The Bankable Nature Solutions’ Investors’ Workshop
The World Wildlife Fund (WWF) recently organized a workshop at the LHoFT, aimed at connecting impact investors with bankable nature projects to close the $3.9 trillion financing gap that stands in the way of achieving the United Nations Sustainable Development Goals (SDGs). The private sector’s role in funding positive impact enterprises is crucial, with estimates suggesting that it could deliver more than half of the funding actually needed to achieve the SDGs.
The workshop presented Bankable Nature Solutions (BNS), which leverage private financing to support sustainable business models, reduce pressure on ecosystems, and drive resilience and sustainability for both people and nature while generating financial returns for communities and investors.
Through the innovative projects showcased at the event, it becomes clear that collaborations between private investors, financial institutions, companies, and development organizations are necessary to develop bankable nature projects and establish sustainable foundations for the future.
Introduction
Connecting impact investors with bankable projects for nature was the goal of the WWF’s workshop at the LHoFT’s premises, where innovative projects and funds were presented to potential investors. With a persistent $3.5 trillion annual financing gap standing in the way of achieving the UN Sustainable Development Goals, private financing has proven essential to preserve and restore ecosystems.
The WWF supports bankable nature projects across various landscapes and works through partnership programs to catalyze bankable projects around the world. Private sector investors, financial institutions, companies, and development organizations interested in bankable nature projects are more than welcome to participate in this urgent call to action.
Closing the $3.9 Trillion Gap: How The Private Sector Can Support the SDGs
Achieving the UN Sustainable Development Goals (SDGs) is crucial for a sustainable future, but a persistent annual financing gap is standing in the way. According to the Organization for Economic Co-operation and Development (OECD) I-library, “following the COVID-19 outbreak, available resources are not keeping pace with [the] growing SDG financing needs […]. The SDG financing gap in developing countries increased by 56% percent in 2020, totaling USD 3.9 trillion.” Their 2023 report lists the various uncertainty factors backstaging this issue: the increased pressure on official development assistance (ODA), victim of inflation; developing countries’ constraints on their government revenue due to the pandemic; and spiraling debt and debt servicing costs.
Despite the grim outlook, there is a glimmer of hope on the horizon. Recent data from the World Bank reveals that private investment in low- and middle-income country infrastructure has been steadily recovering from the unprecedented lows experienced in 2020. Specifically, private investment commitments in these regions reached $76.2 billion in 2021, reflecting a remarkable 49% surge from the previous year.
Collaborating with companies, financial institutions, and local stakeholders is crucial for developing solutions that can create financial returns while supporting both people and the planet. Those solutions are commonly called Bankable Nature Solutions (BNS), meaning innovative projects that leverage private financing to support sustainable business models, reduce pressure on ecosystems, and drive resilience and sustainability for both people and nature while generating financial returns for communities and investors.
The Need to Change the Narrative
According to the « Better Business, Better World » 2017 report of the Business & Sustainable Development Commission, Although business leaders are more than likely to support a viable model for long-term growth, “they are less likely to feel responsible for delivering them », one of their surveys showed that that half the business community deems this goal « government territory ».
Tuffs University research indicates that funding for nature-based solutions (NBS) is often hampered by a variety of obstacles. These include weak infrastructure in emerging markets, limited capacity among intended customers and suppliers, and regulatory and policy complexities in the countries where these solutions are implemented. Moreover, organizations face internal challenges in monitoring, measuring, and communicating the impact of NBS to investors, and may be inclined to prioritize alternative investment opportunities that promise more immediate and lucrative returns.
Investing in the SDGs Makes Economic Sense
The United Nations estimate that achieving the SDGs could create US$ 12 trillion of market opportunities, along with 380 million new jobs, and that preventing and mitigating climate change would result in savings of about US$ 26 trillion by 2030.
“There is a significant opportunity to forge ahead with quality investments in green, resilient, and inclusive infrastructure […]. But as economic stimulus slows, credit conditions tighten and uncertainty from overlapping crises intensifies, there will be even greater need for private investment in infrastructure. This will require working collectively to enable private sector solutions and putting in place stronger foundations for a post-crises recovery.” – Imad Fakhoury, World Bank’s Global Director for Infrastructure Finance, PPPs & Guarantees
Private sector funding is indeed essential to fuel positive impact enterprises that strive to achieve the SDGs. While governments and philanthropic funding has played a traditional – albeit crucial – role in closing the funding gap, estimates suggest that the private sector could deliver more than half of the funding needed to achieve SDGs through new positive impact enterprises.
These enterprises offer sustainable business models that support people and nature while generating financial returns for investors and communities. By working with financial institutions, companies, and local stakeholders, they help develop BNS that reduce pressure on ecosystems, drive resilience and sustainability, and generate financial returns.
Nature Based Solutions: Circularity and Sustainability
Presented below are the innovative projects that were featured at the WWF’s workshop at the LHoFT’s premises. While this article highlights one particular SDG per company, it’s essential to recognize that these projects also support various other goals, including SDG 2 – Zero Hunger, SDG 6 – Clean Water and Sanitation, among others.
Source: https://sdgs.un.org/goals
In The Forest
Greenpot Enterprises Limited (GPE) is Kenya’s first fully integrated bamboo business and a women-led company, established in 2014 to create wealth by planting one tree at a time. The company operates large-scale nurseries, plantations, and restoration projects with smallholder farmers, and has established over 1,400 hectares of bamboo forests in 16 counties in Kenya. GPE is at an advanced stage of commercializing bamboo, starting a bamboo wood factory to produce sustainable products, including disposable cutlery, wood flooring, furniture, and energy. The company has created 200 jobs and impacted over 2,000 families, with projected additional farmer income of $800 per hectare per year. GPE aims to plant an additional 5,000 hectares with smallholder farmers in the next 3 years, acquire FSC certification, and complete the bamboo factory by June 2023 while acquiring and installing wood processing equipment by December 2023.
The company emphasizes the negative impacts of soil degradation on smallholder farmers, who suffer from declining farm productivity, as well as the Kenyan landscape, which experiences reduced forest cover and increased erosion. To address these issues, the company focuses on bamboo production, which is characterized by resilience and adaptation, and can remove up to 30% more carbon from the air than other trees. This makes bamboo a key part of the solution for mitigating climate change, aligning with SDG 13 – Climate action.
L.Co produces high-quality natural wood care products from tung oil, working with ethnic minorities in Quang Tri, central Vietnam, to plant, harvest, and process tung trees/oil. L.Co plans to expand its current manufacturing facilities, plant 350 ha of tung trees, and construct a new local tung oil processing facility near Quang Tri. L.Co aims to expand into international markets and achieve new FSC Ecosystem Services certification for tung seeds/oil. The company is seeking investment to achieve these goals and support its suppliers. The firm is participating in the WWF Sustainable Forest Trade Incubator.
Through sustainable forest management, the company’s vision is to provide “the best woodcare products in the world” while encouraging leadership roles for women, aligning with SDG 5 – Gender Equality. They also want to solve the scourge of landslides with active reforestation and are projecting to receive world’s first FSC certification for tung oil.
Through Indigenous Fruits and Plants
Āluān is an Indonesian company that produces organic coconut oil sourced from smallholder farmers. The project places emphasis on conservation efforts, regenerative farming, and job creation. To meet its processing business needs, the company is seeking an immediate investment of $200k. Phase 1 and 2 require $2m and $2-3m investments, respectively, for the implementation of regenerative agriculture, processing of by-products, and a coconut sugar processing facility. Target customers for their coconut oil are cosmetics and health food manufacturers.
The company takes pride in its purpose-driven strategy, which incorporates regenerative agriculture and conservation practices and adds value through processing of coconut byproducts. Furthermore, the company places a priority on several sustainable development goals, including SDG 5 – Gender Equality. The company is led by women and has a majority of women in mid-level management and 40% of women in processing staff roles.
Kilifi Moringa is an exporter of certified organic Moringa products to body-care and health industries worldwide, using a value chain that supports rural smallholders in coastal Kenya. The company seeks equity to upscale to 25,000+ farms and create a vast, tradable carbon sink of 180 million tons of carbon to trade over a multi-decadal pay-out timeframe. Kilifi Moringa’s farming community has averaged 75%-150% income gains from seed-supply alone, and the company aims to implement proven livelihood and resilience enhancement models, upscale oil and leaf processing, and create institutional and incentive structures to monitor and maintain tree growth for subsequent monetization in carbon-trade markets. It also partners with the Dutch Fund for Climate and Development (DFCD).
The company’s goal is to promote and popularize African moringa, while also connecting global markets to smallholder women farmers, to create diverse and resilient livelihoods for these communities. The project is designed to generate primary and circular revenue streams that will drive sustainable income for the producers. It aligns with the SDG 1 – No poverty, by ensuring 75 to 150% income gain per household.
Forest Africa Zambia operates an indigenous wild fruit value chain to produce nutritious drinks made from Mabuyu and Ngai fruits. The project works with the Mobilizing More for Climate (MoMo4C) program and follows the principles of Ecosystem-Based Adaptation to enhance local communities’ resilience to climate impacts. It promotes afforestation, aids in reducing deforestation, and adheres to a zero-waste philosophy. Revenue has rapidly increased from $20k in 2020 to $160k in 2022, translating into positive outcomes for local communities. Forest Africa aims to expand its market share in regional markets, such as Angola, DRC, and Malawi, and to develop new products from wild fruits, such as jams, sauces, and oil. The project has created 18 permanent jobs at the factory, with plans to enhance distribution capacity by acquiring a refrigerated truck and expanding the processing facility to increase production.
The company places particular emphasis on the loss of biodiversity experienced in the region, which is attributed to the lack of adaptive capacity and resilience to climate change among rural communities. To address this issue, the company offers an alternative livelihood by creating a ready market for indigenous wild fruits, strongly aligning with the SDG 10 – Reduced inequalities.
From Waste to Biogas and Tree Nurseries
The Circular Refugee Camp Consortium (CRC) implements a closed-loop concept in the Imvepi Refugee Settlement in Northern Uganda by transforming waste into biogas, compost, and irrigation water. The biogas is used for clean cooking, compost and irrigation water for a tree nursery, and tree seedlings and compost are sold to farmers. The concept is established as a Living Lab, which focuses on research and knowledge sharing to showcase the work on SDGs. The project takes basis on a circular economy approach, providing renewable and affordable energy, good sanitation, employment, and education for 25,000 people in the Living Lab, with plans to scale up to 10 biodigesters at 10 locations in Uganda. Revenue-generating activities include sludge collection services, the sale of biogas, gasbags and cooking stoves, future carbon credits from reforestation, and the sale of compost and tree seedlings.
The company places particular emphasis on SDG 13 – Climate action. To support this goal, the company uses bio-slurry from their biodigester to establish tree nurseries and educates and trains refugee communities on project operations. Soft-landing is facilitated by local entrepreneurs and humanitarian aid organizations.
About the WWF Active Support to Nature-Based Solutions
The WWF Sustainable Forest Trade Incubator:
The WWF Sustainable Forest Trade Incubator is on a mission to make sustainable trade the norm. By incubating and accelerating sustainable forest trade businesses, they’re driving a positive impact on nature and communities. With their expertise, networks, and support, they’re helping entrepreneurs develop and implement innovative and profitable business models that foster sustainable forest management, conservation, and restoration.
Active engagements and partnerships:
The WWF is teaming up with powerful partners to catalyze bankable projects worldwide. The Dutch Fund for Climate and Development (DFCD), Landscape Resilience Fund (LRF), and Mobilizing More for Climate (MoMo4C) are just a few of the dynamic partnerships that are fueling sustainable initiatives around the globe. With their help, the WWF is driving investment in innovative projects that support people and the planet.
Conclusion
In a word, the persistent annual financing gap of $3.9 trillion is hindering progress towards the UN Sustainable Development Goals, and private financing is essential to preserve and restore ecosystems. By working collaboratively with local stakeholders, companies, and financial institutions, it is possible to develop Bankable Nature Solutions that support both people and the planet, reduce pressure on ecosystems, drive resilience and sustainability, and generate financial returns for communities and investors.
Investing in sustainable development goals is not only an economically viable option but also holds immense potential to create novel market opportunities and generate millions of jobs. With a collaborative effort, we can empower private sector solutions and establish robust foundations that foster an equitable and sustainable future.
“The Global Goals really need business: unless private companies seize the market opportunities they open up and advance progress on the whole Global Goals package, the abundance they offer won’t materialize.” – Business & Sustainable Development Commission
Written by Oriane Kaesmann
Header image generated on Midjourney
