Sustainable climate finance: how to bridge the gaps

‘The financial sector has contributed to climate change and biodiversity loss, but can also be part of the solution.’ With these words, the organisers opened the GLF conference ‘Luxembourg Finance for Nature: What comes next?’ During the conference, Mobilising More for Climate (MoMo4C) partners and other experts discussed challenges and solutions to fund green business initiatives in low- and middle-income countries. MoMo4C aims to help the financial sector, by supporting civil society organisations and entrepreneurs, in developing investable business cases for nature-based solutions to address climate change.

Header photo: the panel discussion during the expert session. © Global Landscapes Forum

Shortening rubber supply chains in Indonesia

Rubber and palm oil plantations dominate West Kalimantan in Indonesia, one of the landscapes where MoMo4 works. In this heavily deforested area, the remaining primary forests and peatlands are important for the protection of biodiversity and for reducing greenhouse gas emissions.

During the expert session, Dia Mawesti of Tropenbos Indonesia explained the challenges for rubber producers in the landscape and how they can help address biodiversity loss and climate change. Growing rubber is part of a traditional agroforestry practice that is rich in biodiversity and makes the landscape more resilient to climate change. Palm oil however pays better than rubber and oil palm plantations are replacing traditional agroforestry systems.  

Tropenbos Indonesia addresses these challenges by enhancing the capacity of small farmers to improve rubber agroforestry planting and harvesting techniques and by establishing associations that help improve the market position of these local farmers. They have been successful in establishing minimum take-off volumes and in linking farmers directly to rubber off-takers. ‘In this way, we shorten this green supply chain and help the farmers to a better price,’ said Mawesti during her presentation. Supporting agro-forestry systems help communities diversify the commodities they produce and thereby boost their income.

‘Challenges in obtaining finance include lack of collateral, not having the right human resources and high interest rates, but also a lack of government incentives.’

Fungai Musana – WWF-Zambia

Increasing market access

Fungai Musana of WWF-Zambia spoke about the environmental challenges entrepreneurs face in Zambai in the Kaza, Luangwa and Kafue landscapes, such as unstainable agricultural practices, illegal logging and the development of infrastructure. Through the MoMo4C programme, WWF-Zambia supports entrepreneurs with investable projects that help landscapes adapt to climate change and reduce greenhouse gas emissions.

‘Challenges in obtaining finance include lack of collateral, not having the right human resources and high interest rates, but also a lack of government incentives,’ shared Musana. Just like in Indonesia, increasing market access for green entrepreneurs is an important objective of the projects.

Jurisdictional multi-stakeholder partnerships to attract investment

Next, Adelaine Cezar presented a case study on the Produce, Conserve and Include (PCI) strategy in the state of Mato Grosso, Brazil. The strategy maximises the potential that multi-stakeholder partnerships have to increase the confidence of investors, mitigate risks and leverage public and private investments at a landscape and sub-national level.

Cezar showed how different stakeholders can develop a shared vision at sub-national level and how it can cascade down into a specific landscape. By addressing the fragmentation of investments and projects, the PCI strategy helps boost confidence among investors and achieve impact at scale.

The study was conducted by Tropenbos International and will soon be published on its channels.

The role of national biodiversity strategy and actions plans

Jan Willem den Besten of IUCN NL spoke on behalf of EcoAgriculture Partners on how lessons learnt from integrated landscape finance can help improve the National Biodiversity Strategies and Action Plans (NBSAPs) and National Biodiversity Finance Plans (NBFPs) that countries have to develop as part of the implementation of the Global Biodiversity Framework that was adopted at the 15^th Conference of Parties to the Convention on Biological Diversity in Montreal last December.

Den Besten explained how countries can ensure alignment of multiple public, private and philanthropic financial flows. Biodiversity action and finance plans can develop approaches that ‘include the needs for capacity building and, very important, ensure that different finance streams support particular solutions that various sectors offer.’ Governments have an essential role to play in this process, and national action plans can contribute to the alignment of climate and nature with the involvement of all relevant stakeholders at the national, regional and very local levels.

Bridging the funding gaps

The session was concluded with a panel discussion by Inna Bilshchuk (WWF and Landscape Resilience Fund), Floor van Oppen (Dutch Development Bank) and Jan Willem van den Besten, and was moderated by Dr. Caroline van Leenders.

The discussion focused on the need to scale up projects in order to access finance. The Dutch development bank FMO, for example, recognises that producers and small companies need support with their business case before they can attract an investment. Investors such as the Landscape Resilience Fund can provide loans to small-holder farmers and small and medium-sized enterprises to scale up their business. MoMo4C supports local stakeholders in developing their business cases to bridge these gaps at the landscape levels.

What kind of funding is needed, depends on the specific needs of these organisations and individuals in the landscape. Various landscapes differ in terms of economic, socio-cultural and environmental aspects. It is therefore important to look at the landscape-specific context and bring all relevant stakeholders together to match their needs with what can be offered by investors.

Government policies remain crucial, however, concluded Dr. van Leenders: ‘if you do not have the right policies in place, it is going to be a real struggle for all communities, private sector and all the others in the landscape.’

For more information about the event, please contact Bastiaan Louman: bas.louman@tropenbos.org.

Mobilising More for Climate

The expert session ‘Addressing the complexity of directing sustainable climate finance to the Global South’ was organised by MoMo4C and Green Finance for Sustainable Landscapes. MoMo4C aims to develop investment-ready projects applying nature-based solutions to address climate change.

The programme is implemented by Tropenbos International, WWF-NL and IUCN NL and supports local organisations in developing nature-based solutions to address climate change in remote, biodiversity-rich landscapes in Ghana, Zambia, Uganda, Cameroon and Indonesia.