Land Degradation Neutrality Fund
Catalyzing private capital for sustainable land management and restoration projects
Project Facts
Location
Bhutan, Peru
Project Volume
>250 Mio. EUR
Applied Financing Solutions
Market-Rate Loans, Private Equity, Blended Finance, Public-Private Partnership, Carbon Market
Project Dates
Start: 2017
In operation since/from: 2018
The Story
The Land Degradation Neutrality Fund, co-promoted by the UN Convention to Combat Desertification and Mirova, is a first-of-its-kind impact investment fund investing in profit-generating sustainable land management and land restoration projects worldwide. It provides long-term financing to projects that reduce or reverse land degradation and deforestation on a large scale, while meeting strict environmental and social standards. The target size of the fund is US$ 300 million, mixing public resources from development banks etc. with private capital (approx. 70%) in a layered blended finance vehicle.
The LDN Fund was launched in 2017 with the aim to directly impact 500,000 hectares of land, to reduce carbon emissions by 35 million tons, and to create jobs or improve livelihoods for over 100,000 people, predominantly in rural areas of developing countries. To achieve these goals, all investment projects are regularly monitored for their contribution to Land Degradation Neutrality (using indicators such as land cover change and the amount of carbon stored in soils), their social and environmental impacts, as well as ESG risk management.
The fund’s first investment case develops organic and fair-trade certified agroforestry with coffee plants and multiple timber species in Peru (20,000 ha). Another large transaction was realized with a social enterprise and unique large outgrower scheme in Bhutan, working with impoverished farmers (12,000 households) to plant nut trees in degraded areas (10,000 ha).
Success Factor | Hero Moment
Since public resources alone will not be sufficient to reach the SDG target of Land Degradation Neutrality by 2030, the fund fills an important gap, by providing innovative financing that is not readily available in the market.
The LDN Fund's main disruptive innovation is to consider that degraded land can become an opportunity. Successful LDN Fund investments will show private investors the potential of the natural capital asset class, triggering new investments and new actors.
Submitter
Mirova Asset Management, France
Other Involved Stakeholders
EIB, AFD, DEFRA, ECOTIERRA, Mountain Hazelnuts
Contact Mail
communication-mirova@mirova.com
Website
www.unccd.int/actions/impact-investment-fund-land-degradation-neutrality
