Investors Announce Land Degradation Neutrality Fund Commitments
Three months after its official launch, the Land Degradation Neutrality (LDN) Fund has raised approximately 30% of its target capitalization of US$300 million.
The LDN Fund, promoted by the UN Convention to Combat Desertification (UNCCD) and Mirova, an affiliate of Natixis Investment Managers, aims to accelerate achievement of SDG target 15.3, or a land degradation neutral world by 2030.
Three months after its official launch, the Land Degradation Neutrality (LDN) Fund has raised approximately 30% of its target capitalization of US$300 million. Formal implementation and capital deployment towards the first set of LDN projects is expected to start after the first quarter of 2018, once the financial closure arrangements are in place. The LDN Fund is promoted by the UN Convention to Combat Desertification (UNCCD) and Mirova, an affiliate of Natixis Investment Managers, with the overall aim of accelerating achievement of the Sustainable Development Goal (SDG) target 15.3 on achieving a land degradation neutral world by 2030.
The UNCCD and Mirova describe the LDN Fund as “the first investment vehicle to focus on a SDG target using an innovative public-private partnership structure.” The two co-promoters note that the Fund’s success “could motivate the development of new investment vehicles” for the global Goals.
To date, a mix of institutional and private sector investors have announced financial commitments totaling more than US$120 million. They include: the European Investment Bank; Agence Française de Développement; Fondaction, a retirement savings plan by workers in Quebec; Fondation de France; BNP Paribas Cardif; and Garance. In addition, several “de-risking partners” are backing the Fund, including the Government of Luxembourg, IDB Invest and the Global Environment Facility (GEF).
Among projects under development for LDN funding are a shade-grown coffee programme in collaboration with local cooperatives of smallholders in northern Peru, and a sustainable rubber tree plantation in Indonesia that intends to create “the first greenfield sustainable natural rubber plantation in one of the most challenging parts of the world.” These and other LDN-funded projects will be developed and managed by IDH Sustainable Trade Initiative, which has been selected to coordinate the LDN Fund Technical Assistance Facility (TAF). The newly-created TAF will support projects seeking investment from the LDN Fund with practical project design and implementation support to build a strong portfolio of sustainable land management (SLM) projects that satisfy the Fund’s investment criteria and contribute to fighting land degradation. The GEF announced a US$2 million contribution to the TAF in September 2017.
The LDN Fund received an added boost during the One Planet Summit in December 2017 when President Emmanuel Macron identified it as one of 12 global initiatives that will receive support. In a Summit publication presenting 20 “Projects for our Planet,” the LDN Fund was described as being well-placed to “kick start a revolution in sustainable development and entrepreneurship and accelerate progress to cover 25% of the gap left to meet the Paris Agreement.” The publication further noted that the Fund “can help achieve multi-benefits for the planet, including creating millions of green sector jobs, boosting food security and increasing adaptation and resilience to climate change.”
During the Summit, President Macron also announced actions in agricultural and solar technologies that would enhance the UNCCD’s global efforts to achieve a land degradation neutral world by 2030.
In a related development, LDN Fund Manager Mirova acquired a 51% stake in Althelia Ecosphere – a management company specializing in impact investing – which is expected to pave the way for the establishment of a robust platform dedicated to natural capital investments. The new entity aims to allocate €1 billion for investment in natural capital by 2022. [Mirova LDN Press Package][UNCCD and Mirova Press Release on Endorsement of LDN Fund at One Planet Summit][One Planet Summit Publication: “Projects for Our Planet] [UNCCD Press Release on One Planet Summit commitments] [SDG Knowledge Hub Story on One Planet Summit][SDG Knowledge Hub Story on the Creation of the LDN Fund][SDG Knowledge Hub Story on the Launch of the LDN Fund]