservation International's
global priority areas
Our Mission

5. • 3 main investors
• $19.2 million invested
• 48 entities supported, 104
loans, 13 countries
• 91% of repayment rate
• 55,544 direct beneficiaries
• 464,144 hectares directly
impacted
• 16.4 million hectares indirectly
impacted
• 482 Red-listed species
• $134 million in sales generated
by clients
VV Results

6. 2012 vs. 2011- TBL comparison

7. Investment
by
Sector
79%
Cocoa
Coffee
Ecotourism
Natural
12%
Products
3%
5%
0%
NTFP
Investment by sectors

8. • SME Loans: US$30,000 to
$500,000 for infrastructure,
working capital, trade finance for
business development in rural
communities.
• Technical Assistance:
Accounting, marketing, business
plan development
• Monitoring: Triple-bottom line
monitoring (Environmental,
Social and Financial)
Our Tools

9. • Long Term: infrastructure,
equipment and crop maintenance
• Short Term/Trade Finance:
working capital, harvest finance.
Type of Financing

10. International Finance Corporation (IFC)
•
l’Agence française de développement (AFD)
•
• Fonds français pour l'environnement mondial (FFEM)
• United Nations Foundation (UNF)
• Daiwa Securities
• Global Environment Facility (GEF)
• KfW Entwicklungsbank (KfW)
• Gordon and Betty Moore Foundation (GBMF)
• Overseas Private Investment Corporation (OPIC)
• Starbucks Coffee Company
Key Partners

11. Why Verde Ventures?
• Conservation-based
employment is essential to
provide economic
incentives for conservation
• The small business sector
is a key partner in the
intersection between human
welfare and conservation
• Lack of available,
affordable capital is a
major constraint to building
green economies
Facts

12. Hotspots + wilderness areas populated

13. VV Project Map

14. Capturing the
Value Maturity
Marketplace of the
Building
Marketplace
Uncoordinated
Innovation
“Marketplace Building” involves:
• Building efficient intermediation to
unlock latent supply of capital
• Building enabling infrastructure for the
industry
SME Microfinance • Developing absorptive capacity for
Conservation (today)
investment capital
Finance
Further behind today than microfinance was in 1999,
and is perhaps 10 years behind

15. Sustainable Agriculture– VV
has continued to invest in sustainable
and responsibly grown coffee
cooperatives and estates as well as in
other agricultural products in
Central, South America, and Africa.
Investments in this sector are
typically designed to enhance habitat
conservation, and provide water and
food security benefits.
Sectors

16. Name of Investment
Central Agropecuaria Perla del Mayo (CAPEMA)
Sector/Country
Coffee / Peru – Alto Mayo Region
Amount
150,000 USD
CAPEMA represents 150 coffee producers from 6 communities in
the Alto Mayo Protection Forest’ buffer zone. After cattle, coffee
production is one of the main agricultural activities that represent a
risk for conservation in the Alto Mayo watershed. Certification
programs demand an improvement on agricultural practices such as
soil erosion prevention, prohibition on agrochemicals use,
agroforestry systems establishment and waste water management.
Conservation/Social
Fair Trade certification also assures a minimum price and demands
Impact
that the organization maintain an annual premium (US$10/coffee
bag) for AGM agreed social investments.
Associates’ families depend on coffee production and
commercialization through CAPEMA as one of the bigger incomes
during the year. They also produce some other crops for their own
food security.
VV Deals – CAPEMA / Alto Mayo

17. Alto Mayo, Peru

18. Alto Mayo, Peru

19. Name of
Technoserve Ethiopia Coffee Cooperatives
Investment
Sector/
Coffee / Ethiopia
Country
Amount
400,000 USD – Loan Guarantee
Three major impacts are envisaged:
• Protection of natural forests through the development of sustainable small
businesses that enable coffee farmers to earn more income and keep growing
coffee
• Adoption of good practices for sustainable, certified, or conservation friendly
coffee
• Reduction in freshwater consumption by coffee cooperatives
Conservation/
With only 3% of the surface area of the country covered by natural forests, the
Social Impact
conservation of these areas and the reduction of the demands made on these
ecosystems are a conservation priority. As in many developing countries, there are
very few economic options available to local populations who rely, along with a
number of important species, on the ecosystem services provided by these forest
areas. In Ethiopia, no less than 80 percent of the rural community and a significant
proportion of the urban dwellers depend on herbal medicines for their primary
health care delivery system. In addition to foods, medicine, fuel wood, and
construction materials, forests provide wildlife habitat and recreational
opportunities, prevent soil erosion and flooding, and help provide clean air.
VV Deals – Ethiopia Coffee Cooperatives

20. Ethiopia Cooperatives, Ethiopia

21. Ethiopia Cooperatives, Ethiopia

22. Name of
Ten Senses Africa
Investment
Sector/Country
Macadamia Nuts / Kenya - Africa
Amount
75,000 USD
The investment in Ten Senses Africa represents an opportunity to support a
socially responsible enterprise currently enhancing the life of approximately
1,800 farmers in key areas for biodiversity by providing an economic
justification to maintain tree cover in an important water tower and a region
where most trees are threatened by charcoal burning. The upper Tana
region is a critical fresh water resources in Kenya, important for the
ivelihood of local farmers. The rivers are indispensable source of water for
crops, livestock, wildlife, and human use, not only within the mountain
Conservation/
vicinity, but also for farther arid and semi‐arid lands. The upper Tana region
Social Impact
also hosts several reserves and parks. They contribute to Kenya’s economy
in the ecotourism industry and also provide direct or indirect stream of
revenues to the surrounding communities. Strategies to protect this rich
region include alleviation of poverty. In fact, over the years, it has been
proven that poverty is as a key driver in over‐ exploitation of the
ecosystem. TSA’s activities in the region and its commitment toward
certification (fair trade and organic) enable the rural communities to improve
upon their living standards and conserve their natural habitat.
VV Deals – Ten Senses Africa

23. Ten Senses Africa, Kenya

24. Ten Senses Africa, Kenya

25. Sustainable Tourism – VV has
continued to invest in priority
ecotourism enterprises in Africa and in
Central and South America. Sustainable,
responsible tourism continues to be an
important component of many
sustainable economies and is an
effective mechanism to secure both
critical habitats and provide alternative
economic opportunities to local
communities in many parts
of the world.
Sectors

26. Name of
Playa Viva LLC
Investment
Sector/
Tourism / Mexico
Country
Amount
200,000 USD
Playa Viva is within CI’s Mesoamerican Hotspot and directly
involved in supporting a turtle sanctuary with high egg counts of
5-10 nests of leatherback turtles (Red List CR), about the same
number of green turtle nests (RL EN), and 2,000 nests of Olive
Ridley turtles (RL VU) and low hatch rates. In addition, the
developer has demonstrated a commitment to tackle habitat
Conservation/
restoration and ecosystem function. As the only formal employer
Social Impact
on the beach, they play an important part in providing alternative
incomes and capacity building to the rural community. This
presents a unique opportunity to maintain a conservation
presence on an otherwise unmonitored stretch of tens of
kilometers of beach.
The initiative has been reviewed by the Conservation Committee,
and approved on Dec 2, 2009.
VV Deals – Playa Viva

27. Playa Viva, Mexico

28. Playa Viva, Mexico

29. Clean Energy – Addressing energy
cleanliness is a key component of
developing a sustainable green economy.
Verde Ventures is committed to tackling
the challenges of energy poverty and
the related health, climate and
deforestation impacts prevalent in many
hotspots.
Sectors

30. VV Monitoring and Evaluation

31. • Outlines, demonstrates and tests key
hypotheses: that VV investments
support improved TBL impacts
• Estimates substantive impacts
• Embedded within management
structure
• Delivers accurate and timely
reporting
• Transparency measures built in for
accountability
VV M+E Framework

32. •
Portfolio-wide monitoring
o All deals
o Basic TBL information that
aggregates across
o Yearly snapshot of TBL progress
• Project specific monitoring
o Subset of portfolio
o Specific TBL conceptual models and
indicators
o Demonstrates key links between
nature and people
o Tailored indicators
VV’s M+E Framework: 2 Levels

33. 70 Indicators (13 Social, 20 financial, 37 environmental)39 compliant with IRIS 2.2
taxonomy
1.
Organiza=on's
members
13.
Indirect
Beneficiaries
24.
Addi=onal
finance
mobilized
36.
Number
of
farms
48.
Total
Conserva=on
Area
61.
CI/CELB
par=cipant
2.
Organiza=on's
14.
Total
Revenue
25.
Wages
paid
37.
Ecotourism
Area
49.
Area
Sustainably
62.
Water
use
members:
Female
Managed
3.
Full-­‐=me
Employees
15.
Earned
revenue
26.
Direct
customers
38.
Ecotourism
Clients
50.
Area
Directly
63.
Water
conserva=on
Impacted
4.
Full-­‐=me
Employees:
16.
Cost
of
goods
sold
27.
Buyer
contracts
39.
Produc=on:
Honey
51.
Area
Indirectly
64.
Water
treatment
Female
Impacted
5.
Part-­‐=me
Employees
17.
Gross
profit
28.
Average
price
40.
Produc=on:
Wax
52.
Distance
of
water
65.
Solids
treated
bodies
permanently
protected
6.
Part-­‐=me
Employees:
18.
Net
income
29.
Local
market
price
41.
Beehives
Managed
53.
Number
of
66.
Energy
produc=on
Female
cer=fica=ons
7.
Temporary
employees
19.
Net
worth
30.
Producer
Price
42.
Produc=vity:
Honey
54.
Area
cer=fied
67.
Energy
consump=on
Premium
8.
Temporary
employees:
20.
Fixed
assets
31.
Total
interest
repaid
43.
Lobster
Traps
55.
Area
cer=fied:
Fair
68.
Renewable/Non-­‐
Female
Managed
Trade
Renewable
energy
sources
9.
Permanent
employees
21.
Value
of
collateral
32.
Amount
of
principal
44.
Produc=on:
Lobster
56.
Area
cer=fied:
Utz
69.
Names
of
Important
repaid
Adjacent
Conserva=on
Areas
10.
Permanent
22.
Return
on
equity
33.
Net
cash
flow
45.
Scale
of
Lobster
57.
Area
cer=fied:
70.
Number
of
IUCN
Red
employees:
Female
Produc=on
Organic
List
Threatened
Species
Impacted
11.
Direct
Beneficiaries
23.
Interest
Expense
34.
Produc=on:
focal
46.
Area
dedicated
to
58.
Area
Cer=fied:
71.
CO2-­‐equivalent
crop
focal
crop
Rainforest
Alliance
Emissions
Avoided
12.
Direct
Beneficiaries:
35.
Produc=vity:
Focal
47.
Total
Produc=on
60.
Area
cer=fied:
Bird
Female
crop
Area
Friendly
VV Portfolio Monitoring

34. § US $19.2 M invested in 13 Countries
§ 464,144 ha protected in 9 hotspots
§ 55,544 jobs supported, 29% women
Impacts

35. • Feasibility
• VV client screening/environmental
indicators
• VV due diligence checklist
• Value Chain Ranking Matrix
• Conservation Memo
• Investment Memo
• Implementation
• VV Annual Impact Survey
• Assessment Tool
• Certification Audit Review
• Analysis
• Cost effectiveness
• Frequency distribution
• Performance Indices
• Other initiatives
• GIIRS
• IRIS
VV’s Management Tools

36. • Quarterly Triple Bottom
Line Report
• Annual Impact Report
• M E Update
• Pipeline Report
• Dashboard Report
VV Reporting

37. • GIIRS Pioneer Fund
• Aligned with IRIS, FAST, ANDE
• Active at SOCAP, SVN,
Investors Circle, etc
Impact investing linkages

38. VV Coffee Portfolio Impacts

39. Indicator 2011
Total
Area
Cer6fied
(ha)
13,408
Area
Cer6fied
Fair
Trade
10,132
Area
Cer6fied
Organic
(ha)
7,741
Area
Cer6fied
Rainforest
Alliance
(ha)
4,139
Area
Cer6fied
C.A.F.E.
Prac6ces
(ha)
1,397
Area
Cer6fied
Bird
Friendly
(ha)
854
Total
Water
Conserva6on
(L)
154,716,796
Total
Water
Treated
(L)
29,549,064
Total
Solids
Treated
(T)
39,175
Energy
Produced
(KwH)
1,205,010
Energy
Consumed(KwH)
613,607
Average
Producer
Price
Premium
18.3%
Summary of VV Coffee Portfolio Impact

40. • There is little scientific consensus on whether these
agro-ecological systems provide tangible benefits to
maintaining ecosystem services/biodiversity and should
be considered areas of conservation significance
• Although shade grown coffee cultivation is no
substitute for natural forest in terms of biodiversity
conservation and ecosystem service production, this
form of land use provides a viable compromise between
the economic needs of local communities and global
conservation priorities.
Rationale for Coffee Investment

41. Coffee portfolio status in FY10 FY11
Coffee Portfolio Indicators

42. Indicator
Life
of
Fund
2010
2011
Total
Coopera=ve
Average
Per
Client:
1,243
3,351
2,546
Members
Average
Price
($/kg)
$4.53
$3.98
$5.22
Average
Price
Premium
18.3%
(for
Cer=fied)
Total
Produc=on
(kg)
Unknown
8,252,716
6,879,494
Avg.
Produc=vity
(kg/ha)
667
871
537
#
of
Farms
Contribu=ng
Unknown
880
1,308
to
Produc=on
Emissions
Avoided
15,510,578.08
Mg
CO2
3,305,026.9
Mg
CO2
5,010,522.08
Mg
CO2
Certification Programs

43. The majority of investments
in the Verde Ventures coffee
portfolio fall into two broad
categories:
1. private landholders
2. organized groups of
small holders
(cooperatives or
associations).
VV Coffee Investments

44. In addition to the reliance on
certification programs,VV has
integrated the following criteria
into our process of investment
selection:
§ Location
§ Alternative Land use
§ Historical land use
§ Cluster
Strategy for Investment

45. Proportion of clients under each certification
in
2012 and 2011
Certification Programs

46. Please visit
www.conservation.org/verdeventures
Thank you!