The LDN is a blended finance fund that allows a unique parternship between public private and philhatropic actors with the main objectives to:
- Restore degraded lands in developing countries;
- Promote sustainable farming and forestry methods in conjunction with local communities and small producers.
- encourage the mobilization of private investors in this sector with strong environmental and social impacts
By leveraging long-term private financing on top of public aid to development, the LDN Fund invests in financially viable private projects on land rehabilitation and sustainable land management worldwide, including sustainable agriculture, sustainable livestock management, agro-forestry and sustainable forestry. Eligible projects generate environmental and socio-economic benefits as well as financial returns. The LDN Fund was the first-of-its-kind investment vehicle leveraging public money to raise private capital for sustainable land projects.
Anchor investors – the European Investment Bank and the French Development Agency AFD – are joined by institutional investors including the first north-American private investor Fondaction, the Fondation de France foundation and insurance companies BNP Paribas Cardif and Garance. The initiative is also backed by de-risking partners that include the Government of Luxembourg, IDB Invest and the Global Environment Facility. This helps make private investment less risky and thus attract more private capital for projects with positive impacts on the environment, climate, biodiversity and sustainable agriculture.
The LDN fund reached its final closing at $ 208 million in March 2021. As the first Mirova fund dedicated to natural capital, it made it possible to initiate other activities in connection with the restoration and protection of nature. This includes the L'Oréal Fund for the regeneration of nature (€ 50 million) in 2020, the Orange Nature fund (€ 50 million) in 2021 and nature+ Accelerator Fund ($ 10M) in 2022. This dynamic thus allowed the Mobilization of more than € 300 million for nature and other initiatives should see the light of day in the coming months.
The LDN fund has also given rise to 10 investments in 12 developing countries. The latest investments announced include:
- Agroforestry program in the Philippines
- Sustainable citrus orchards in Morocco
- Sustainable forestry in Brazil
- Agroforestry systems with small producers in Madagascar.
More information on fund investments can be obtained on these links: here, hereand there. The fund will soon be fully invested, giving rise to the launch of a new fund expected for the end of 2022, in early 2023.
The projects already funded by the LDN fund as of April 2021 have protected 120 thousand hectares (the size of South Korea) and avoided 20 million tons of CO2 emissions.
The fund and the technical assistance facility support projects in Latin America, Africa and Asia such as
- development of agroforestry systems in Peru in partnership with cooperatives of small coffee producers to restore degraded land;
- land restoration through sustainable hazelnut orchards in Bhutan, supporting 15,000 farmers on 10,000 hectares
- micro-forestry in Kenya using digital technologies to coordinate more than 20,000 producers and develop a sustainable timber industry in East Africa
- FSC-certified plantations in Ghana and Sierra Leone: creating over 2,500 jobs and sequestering 5 million tons of CO2
In addition to restoring degraded lands, the Fund generates revenues from sustainable use of natural resources, creating green job opportunities for local communities, increasing food and water security and sequestering CO2.
The LDN fund was initiated by the Global Mechanism under the United Nations Convention to Combat Desertification with support from the Governments of France, Luxembourg, Norway, and the Rockefeller Foundation and involvement of an advisory group that brought together representatives from public financial institutions, international NGOs and academia. A private sector investment management firm Mirova, an affiliate of Natixis Investment Managers dedicated to responsible investing, was selected competitively to manage the LDN Fund.
The LDN Fund provides evidence of its achieved impacts through a rigorous monitoring and evaluation framework overlooked by public sector and private sector criteria. The LDN Fund investments follows an Environmental and Social Management System (ESMS) meeting international best practices. The LDN Fund complies with robust environmental, social and sustainability standards, along with responsible investment criteria. The ESMS approach was developed with the support of an independent internationally-acknowledged expert and benefited from public consultations that included CSOs. In addition to the IFC Performance Standards, the LDN Fund follows the Voluntary Guidelines on the responsible Governance of Tenure (VGGT) developed through inter-governmental negotiations within the Food and Agricultural Organization. The ESMS also includes a complaint and compliance mechanism to ensure that project-affected populations have formal ways to voice their concerns, identify and correct the causes for grievance.