11 June 2013 | If Christian del Valle is right, the Althelia Climate Fund will make money over the next eight years for the Church of Sweden, the European Investment Bank, the Finnish Fund for Industrial Cooperation (Finnfund), and the Dutch Development Bank (FMO, Financierings-Maatschappij voor Ontwikkelingslanden). It will do this by investing in certified commodities, sustainable agricultural produce, carbon credits, and other ecosystem-service projects across Latin America, Africa, and Asia – spawning in the process imitators who will funnel billions into sustainable land-use projects around the world.
“We will provide funding to projects that are early-stage in nature or pilots in need of scaling up,” says del Valle, who is Managing Partner and Chief Investment Officer of Althelia Ecosphere, the Fund’s management Company. “These investments are often overlooked or perceived as being too complex (or risky) for conventional sources of capital.”
Launched in late 2011 with the aim of raising €150 million ($200 million) to €200 million ($266 million) over three years, the Fund today closed its first financing round with €60 million ($80 million), and del Valle says it is on track to achieve its funding goals.
“The Fund’s first close demonstrates investors’ emerging confidence that financing a transition towards sustainable land use can deliver competitive financial returns alongside positive environmental and social impacts’ says Sylvain Goupille, Althelia Ecosphere’s Managing Partner and Chief Executive. “This is good news for investors seeking new growth strategies, but also for governments now focussed on addressing dilemmas like food security, Natural Capital preservation and decarbonisation of the global economy.”
Of the first-round investors, FMO has the highest amount of private-sector ownership, with 49% of its shares in the hands of commercial banks, trade unions and other private-sector representatives. As the Fund scales up, it hopes to attract more private-sector investors into projects selected in cooperation with the nonprofit Conservation International, which helped the fund get started with bridge financing in 2011 and has provided technical support ever since.
Althelia has worked with investors and NGO partners to design a proprietary Environmental, Social and Governance (ESG) policy and management system, incorporating the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability (2012) and the EIB Statement of Environmental and Social Principles and Standards (2009). Forest-based emissions reductions financed by the Fund will also be validated and verified to both the Verified Carbon Standard and the gold level of the Climate Community and Biodiversity (CCB) Standard for projects delivering smallholder/community-led equitable benefits and exceptional biodiversity benefits, as appropriate. The Fund will also work to ensure that its investments are developed in such a way as to be eligible for recognition within jurisdictional (subnational and national) REDD+ programmes that are under development, including VCS Jurisdictional and Nested REDD (JNR) as well as the REDD+ mechanism developing internationally under the UNFCCC process, and where appropriate, in regional frameworks such as California and other states and provinces participating in Governors’ Climate & Forest taskforce (GCF).