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Land Degradation Neutrality (LDN) Fund. An innovative impact investment fund for sustainable land use, with a linked TA Facility

The challenge of land degradation
Sustainable land use is closely connected with many sustainable development objectives Land Degradation Neutrality (LDN).  It is estimated that two billion hectares of land is degraded worldwide, and we continue to degrade another 12 million hectares of productive land every year. According to the 2018 World Atlas of Desertification produced by the European Commission’s Joint Research Centre, 75% of the Earth’s land area is already degraded, and over 90% could become degraded by 2050.

Land degradation is not a stand-alone issue, but threatens the future sustainability of life on Earth, with severe impacts on food security, livelihoods, climate change, biodiversity, and ecosystem services. Sustainable land management (SLM) practices such as landscape restoration and agroforestry offer great opportunities to reduce and reverse land degradation, and produce significant environmental and social benefits.

LDN is defined by the UN Convention to Combat Desertification (UNCCD) as: “A state whereby the amount and quality of land resources necessary to support ecosystem functions and services and enhance food security remains stable or increases"

LDN  Fund in a nutshell: The Land Degradation Neutrality (LDN) Fund, co-promoted by the United Nations Convention to Combat Desertification (UNCCD) and Mirova, is a

  • first-of-its-kind impact investment fund investing in profit-generating sustainable land management (SLM) and land restoration projects worldwide.
  • The LDN Fund has secured over $100m of commitments from investors, and achieved its first closing in December 2018 with $ 60m available.
  • The LDN Fund provides long-term financing (debt/equity) for sustainable land use projects that will reduce or reverse land degradation.It operates according to robust environmental and social standards, which are integrated into a comprehensive E&S Management System (ESMS).
  • 150+ potential investment opportunities have been identified and assessed to date, and the Fund has a well-developed pipeline in Africa, Asia, and South America, with several projects that are investment-ready and others under active consideration.
  • The Fund uses a layered structure, leveraging public money to increase private sector investment in sustainable development.
  • Technical assistance will be provided by an associated donor- funded Technical Assistance Facility managed by IDH, increasing positive development impacts, reducing ESG risks, and facilitating knowledge sharing.

The LDN Fund aims to generate positive environmental and socio-economic impacts, alongside financial returns, through its investments in SLM and land restoration projects. Specifically, by tackling land degradation the LDN Fund is expected to produce the following benefits:

  • Land degradation neutrality: LDN Fund investments should directly result in the large-scale reversal or reduction of land degradation
  • Climate change mitigation: LDN projects should store a significant amount of additional CO?, and will also reduce GHG emissions compared to business-as-usual approaches
  • Climate change adaption: SLM approaches will increase resilience for project areas, and the people that depend on them
  • Improved livelihoods: Fund projects should support many decent jobs, predominantly in rural areas of developing countries, helping to lift people out of poverty. In addition, the Fund will promote gender equality and social inclusion from project design through to implementation on the ground
  • Improved biodiversity: LDN Fund projects will use biodiversity-friendly SLM practices

The Fund will monitor the LDN contribution of each investment using the official SDG 15.3 metrics, as well as other social and environment indicators.

Investment strategy: The LDN Fund will provide long-term financing (debt/equity) to projects and programmes in the following sectors:

  • LDN Fund investments
  • LDN Fund structure and investors

LDN Fund

  • LDN Fund governance
  • Value creation
  • Provision of technical assistance

Read the full text document "Land Degradation Neutrality (LDN) Fund: An innovative impact investment fund for sustainable land use, with a linked TA Facility" here. DISCLAIMER: This commercial document is intended for Professional clients only in accordance with MIFID.  MIROVA