Rabobank and UN Environment announced the partnership for Forest Protection and Sustainable Agriculture on October 16, World Food Day, 2017. What has it achieved so far?
Agricultural production often leads to deforestation and land degradation. Deforestation accounts for half the climate impact of the rural agricultural sector. At the same time, the world population is growing while arable land and the number of farmers are decreasing. Forest protection, climate-smart agriculture, innovation and financial solutions are required. However, the financial risks associated with implementing such solutions are often deemed too high by commercial banks or too costly for farmers. The partnership for Forest Protection and Sustainable Agriculture (FPSA) with UN Environment is one of Rabobank’s initiatives to reduce the sector’s environmental impact.
The partnership aims to scale up best practices for restoring the soil quality of arable land around the world to produce more food with less impact. Since announcing its formation, Rabobank and UN Environment have worked on the realization of a fund to back the initiative.
The FPSA brings together companies involved in the production, processing, or sale of agricultural products and commodities, such as palm oil, cocoa, soy and beef. All partners share a belief in the need for change, and in the critical role of the financial sector in the transition to sustainable land use practices at scale. This means balancing enhanced agricultural output with forest protection, reforestation and improved rural livelihoods.
The partnership accelerates forest protection, reforestation and sustainable agriculture on a large scale. We aim to increase funding of these projects through senior debt and appropriate de-risking facilities. We can increase sustainability by working together and building an enabling environment: from sharing knowledge on agri-finance and engaging with clients, to structuring new financing deals with governments, multilateral organizations, NGOs and other impact investors. Together, we can provide tangible contributions towards a more sustainable food system.
FPSA aims to finance the transition to sustainable land use in our clients’ supply chains. ©UN Environment
The partnership wants to call a halt to agriculture-related climate change and the sector’s expanding footprint. At the same time, it aims to ensure growth in food production in order to feed an estimated 9 billion people in 2050. These are among the most defining challenges of the 21st century.
The partners are working together to promote existing and new best practices designed to decrease agriculture’s footprint and restore the quality of existing arable land. Guidelines are being developed in order to measure progress.
The FPSA is backed by a fund to finance projects that will help achieve its goals. In order to be eligible for the fund, projects must focus on at least one of the first two objectives and contribute to the third:
1. Forest protection and reforestation
Acceleration of sustainable management of forests to enhance soil fertility, carbon sequestration, water management and biodiversity, including through: reforestation, forest landscape restoration, transition of agricultural lands to agroforestry, and protection of high conservation value (HCV) areas/high carbon stock forests (HCS)
2. Sustainable land use
Implementing innovative agricultural solutions such as Integrated Crop-Livestock-Forest (ICLF) systems that have an impact on lowering GHG emissions, restoring degraded land, enhancing water management, improving soil fertility, sequestering carbon, building climate change resilience and/or protecting biodiversity while maintaining or substantially increasing yield for local farmers and smallholders.
3. Improved rural livelihoods
Improving the living standards of land owners, which may include local farmers and smallholders in order to reach sustainable inclusive growth, with particular attention paid to gender equality, eradicating child labor, promoting fair labor and wages, and alleviating poverty. The impact will be measured via an environmental & social framework that includes clear baseline KPIs per project, extra KPIs, monitoring, etc.
Livelihoods of farmers should be protected. ©UN Environment
How does it work?
The aim is to invest USD 1 billion through the facility in projects that protect tropical forests, stimulate sustainable agriculture, and improve the living conditions of the local farmers. The facility consists of a fund and commercial debt. The fund is currently being established and will consist of a financing fund and technical assistance (such as grants and donations). The fund is being financed by governments, NGOs and large foundations, and will be organized by an independent fund manager. Commercial debt with an increased risk appetite is provided by Rabobank.
FPSA will make it possible to realize projects that otherwise would have difficulties to obtain regular credit because these are seen as high risk, need extended repayment terms, or are located in countries with financial restrictions.
Rabobank will promote the partnership goals among its clients and business partners, and provide commercial debt from its own balance sheet. Impact investors can contribute to the fund and supports projects that are committed to the FPSA goals.
The fund should be operational by the end of 2018 so that the first projects can start in Brazil and Indonesia.
In October 2017, at the World Business Council for Sustainable Development Summit, as part of our “Growing a better world together” mission, Rabobank and United Nations Environment joined forces and announced the creation of a USD 1 billion facility. The facility aims to finance forest protection and sustainable agriculture, using a combination of public and private funding. Other interested commercial and development banks, private foundations, governments, impact investors and non-governmental organizations (“NGOs”) are invited to participate.
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