Attracting Mainstream Investment in Agroforestry: the Global Sustainable Agroforestry Fundwca2014-1969 Lieske V. Santen 1,*Tanja Havemann 2,Oliver Hanke 3 and Working Group Climate Smart Agriculture for the Green Growth Action Alliance 1World Economic Forum, Geneva, 2Clarmondial, 3ForestFinance, Zurich, Switzerland
Given increasing global pressures on productive land, there is a clear need for promoting integrated responsible land management projects with multiple revenue streams, such as agroforestry. Due to these businesses’ inherent diversity, they tend to fall between sectoral cracks. Consequentially, sizeable catalytic funding required for agroforestry development has been lacking. As public funding is limited a blend of public and private sources will be required.
The focus on one-dimensional agriculture or forestry projects by investors is unfortunate, as there is a clear opportunity for investing in multi-dimensional land management (agroforestry) approaches. With the right expertise, projects can be pooled into a Fund, which can meet return and risk criteria of mainstream investors and yield long-term sustainable development benefits.
To demonstrate the investment case for this approach, the authors developed an investment blueprint for the Global Sustainable Agroforestry Fund. The Fund targets an IRR of 10%, with an initial pilot size of USD 200m to commence in 2014 and the prospect to scale to 500m. The portfolio consists of a mix of agriculture and forestry projects, which as a pool will provide diversified and stable returns while screening and proactively managing Environmental, Social and Governance (ESG) impacts. The Fund forms a commercially, environmentally and socially attractive portfolio to drive investment at scale in multi-dimensional, sustainable, land management projects. To draw in the necessary cross-sectoral expertise and capacity, the Fund is developed by a coalition of finance experts, civil society groups, business people, scientists and government officials. The governing structure reflects this multistakeholder interest.
The Fund is incubated by the Green Growth Action Alliance – a public-private coalition assembled by the World Economic Forum to scale investment in green growth.