At the Global Landscapes Forum’s third investment case symposium, held at the World Bank Group’s International Finance Corporation in Washington, D.C. on Wednesday, top investors, business leaders, and policymakers gathered to present their efforts and advice on how to build a critical mass of work that will lead to a stronger investment case for sustainable landscapes and restoration.
Over 200 people attended the symposium to discuss ways to speed up the pace of financial investments aimed at creating more resilient, fair, profitable, and climate-friendly landscapes. Conversations, disagreements, and challenges arose over how to combine efforts that will lead to lasting change. Accounting for natural capital, putting a price on carbon, and processes to secure land tenure rights emerged as key issues.
In order to entice large amounts of private capital investment into funds that support sustainable global landscapes, those funds will need to grow much larger than what has been proposed thus far, according to Jennifer Pryce, President and CEO of Calvert Impact Capital, which has raised $1.5 billion in capital from private investors over the past 20 years and channeled that money to mission-driven organizations. “In many situations, a $20 million fund is boutique. It’s not going to be on many eyeballs,” Pryce said. “For this to scale, $500 million is interesting.”
“
We are now getting closer to a business model that links global companies with the investment firepower, and if we unlock this the future is incredibly exciting.
Juergen Voegele, senior director of Food and Agriculture Global Practice, World Bank
To achieve scale, Pryce said billions will need to be invested to achieve sustainability and restoration goals; and much work will need to be done on evaluating risk, creating public-private partnerships, and connecting sustainable businesses to traditional financial markets.
Juergen Voegele, senior director of Food and Agriculture Global Practice at the World Bank, said that, five years ago, he never would have believed that private capital investors such as Pryce would ever be interested in sitting down public investors to work toward a business model to build sustainable landscapes.
“We are now getting closer to a business model that links global companies with the investment firepower, and if we unlock this the future is incredibly exciting,” he said, speaking at a World Bank-hosted session on public and private finance.
Voegele explained that he knows transformation can occur if money flows: Thirty years ago, in China, he worked with farmers on a $500 million landscape restoration program that transformed a degraded landscape the size of France into productive land.
Critical to a business model for financing sustainable landscapes is making land tenure and land use rights clear to farmers. “If a small holder farmer doesn’t know if she has rights to the land five years from now, she will not plant a tree and there will be no investment in that landscape. Investment is key to restoration and is key to sustainable landscape management,” Voegele said.
Accounting for natural capital has become central to private business, too, but it remains a challenge. Voegele added, “What the world does is borderline criminal with what it does with its natural assets. This is everywhere… This is absolutely essential that we begin to understand what it is that we are actually squandering.”
Keeping finance at the center of sustainability has been key to private companies seeking a competitive advantage and price premiums for their sustainability practices, because certification does not yet reliably provide a competitive advantage.
Chris Brown, vice president of corporate responsibility and sustainability at Olam, noted that he has just hired an accountant as a new member of his sustainability team in order to make a better business case for efforts to improve natural capital.
“I don’t need another sustainability person on my team,” he said. “I need someone with a finance background who can understand finance within Olam and how we can understand the business value of the soil, the water, the forests, the communities, and the people we are working with.”
Olam is an agribusiness company that manages 2.5 million hectares of land globally and works with 4.7 million smallholder farmers growing commodity products such as rice, coffee, and almonds. The company works directly with 400,000 farmers in sustainability programs, but Brown still sees many challenges of investing in both productive and sustainable landscapes.
One of his key challenges is how to measure the impacts of his company’s conservation efforts and maintaining natural capital assets. Brown believes private business will develop ways to measure the impact of environmental sustainability changes they are making. “This is fundamental to moving forward, and it’s not there yet, if we are being honest,” he said.
Business models would change faster by incorporating the positive or negative consequences of agricultural activities, such as pricing carbon and avoided deforestation, onto the balance sheet and into higher-priced commodities and better certification schemes. “With global population increasing and natural capital decreasing, we are in urgent need of change,” said Bas Ruter, a director of sustainability and lead of the forest protection and sustainable agriculture fund at Rabobank.
In partnership with the UN Environment Program, Rabobank is investing 700 million Euros over the next five to seven years in a $1-billion-initiative aimed at making agriculture more sustainable. The focus is on stopping deforestation, investing in degraded lands instead of deforestation, and increasing reforestation and integrated livestock and agroforestry efforts rather than large-scale monoculture.
Globally, $585 billion of public subsidies goes into global agriculture every year, the World Bank’s Voegele explained, but only a small percentage of that is used for environmental conservation and social improvements. Shifting even some of those investments to create better land tenure systems, support climate smart agriculture, improve nutrition, and direct money toward investing in smaller farms can change the outcomes dramatically toward more sustainably managed landscapes, Voegele added.
The Center for International Forestry Research (CIFOR), UN Environment, and The World Bank launched the Global Landscapes Forum in 2013 with core funding from the German government.
This story was published with permission from Mongabay.com. Read the full story.
