How we invest - &Green

01 / TRANSFORMATIONAL CHANGE

INVESTMENT STRATEGY

&Green is a thematic investor looking for businesses which fit squarely within the core mission of delinking deforestation from major commodity supply chains. We finance the transition of these supply chains from extractive to truly sustainable blueprints for others to adopt, replicate and scale. &Green identifies those businesses directly or indirectly involved in commodity production, downstream and upstream in the supply chain in our Approved Jurisdictions.

Prospective clients are those who are willing and able to map out and then commit to:

A No Deforestation, No Peat and No Exploitation (NDPE) Policy;
An Environmental and Social Action Plan (ESAP); and
A Landscape Protection Plan

By implementing these commitments, our clients transform their agricultural operations to become more sustainable – and more attractive to further investors.

Our clients’ projects are expected to provide substantial Environmental Returns, that can be monitored throughout the investment period. All projects must adhere to strong social and environmental covenants as well as a plan for the protection of the wider landscape around the project.

02 / COMMODITY SUPPLY CHAINS

OUR TARGET CLIENTS

We invest in businesses that are directly or indirectly involved in production of our target commodities in our Approved Jurisdictions.

We monitor the impact of our investment in a Landscape by measuring:

ENVIRONMENTAL RETURNS

hectares of forest conserved or restored and
avoided deforestation

SOCIAL IMPACT

households and
smallholder farmers benefitting

Our clients make notable public commitments in their Landscape Protection Plans and we measure and report their progress against those commitments publicly.

03 / DE-RISKING INVESTMENTS

Financial instruments

&Green provides USD 5 million to USD 30 million in long term (5-15 year) credit or guarantees. Our experience and skills enable us to structure and price credit facilities which are both affordable to our clients and responsibly mitigate and manage our investors’ credit risk. At the same time we provide our investors with attractive risk adjusted returns.

The Fund can absorb higher short and medium term risk, so the credit can accommodate lower cash flow requirements in the early years. This partially compensates our clients for the additional upfront project development costs, particularly related to environmental and social criteria requirements.

&Green also has a budget for providing Technical Assistance (TA) to prospective clients. With this additional support they can improve their practices and get ready for the investment.

OUR PORTFOLIO

04 / RIGOROUS SCREENING

Investment process

It is in the best interests of all of &Green’s stakeholders to have an investment process that is rigorous and interactive. The process is run by the Investment Advisor who is constantly sourcing appropriate transactions for the pipeline. The Investment Advisor Sail Ventures only presents credible investment opportunities, that meet the &Green investment criteria, to the independent Credit Committee. That committee assesses the projects and only recommends those investments that pass its screening to the Board of Directors for final approval.

Sourcing

Continuous process of lead generation & JEC Assessments

Lead generation

Potential projects are sourced directly and through supply chain actors, financial institutions, NHG’s and investor networks.

&Green can only invest in Eligible Jurisdictions that the Advisory Board has approved.

Structuring & Terms

Project design and financial structure

Investment Rationale

High level assessment of the fit with our Theory of Change; the potential for impact and the potential to be a blueprint that can be scaled and/or replicated.

Term Sheet

Agreed set of indicative financial terms and environmental return and social inclusion commitments.

Due Diligence & Final Approval

Fundraising / syndication with co-investors

Due Diligence

Analysis of all financial and operational documentation of the project, and assessment of both environmental and social risks and potential for positive impact.

Approval

Full proposal by Sail Ventures to the Credit Committee including loan terms, environmental, social and governance covenants and the LPP. Credit Committee recommends to the Board of Directors for Final Approval.

Execution & Monitoring

Project governance & monitoring

Execution & Disbursement

The investment may be executed following final approval from the &Green Board.

Ongoing Monitoring

Ongoing engagement with the client including independent verification of their impact performance and environmental and social compliance and monitoring the landscape.

05 / ACHIEVING OUR TARGETS

Landscape protection plan

All of our clients publicly commit to transitioning to sustainable agricultural practices and protecting their wider Landscape from deforestation. As part of this commitment they draft a Landscape Protection Plan, or LPP.

An LPP is a sustainable land use and management plan, which quantitatively sets out how the impact will be generated during the ﬁnancing period.

The LPP covers matters such as:

History of the landscape, Business as Usual Scenarios and Project Scenarios for different landscape elements;
Stakeholders and their roles in the landscape and in the project;
Targets for Environmental Returns and Social Returns, with milestones for delivery; and
Monitoring, Reporting and Verification strategy and schedules.

Please refer to the descriptions of each of our clients for the details of their respective LPPs.

06 / LAWS AND REGULATIONS

Environmental, Social and Governance (ESG) safeguards

We work in sectors and regions with progressive forest protection policies. In addition to the required compliance with all applicable local laws and regulations, &Green investments also safeguard Environmental, Social and Governance (ESG) standards as part of the investment process as follows:

Investments must follow the International Finance Corporation Performance Standards (IFC PS), or equivalent;
Clients must implement an Environmental and Social Action Plan (ESAP) in order to address gaps with the IFC PS and the E&S risks identified;
Clients must make a commitment to No Deforestation, No Development of Peatlands, and No Exploitation (NDPE) at organizational level;
The project area forest and peatland must be covered by a long term Landscape Protection Plan (LPP), and
Co-investors in a project must comply with ESG standards, specifically the IFC PS or the Equator Principles

07 / CLIENT SUPPORT

TECHNICAL ASSISTANCE

To improve the prospects of achieving the Fund’s objectives, &Green has established a dedicated Technical Assistance (TA) Budget to support its clients, and prospective clients, in reaching the standard of the Fund’s Environmental & Social Management System (ESMS), which is required in order to qualify for financing from &Green. The &Green TA processes run in close connection with the investment process and the governance of the &Green TA Budget is integrated in to the existing &Green governance structure.

There are certain eligibility criteria for providing &Green TA, including cost-sharing requirements for clients. To provide additional support, particularly where a (prospective) client is not eligible under &Green’s TA, the Fund strives to connect clients to strategic partners that are able to provide similar grant-based support to catalyse &Green’s investment and maximise impact. As part of the partnership with IDH, the sustainable trade initiative, a separate technical assistance facility (TAF) has been developed and it is dedicated to assisting &Green’s (prospective) clients in preparing for, and realising, the environmental and social impact required by the Fund. Other similar connections have been established with 3rd parties and exceptionally on ad-hoc basis.